<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO
50 West San Fernando Street, San Jose, CA 95113
Dear Shareholders:
It is my pleasure to invite you to Knight Ridder's Annual Meeting of
Shareholders.
We will hold the meeting on Wednesday, May 12, 1999, at 9:30 a.m. in the
Fairmont Hotel, 170 South Market Street, San Jose, California. The Fairmont is
immediately adjacent to our new corporate headquarters. In addition to the
formal items of business, I will review the major developments of 1998 and
answer your questions.
This booklet includes the Notice of Annual Meeting and the Proxy Statement.
The Proxy Statement describes the business that we will conduct at the meeting
and provides information about Knight Ridder. This year, we have changed the
format of the Proxy Statement to make it easier to read and understand.
Your vote is important. Whether or not you plan to attend the meeting,
please complete, sign and return the enclosed proxy card in the envelope
provided. If you attend the meeting and prefer to vote in person, you may do so.
Also new this year, we are introducing telephone and Internet voting. If you
have access to a computer, the latter is an easy way to vote.
I look forward to seeing you at the Annual Meeting.
Sincerely,
/s/Tony Ridder
Tony Ridder
Chairman of the Board
and Chief Executive Officer
March 29, 1999
<PAGE> 3
KNIGHT RIDDER
50 West San Fernando Street
San Jose, CA 95113
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 12, 1999
Dear Shareholders:
We will hold the 1999 Annual Meeting of Shareholders of Knight-Ridder, Inc.
at 9:30 a.m. (Pacific time) at the Fairmont Hotel, 170 South Market Street, San
Jose, California, on Wednesday, May 12, 1999. At this meeting, we will ask you
to:
- Elect three directors;
- Ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for 1999;
- Approve an amendment to the Company's Employee Stock Option Plan to
increase the number of shares of common stock for which options may be
granted by 7,000,000;
- Approve an amendment to the Company's Employee Stock Purchase Plan to
increase the number of shares of common stock available for purchase by
1,000,000;
and consider and vote upon:
- A shareholder proposal recommending that the Company adopt an executive
compensation policy that all future stock option grants be
performance-based; and
- Any other business properly before the meeting.
The accompanying Proxy Statement contains additional information about the
matters to be considered at the Annual Meeting. Also enclosed is our 1998 Annual
Report, which includes the Company's financial statements.
You may vote at the Annual Meeting if you were a Knight Ridder shareholder
of record at the close of business on March 17, 1999.
We hope you will attend the meeting. However, if you cannot, we encourage
you to vote the enclosed proxy -- either by mail, or by telephone, or by
Internet -- as soon as possible. If later you decide to attend the meeting, you
can, if you wish, revoke the proxy and vote in person.
Please be assured that all proxies, ballots and votes will be kept
confidential except as necessary for the independent inspector of election to
tabulate the results.
By Order of the Board of Directors
/s/ Polk Laffoon
Polk Laffoon
Vice President/Corporate Relations
and Secretary
March 29, 1999
<PAGE> 4
KNIGHT RIDDER
50 West San Fernando Street, San Jose, CA 95113
PROXY STATEMENT OF KNIGHT RIDDER
1999 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION ABOUT THE MEETING, VOTING AND PROXIES
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We -- the Board of Directors of Knight Ridder -- sent you this Proxy
Statement and the enclosed proxy card because we are soliciting your proxy to
vote at the 1999 Annual Meeting of Shareholders to be held at 9:30 a.m. on
Wednesday, May 12, 1999 at the Fairmont Hotel, San Jose, CA. Certain officers,
directors and other employees of the Company and D.F. King & Co. (a proxy
solicitor) may also solicit proxies on our behalf by mail, phone, fax or in
person.
This Proxy Statement summarizes the information you need to vote at the
Annual Meeting. You do not need to attend the meeting, however, to vote your
shares. You may either return the enclosed proxy card, or vote by telephone or
via the Internet.
We began mailing this Proxy Statement, along with the proxy card and Annual
Report, on March 29, 1999 to all shareholders of record as of March 17, 1999. On
that date, there were 78,451,523 shares of the Company's common stock and
1,754,930 shares of its Series B Preferred Stock outstanding. These are the
Company's only classes of voting stock.
WHO IS ENTITLED TO VOTE?
Shareholders at the close of business on March 17, 1999 (the record date).
Your proxy card shows the number of shares you had on that date. Each share of
the Company's common stock is entitled to one vote. Each share of the Company's
Series B Preferred Stock is entitled to two votes. The holders of the Company's
common stock and Series B Preferred Stock generally vote together as a single
class on all matters and will do so on all items specifically listed in the
Proxy Statement.
HOW DO I VOTE?
There are four methods. This year, online voting is available via the
Internet. If you have access to the Internet, we encourage you to vote at the
following Web address:
www.chasemellon.com.
You may also vote in person, by telephone (1-800-840-1208) or by completing
and mailing your proxy card.
If you make specific choices and sign and return your proxy card, your
shares will be voted as you have directed. If you sign the proxy card but do not
make specific choices, the proxyholders will vote your shares as follows:
- "For" the election of the three nominees for director
- "For" the ratification of the appointment of Ernst & Young LLP as
independent auditors for 1999
- "For" the amendment to the Employee Stock Option Plan to increase the
number of shares available for grant
1
<PAGE> 5
- "For" the amendment to the Employees Stock Purchase Plan to increase the
number of shares available for purchase
- "Against" the shareholder proposal recommending that the Company adopt an
executive compensation policy that all future stock option grants be
performance-based
CAN I VOTE ON OTHER MATTERS?
The Company's by-laws limit the matters presented at our annual meeting to
(1) those in the notice of the meeting, (2) those that the Board of Directors
has properly caused to be presented and (3) those brought by a shareholder of
record entitled to vote at the meeting so long as the shareholder has notified
our Corporate Secretary in writing (at our principal office) not later than 120
days before the anniversary of the prior year's proxy statement. The notice must
briefly describe the business to be brought, the reasons and any material
interest the shareholder has in the business; give the shareholder's name and
address; and represent that the shareholder is a holder of record entitled to
vote, or intends to be a holder on the record date (giving the number of shares
and class) and intends to be at the meeting in person or by proxy to present the
business.
We do not expect any matters not listed in the Proxy Statement to come
before the meeting. If any other matter is presented, your signed proxy card
gives the individuals named as proxyholders the authority to vote your shares to
the extent authorized by Rule 14a-4(c) under the Securities Exchange Act of 1934
(the "Exchange Act") (which would include matters that the proxyholders did not
know were to be presented 120 days before the anniversary of last year's proxy
statement).
IS MY VOTE CONFIDENTIAL?
Yes. Only the inspector of election, ChaseMellon Shareholder Services, will
have access to your card.
MAY I REVOKE MY PROXY?
Yes. You may change your mind after you send in your proxy card by
following any of these procedures. To revoke your proxy:
- Send in another signed proxy with a later date; or
- Send a letter revoking your proxy to Knight Ridder's Corporate Secretary
at 50 West San Fernando Street, San Jose, CA 95113; or
- Attend the Annual Meeting and vote in person.
You may revoke your proxy if you have voted by telephone or online by
re-voting in the same manner. Only the last vote that you enter by telephone or
online will be counted. Alternatively, you may attend the Annual Meeting and
vote in person.
WHO COUNTS THE VOTES?
ChaseMellon Shareholder Services will tabulate the votes and act as
inspector of election.
HOW DO I VOTE IN PERSON?
If you attend the Annual Meeting and vote in person, we will give you a
ballot when you arrive.
If your shares are held in the name of your broker, bank or other nominee,
you must bring an account statement or letter from the nominee. The account
statement or letter must show that you were the beneficial owner of the shares
on March 17, 1999.
2
<PAGE> 6
WHAT DOES "BENEFICIAL OWNER" MEAN?
Under the Securities and Exchange Commission's definition, you are a
"beneficial owner" of shares if you have sole or shared voting or investment
power over the shares.
HOW DO EMPLOYEES WHO PARTICIPATE IN THE INVESTMENT SAVINGS 401(K) PLAN VOTE?
If you participate in Knight Ridder's Investment Savings 401(k) Plan, you
will receive a voting instruction card instead of a proxy card. This card will
indicate the number of shares credited to your account as of March 17, 1999.
- If you complete, sign and return the voting instruction card on time, the
plan trustee will vote the shares as you have directed.
- If you do not complete, sign and return the voting instruction card on
time, the plan trustee will vote the shares credited to your account in
the same proportion as those that have been voted by other plan
participants.
WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
Your shares are probably registered in more than one account. Sign and
return all proxy cards to ensure that all your shares are voted. Please have all
of your accounts registered in the same name and address. You may do this by
contacting our transfer agent, ChaseMellon Shareholder Services
(1-800-982-7648).
WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
The nominees receiving the most votes are elected as directors. As a
result, if you withhold your authority to vote for any nominee, your votes will
not count for or against the nominee, nor will a broker "non-vote" affect the
outcome of the election.
Approval of all other proposals requires that the votes cast in favor
exceed the votes cast against. Abstentions and broker non-votes will not affect
the outcome of these proposals.
WHAT CONSTITUTES A QUORUM?
The holders of shares entitled to exercise a majority of the voting power
present in person or by proxy. Abstentions and broker non-votes are included in
determining whether a quorum exists.
WHO IS PAYING FOR THIS SOLICITATION?
The Company will pay for the solicitation of proxies, including D. F.
King's estimated fee of $9,000 plus out-of-pocket expenses. The Company also
will reimburse banks, brokers, custodians, nominees and fiduciaries for their
reasonable charges and expenses to forward our proxy materials to the beneficial
owners of the Company's stock.
HOW DO I OBTAIN A COPY OF THE PROXY STATEMENT, ANNUAL REPORT OR FORM 10-K
REPORT?
If you would like a printed copy, call our Corporate Secretary, Polk
Laffoon, at 408-938-7838, or his assistant, Lorraine Brenner, at 408-938-7857.
You can also leave a message on our literature line at 408-938-7878. You can
also review these documents on the Company's web site at www.knightridder.com.
3
<PAGE> 7
WHERE CAN I FIND VOTING RESULTS?
The Company will publish the voting results in its Form 10-Q for the second
quarter of 1999, which it will file with the SEC in August 1999. You can also
find the results on the Company's Web site at www.knightridder.com.
HOW DO I NOMINATE A DIRECTOR OF KNIGHT RIDDER?
Any shareholder entitled to vote at an annual meeting may nominate
directors so long as the shareholder has notified our Corporate Secretary in
writing (at our principal office) not later than 120 days before the anniversary
of the prior year's proxy statement. The notice must give the shareholder's name
and address and those of the person(s) to be nominated; represent that the
shareholder is a holder of record entitled to vote, or intends to be a holder on
the record date (giving the number of shares and class) and intends to be at the
meeting in person or by proxy to make the nomination(s); describe any
arrangements between the shareholder, the nominee(s) and any other person(s)
(naming the person(s)) pursuant to which the nomination is made; provide any
other information about the nominee(s) that must be disclosed in proxy
solicitations under the Exchange Act; and include the consent of each nominee to
serve as a director if elected.
WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING DUE?
To be considered for inclusion in the proxy statement for the 2000 Annual
Meeting, a shareholder proposal must be received at the Company's principal
office no later than November 29, 1999. As described above, the Company's
by-laws would require the Corporate Secretary to receive notice of all proposals
by this date, whether or not they are included in the proxy statement. In the
unlikely event any proposal received after this date was presented to the annual
meeting, the proxyholders would be able to exercise discretionary authority to
vote your shares to the extent authorized by Rule 14a-4(c) under the Exchange
Act on the proposal.
WHOM SHOULD I CALL IF I HAVE ANY QUESTIONS?
Call our Corporate Secretary, Polk Laffoon, at 408-938-7838.
If you have questions specific to your ownership of Knight Ridder stock,
call our Shareholder Services and Corporate Records department at 305-376-3938.
4
<PAGE> 8
INFORMATION ABOUT KNIGHT RIDDER STOCK OWNERSHIP
This table shows all persons we know to be the beneficial owners of more
than 5% of the Company's common stock as of March 3, 1999.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY PERCENT OF
OWNERS OF COMMON STOCK OWNED CLASS
------------------------------ ------------ ----------
<S> <C> <C>
Southeastern Asset Management, Inc.......................... 10,171,698(1) 13.0
6410 Poplar Avenue, #900
Memphis, TN 38119
Harris Associates L.P....................................... 9,689,038(2) 12.3
2 North LaSalle Street, #500
Chicago, IL 60602
Bear Stearns & Co. Inc...................................... 5,339,636(3) 6.8
245 Park Avenue
New York, NY 10167
Northern Trust Corporation.................................. 4,039,546(4) 5.1
50 South LaSalle Street
Chicago, IL 60675
</TABLE>
- -------------------------
(1) According to a Schedule 13G dated February 5, 1999, Southeastern Asset
Management, Inc., a registered investment advisor, has sole voting power
over 5,730,698 shares, shared voting power over 3,150,000 shares, sole
dispositive power over 6,992,998 shares, and shared dispositive power over
3,150,000 shares.
(2) According to a Schedule 13G dated January 28, 1999, Harris Associates L.P.,
a registered investment advisor, has shared voting power over 9,689,038
shares, sole dispositive power over 2,394,438 shares and shared dispositive
power over 7,294,600 shares.
(3) According to a Schedule 13G dated February 12, 1999, Bear Stearns & Co. Inc.
has sole voting and dispositive power over all shares.
(4) According to a Schedule 13G dated February 9, 1999, Northern Trust
Corporation, a parent holding company, has sole voting power over 3,918,457
shares, shared voting power over 115,889 shares, sole dispositive power over
809,250 shares and shared dispositive power over 189,118 shares.
We also know that as of March 3, 1999, The Walt Disney Company, located at
500 South Buena Vista Street, Burbank, CA 91525, beneficially owned 1,754,930
shares (100%) of the Company's Series B Preferred Stock.
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 share
automatically converts into 10 shares of common stock, subject to adjustment.
Knight Ridder can cause the conversion of shares of Series B Preferred Stock.
There are restrictions on the transfer of these shares.
ITEM 1: ELECTION OF DIRECTORS
HOW IS THE BOARD STRUCTURED?
The Company's Board of Directors is divided into three classes serving
staggered three-year terms. Three directors are to be elected at the 1999 Annual
Meeting, to hold office until the 2002 Annual Meeting of Shareholders.
WHO IS NOMINATED TO STAND FOR ELECTION?
The individuals nominated by the Board of Directors to stand for election
at the 1999 Annual Meeting for three-year terms are James I. Cash, P. Anthony
Ridder and Randall L. Tobias. Jesse Hill, Jr. and Thomas L. Phillips, whose
terms expire at the 1999 Annual Meeting, are not standing for re-election.
Immediately prior to the Annual Meeting, the size of the Board will be reduced
from the current 13 directors to 11. Accordingly, proxyholders cannot vote for
more than three nominees.
The other eight directors who were elected at prior annual meetings will
continue to serve for their respective terms.
5
<PAGE> 9
HOW WILL PROXIES BE VOTED?
Proxies will be voted for the election of the three 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.
NOMINEES FOR ELECTION FOR THREE-YEAR TERMS ENDING 2002
[PHOTO OF JAMES I. CASH, JR.]
JAMES I. CASH, JR., age 51 Director since 1995
James E. Robison Professor of Business Administration
Harvard University, Graduate School of
Business Administration
Member of the Harvard Business School faculty since 1976.
Trustee of Massachusetts General Hospital and the
Massachusetts Software Council. Director of Cambridge
Technology Partners, Chubb Corporation, State Street Bank
and Trust, Tandy Corporation and WinStar Communications,
Inc. B.S., Texas Christian University; M.S. and Ph.D.,
Purdue University.
[PHOTO OF P. ANTHONY RIDDER]
P. ANTHONY RIDDER, age 58 Director since 1987
Chairman of the Board and Chief Executive Officer
Knight Ridder
Chief Executive Officer and Chairman of Knight Ridder since
1995; President of the Company from 1989 to 1995; President
of the Newspaper Division of the Company from 1986 to 1989.
Joined the San Jose Mercury News in 1964; served as General
Manager until 1977 and Publisher from 1977 to 1986.
Previously held various editorial and business positions at
several Company newspapers. Director of the Seattle Times
Company, Associated Press, Newspaper Association of America,
Florida International University Foundation. Member of the
Board of Trustees of the University of Santa Clara. B.A.,
University of Michigan.
[PHOTO OF RANDALL L. TOBIAS]
RANDALL L. TOBIAS, age 57 Director since 1994
Chairman Emeritus
Eli Lilly and Company
Chairman Emeritus of Eli Lilly and Company, a
pharmaceuticals manufacturer; Chairman and Chief Executive
Officer of Eli Lilly and Company from 1993 to 1999. Former
Vice Chairman of the Board of AT&T. Director of Phillips
Petroleum, Inc. and Kimberly-Clark Corporation. Member of
the Business Council. Chairman of the Board of Trustees of
Duke University. Trustee of the Colonial Williamsburg
Foundation. B.S., Indiana University.
6
<PAGE> 10
DIRECTORS CONTINUING IN OFFICE UNTIL 2001
[PHOTO OF JOAN RIDDER CHALLINOR]
JOAN RIDDER CHALLINOR, age 72 Director since 1989
Director of Various Educational Organizations
Presidential appointee to the U.S. National Commission on
Libraries and Information Science. Board member of
educational organizations, including the French-American
Foundation and the Schlesinger Library on the History of
Women at Radcliffe College (chairperson). Member of the
Editorial Advisory Committee of the Adams Papers. B.A., M.A.
and Ph.D., The American University, Washington, D.C.
[PHOTO OF KATHLEEN FOLEY FELDSTEIN]
KATHLEEN FOLEY FELDSTEIN, age 58 Director since 1998
President
Economics Studies, Inc.
President of Economics Studies, Inc., a private consulting
firm, since 1987. Director of BankAmerica Corporation, Bell
South Corporation, Ionics Corporation and John Hancock
Mutual Life Insurance Company. Trustee of the Committee for
Economic Development, the Museum of Fine Arts, Boston and
McLean Hospital. B.A., Radcliffe College; Ph.D.,
Massachusetts Institute of Technology.
[PHOTO OF THOMAS P. GERRITY]
THOMAS P. GERRITY, age 57 Director since 1998
Dean, The Wharton School
Reliance Professor of Management and Private Enterprise
Dean of the Wharton School of the University of Pennsylvania
since 1990. Director of CVS Corporation, IKON Office
Solutions, Inc., Fannie Mae, Reliance Group Holdings, Inc.,
Sunoco and Fiserv, Inc. Trustee of MAS Funds. B.S., M.S.,
and Ph.D., Massachusetts Institute of Technology. Rhodes
Scholar, Oxford University.
[PHOTO OF GONZALO F. VALDES-FAULI]
GONZALO F. VALDES-FAULI, age 52 Director since 1992
Chief Executive Officer, Latin America
Barclays Group
Since 1988, Chief Executive Officer, Latin America of
Barclays Group, an international bank. International banker
with Barclays Bank since 1980. Trustee of the University of
Miami. Director of Blue Cross/Blue Shield of Florida. B.S.,
Spring Hill College; M.A., Thunderbird Graduate School for
International Management.
7
<PAGE> 11
DIRECTORS CONTINUING IN OFFICE UNTIL 2000
[PHOTO OF ALVAH H. CHAPMAN, JR.]
ALVAH H. CHAPMAN, JR., age 78 Director since 1962
Former Chairman of the Board and
Chief Executive Officer of Knight Ridder
Chief Executive Officer of the Company from 1976 to 1988;
Chairman of the Board from 1982 to 1989. Trustee of the John
S. and James L. Knight Foundation. Chairman of Community
Partnership for Homeless, Inc. Founding Chairman of
Community Anti-Drug Coalitions of America. Director of the
Miami Coalition for a Safe and Drug Free Community and
Florida International University Foundation. B.S., The
Citadel; recipient of honorary degrees from The Citadel and
four other universities.
[PHOTO OF BARBARA BARNES HAUPTFUHRER]
BARBARA BARNES HAUPTFUHRER, age 70 Director since 1979
Director of Various Public Companies
Director of The Great Atlantic & Pacific Tea Co.,
Massachusetts Mutual Life Insurance Company, IKON Office
Solutions, Inc. and Raytheon Company. Trustee Emerita of
Wellesley College. Past director of the Ladies Professional
Golf Association. B.A., Wellesley College.
[PHOTO OF M. KENNETH OSHMAN]
M. KENNETH OSHMAN, age 58 Director since 1996
President, Chairman and Chief Executive Officer
Echelon Corporation
President, Chairman and Chief Executive Office of Echelon
Corporation, a developer of control network technology and
products, since 1989. Co-founded Rolm Corporation in 1969;
served as Chief Executive Officer, President and Director
until Rolm's merger with IBM in 1984. Vice president of IBM
from 1984 to 1986. Director of Sun Microsystems and CMC,
Inc. B.A. and B.S., Rice University; M.S. and Ph.D.,
Stanford University.
[PHOTO OF JOHN L. WEINBERG]
JOHN L. WEINBERG, age 74 Director since 1969
Senior Chairman
Goldman, Sachs & Co.
Investment banker with Goldman, Sachs & Co. since 1950;
senior partner and Chairman of the Management Committee of
the Goldman Sachs Group, L.P. and its principal affiliate,
Goldman, Sachs & Co. until 1990; Senior Chairman of The
Goldman Sachs Group, L.P. since 1990. Director of Providian
Financial Corporation and Tricon Global Restaurants. Member
of The Business Council. B.A., Princeton University; M.B.A.,
Harvard University.
8
<PAGE> 12
STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
This table shows the number of shares of the Company's common stock
beneficially owned as of March 3, 1999 by each director and nominee, each
executive officer named in the Summary Compensation Table, and by all directors
and officers as a group. None of these persons beneficially owned more than 1%
of the Company's common stock. All directors and officers of the Company as a
group owned 4.8% of the Company's common stock. Except as noted, each person has
sole voting and investment power over the shares shown in the table.
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
SHARES OTHER THAN SHARES SUBJECT OF COMMON STOCK
NAME OPTION SHARES TO OPTIONS(1) BENEFICIALLY OWNED (1)
---- ----------------- -------------- ----------------------
<S> <C> <C> <C>
James I. Cash........................... 989 667 1,656
Joan Ridder Challinor................... 96,418 667 97,085(2)
Alvah H. Chapman, Jr.................... 224,025 667 224,692(3)
Mary Jean Connors....................... 22,474 132,200 154,674(3)
Kathleen Foley Feldstein................ 371 0 371
Thomas P. Gerrity....................... 1,295 0 1,295
Barbara B. Hauptfuhrer.................. 2,695 667 3,362
Jesse Hill, Jr.......................... 1,971 667 2,638
Ross Jones.............................. 19,769 71,667 91,436
Frank McComas........................... 26,192 53,999 80,191(3)
M. Kenneth Oshman....................... 30,589 667 31,256(4)
Thomas L. Phillips...................... 2,695 667 3,362
P. Anthony Ridder....................... 162,426 349,334 511,760(3)
Steve Rossi............................. 8,567 10,333 18,900
Randall L. Tobias....................... 5,295 667 5,962
Gonzalo F. Valdes-Fauli................. 1,795 667 2,462
John L. Weinberg........................ 28,589 667 29,256
All directors and officers as a group
(34 persons including those named
above)................................ 2,804,346 984,006 3,788,352(5)
</TABLE>
- -------------------------
(1) Shares that officers and directors could acquire by exercising options
within 60 days of March 3, 1999.
(2) Does not include 90,000 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.
(3) Includes shares owned by, or jointly held with, spouses as follows: Mr.
Chapman 15,364 shares owned jointly with Mrs. Chapman; Ms. Connors 2,615
shares owned by Geoffrey Tomb, her spouse; Mr. McComas 2,025 shares owned
jointly with Mrs. McComas; Mr. P. Anthony Ridder 2,752 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, McComas and Ridder share voting and investment
power with their respective spouses as to those shares owned jointly.
(4) Includes 30,000 shares owned by a partnership in which Mr. Oshman has a 97%
income interest. Mr. Oshman 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.
(5) Includes 2,100,782 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Exchange Act 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. Based on its review of these
copies, the Company believes that during 1998 all directors and officers filed
on a timely basis all reports required of them, except that Robert Ingle, a
former Vice President of the Company, filed one late report with respect to two
transactions, and Tally Liu, a Vice President of the Company, filed one late
report with respect to one transaction.
9
<PAGE> 13
BOARD COMMITTEES AND ATTENDANCE
The Board currently has five active standing committees: Nominating,
Compensation, Audit, Finance and Environmental Affairs.
The Nominating Committee reviews the composition of the Board and
recommends changes in its membership as needed. The committee members are
Barbara B. Hauptfuhrer, Chair, Joan Ridder Challinor, Alvah H. Chapman, Jr.,
Thomas P. Gerrity, and M. Kenneth Oshman. The committee met once in 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 stock option plans. The
committee members are John L. Weinberg, Chairman, James I. Cash, Jr., Barbara B.
Hauptfuhrer, Thomas L. Phillips and Randall L. Tobias, all of whom are outside
directors. The committee met five times in 1998.
The Audit Committee 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
on those 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 members of the committee are Jesse Hill, Jr.,
Chairman, Joan Ridder Challinor, Alvah H. Chapman, Jr., Kathleen Foley Feldstein
and Gonzalo F. Valdes-Fauli. The committee met twice in 1998.
The Finance Committee periodically reviews the Company's financial position
and capital structure and makes recommendations to the Board about financings
and other financial matters. The committee members are Thomas L. Phillips,
Chairman, Kathleen Foley Feldstein, Jesse Hill, Jr., M. Kenneth Oshman and
Gonzalo F. Valdes-Fauli. The committee met once in 1998.
The Environmental Affairs Committee oversees the policies of the Company
designed 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 members are James I. Cash, Jr., Chairman, Thomas P. Gerrity, P.
Anthony Ridder and Randall L. Tobias. The committee met once in 1998.
In 1998, the Board of Directors met five times. Each of the nominees for
election at the Annual Meeting and each of the continuing directors attended at
least 75% of the meetings of the Board and of the committees of the Board on
which he or she served.
HOW THE COMPANY COMPENSATES DIRECTORS
Annual Cash Fee
Directors of the Company who are not employees of the Company receive an
annual retainer of $30,000. Half of this retainer is paid in the Company's
common stock, and a director may choose to receive the balance in the Company's
common stock as well.
Meeting Fees
Non-employee directors receive a fee of:
- $1,500 for each Board meeting and meeting of shareholders
- $1,000 for each committee meeting
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<PAGE> 14
Fee for Chairing a Committee
Each non-employee director who chairs a committee receives an annual fee of
$5,000.
Annual Stock Option Awards
Every December, each non-employee director is granted an option to purchase
2,000 shares of the Company's common stock.
The Deferred Compensation Plan
Directors are eligible to enter into individual agreements to defer with
interest all or a portion of the fees payable to them until such later dates as
may be provided in the agreements.
Expenses
The Company reimburses directors for travel and other expenses incurred in
attending meetings.
Other Benefits
Directors who have never been employed by the Company and who were age 65
or older on July 1, 1996 are eligible to receive an annual lifetime benefit
commencing upon retirement from the Board with at least five years of service
(or, if disabled, following at least two years of service). The benefit ranges
from 50% of the annual retainer for directors who retire after five years of
service to 100% of the retainer for 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 program under which they are credited with 600
phantom shares of the Company's common stock annually. Their phantom share
accounts are credited with dividend equivalents and the accounts are paid in
cash in a lump sum upon termination of Board service.
Special Arrangements
Alvah H. Chapman, Jr., a director and former chief executive officer of the
Company, has a retirement agreement which provides for payment of an annual
benefit of $79,900 for life and a death benefit payable to his surviving spouse.
This is in addition to benefits payable under the Company's retirement program
and to fees paid to Mr. Chapman for service as a director.
John C. Fontaine, who retired as president of the Company in 1997 and as a
director of the Company in 1998, is serving on the Company's Executive Committee
until June 30, 1999. The Company will pay Mr. Fontaine $100,000 for services
through that date. Mr. Fontaine also has a retirement agreement that provides
for payment of an annual benefit of $129,548 for life and a death benefit
payable to his surviving spouse. This is in addition to benefits payable to him
under the Company's retirement program.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, Knight Ridder and its subsidiaries engage in
transactions with companies where one of the Company's executive officers or
directors or a member of his or her immediate family has a direct or indirect
interest. All of these transactions, including those described below, are in the
ordinary course of business and at competitive rates and prices.
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<PAGE> 15
Peter B. Ridder, President and Publisher of The Charlotte Observer, is a
brother of P. Anthony Ridder. Par Ridder, Recruitment Sales and Ad Delivery
Manager of Contra Costa Newspapers, Inc., is the son of P. Anthony Ridder. Alvah
H. Chapman, Jr.'s son-in-law, Robert L. Hilton, is Marketing Manager of The
Wichita Eagle. In 1998, the Company paid Peter B. Ridder, Par Ridder and Robert
L. Hilton aggregate compensation of $552,353; $62,134; and $125,933,
respectively.
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.
Until December 31, 1998, Barbara B. Hauptfuhrer was 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 Company's Investment Savings 401(k) Plan.
ITEM 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
We have appointed Ernst & Young LLP, Independent Certified Public
Accountants, to examine the books and accounts of the Company for the year 1999,
and we are asking shareholders to ratify our selection. Ernst & Young LLP has
served as the Company's independent auditors since 1951.
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 from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP.
ITEM 3: AMENDMENT TO EMPLOYEE STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES AVAILABLE FOR GRANT
WHAT IS THE EMPLOYEE STOCK OPTION PLAN?
Under the Company's Employee Stock Option Plan, originally adopted in 1971,
eligible employees of the Company and its subsidiaries may be granted
nonqualified and incentive stock options to purchase shares of the Company's
common stock. The Plan also provides for the grant of stock appreciation rights,
although none have been granted in recent years.
WHY ARE WE MAKING THIS PROPOSAL?
The Employee Stock Option Plan was last amended in 1993 to add 7,000,000
additional shares for options. At the end of 1998, 810,465 shares remained
available for options under the Plan. We believe that the Plan has been an
important factor in attracting and retaining key employees and that continuation
of the stock option program is important for the Company to remain competitive.
As a result, we are proposing an amendment to the Employee Stock Option Plan to
make available for grant an additional 7,000,000 shares of the Company's common
stock.
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<PAGE> 16
WHO IS ELIGIBLE TO RECEIVE AWARDS UNDER THE EMPLOYEE STOCK OPTION PLAN?
Employees of the Company and its subsidiaries (including officers and
directors) are eligible to receive awards under the Plan. Directors who are not
employees, including members of the Compensation Committee, are not eligible.
Under the Plan, no person may receive options and/or stock appreciation rights
for more than 100,000 shares in a calendar year.
HOW IS THE EMPLOYEE STOCK OPTION PLAN ADMINISTERED?
The Compensation Committee of the Board of Directors administers the
Employee 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 reflecting its assessment of which
management-level employees of the Company and its operating companies are
important to the Company's success. In 1998, 413 employees were granted options
covering a total of 1,481,750 shares of the Company's common stock.
WHEN DOES THE EMPLOYEE STOCK OPTION PLAN EXPIRE?
The Employee Stock Option Plan does not have an expiration date, but all
options must expire no later than ten years from the date of grant.
AT WHAT PRICE ARE OPTIONS EXERCISED AND HOW ARE THEY PAID FOR?
An option may be exercised at a price which is not less than the fair
market value (i.e., market price) of the underlying shares on the date the
options are granted. Payments 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.
HOW WOULD OPTIONS BE AFFECTED BY A STOCK SPLIT OR SIMILAR EVENT?
The Employee Stock Option Plan provides for equitable adjustments in the
event of stock dividends, recapitalizations, stock splits, or combinations or
exchanges of shares by merger, consolidation, or other similar events.
CAN THE EMPLOYEE STOCK OPTION PLAN BE AMENDED?
We may amend the Plan, except that we cannot impair the rights of an
optionee or the holder of a stock appreciation right. We also cannot change the
maximum number of shares that may be offered, the minimum purchase price of
shares, the maximum term of any option or the maximum amount that may be
received upon exercise of a stock appreciation right, or allow a stock
appreciation right to be exercised after the expiration of a related option
without the approval of the holders of a majority of the outstanding shares of
the Company's common stock.
WHAT IS THE TAX EFFECT OF AN OPTION EXERCISE?
When an optionee exercises a nonqualified option, the difference between
the exercise price and the fair market value of the shares on the date of
exercise will be taxable as ordinary income to the optionee. Any gain or loss
recognized when the optionee later disposes of the shares will generally be
capital gain or loss. Upon the exercise of a stock appreciation right, the
amount of cash or the fair market value of the shares received will be taxable
as ordinary income.
An optionee will not recognize any income upon the exercise of an incentive
stock option during his or her employment with the Company or within three
months after termination of employment (or longer in the event of termination by
reason of death or
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<PAGE> 17
disability). Assuming that the optionee does not dispose of the shares received
for two years after the incentive stock option was granted and one year after
the receipt of shares upon exercise of the option, the optionee will recognize
capital gain or loss measured by the difference between the exercise price and
the amount received for the shares at the time of disposition. If an optionee
disposes of shares acquired upon exercise of an incentive stock option earlier,
the optionee may recognize ordinary income.
The Company generally 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 or stock appreciation right recognizes ordinary income.
In addition, Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") contains special rules on the Federal income tax
deductibility of compensation paid to the Company's chief executive officer and
to the four other most highly compensated executive officers. The general rule
is that annual compensation paid to any of these will be deductible only to the
extent that it does not exceed $1,000,000. However, the Company can preserve the
deductibility of certain compensation in excess of $1,000,000 if it complies
with conditions imposed by Section 162(m), including the establishment of a
maximum number of shares with respect to which options and stock appreciation
rights may be granted to any one employee during one year. The Employee Stock
Option Plan has been designed to permit the Company to receive a Federal income
tax exemption in connection with such awards.
On March 1, 1999, the closing price of the Company's common stock on the
New York Stock Exchange was $50.125.
NEW PLAN BENEFITS
Because awards under the Employee Stock Option Plan are discretionary,
future awards under the Plan are not determinable. However, options to purchase
shares of the Company's common stock were granted under the Plan in 1998 to the
following persons and groups:
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF SHARES
NAME AND PRINCIPAL POSITION OF OPTIONS(1) SUBJECT TO OPTIONS(2)
--------------------------- ------------- ---------------------
<S> <C> <C>
P. Anthony Ridder........................................... $ 40,000 80,000
Chairman and CEO
Ross Jones.................................................. 22,500 45,000
Senior Vice President/Finance & CFO
Frank McComas............................................... 22,500 45,000
Senior Vice President/Operations
Robert Woodworth............................................ N/A 0
Vice President
Mary Jean Connors........................................... 22,500 45,000
Senior Vice President/Human Resources
Steve Rossi................................................. 35,000 70,000
Senior Vice President/Operations
All Executive Officers as a Group........................... 207,000 414,000
All Non-Executive Directors as a Group(3)................... N/A 0
All Non-Executive Officers as a Group....................... 11,500 23,000
</TABLE>
- -------------------------
(1) Based on the closing price of the Company's common stock on the New York
Stock Exchange on March 1, 1999.
(2) Options were granted at an exercise price of 100% of the market price of the
underlying shares of the Company's common stock on the date of grant, vest
in three equal installments over a three-year period, and expire no later
than ten years from the date of grant.
(3) Non-employees are not eligible to receive options under the Employee Stock
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN.
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<PAGE> 18
ITEM 4: AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF
SHARES AVAILABLE FOR PURCHASE
WHAT IS THE EMPLOYEE STOCK PURCHASE PLAN?
The Company's Employee Stock Purchase Plan, which was originally adopted in
1969, gives eligible employees of the Company and its subsidiaries an
opportunity to purchase the Company's common stock at a 15% discount, thereby
increasing their interest in the growth and success of the Company and
encouraging them to remain employed by the Company. The Plan is intended to
qualify under Section 423 of the Code.
WHY ARE WE MAKING THIS PROPOSAL?
At the end of 1998, 1,071,507 shares remained available for purchase under
the Employee Stock Purchase Plan. As a result, we are proposing an amendment to
the Plan to make available for purchase an additional 1,000,000 shares of the
Company's common stock. The shareholders last approved adding shares to the Plan
in 1993, when an additional 3,000,000 shares were authorized.
WHO CAN PARTICIPATE IN THE EMPLOYEE STOCK PURCHASE PLAN?
Most employees of the Company and its participating subsidiaries are
eligible to participate in the Plan provided they have worked for the Company or
a participating subsidiary for a year. However, an employee is not eligible if
he or she owns or has the right to acquire five percent or more of the voting
stock of the Company or of any subsidiary of the Company. Also, an employee is
not eligible if he or she normally is not scheduled to work more than five
months per calendar year or more than 20 hours per week. Directors who are not
employees are not eligible to participate in the Plan. Approximately 4,260
employees currently are participating in the Plan.
HOW DOES THE EMPLOYEE STOCK PURCHASE PLAN WORK?
At the beginning of each three-month purchase period, eligible employees
have the right to purchase Company common stock through payroll deductions
ranging from 1% to 10% of their base pay, commissions, overtime and (at the
employee's election) bonuses during the purchase period. At the end of the
purchase period, a participant's accumulated payroll deductions are used to
purchase the Company's common stock at 85% of its then fair market value. The
employee immediately becomes the vested owner of the shares purchased, but
acquires the rights of a shareholder only upon the issuance of the shares. No
employee will be granted a right to purchase shares of common stock with a fair
market value of more than $25,000 in any calendar year (based on the fair market
value at the time the right is granted). Purchase periods begin on September 1,
December 1, March 1 and June 1 or on other dates as the Company's Employee Stock
Purchase Plan Committee may provide.
CAN THE RIGHT TO PARTICIPATE IN THE EMPLOYEE STOCK PURCHASE PLAN BE TRANSFERRED?
No. The rights of each Plan participant are non-transferable except by will
or by descent and distribution, and cease as of the date of termination of
employment for any reason other than death or retirement. In the event of death
or retirement, the employee or his or her personal representative may, within
three months after such termination, receive the number of full shares the
employee would have been entitled to receive.
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<PAGE> 19
CAN THE EMPLOYEE STOCK PURCHASE PLAN BE AMENDED?
We may amend the Plan, except that we cannot change the maximum number of
shares that may be offered, the purchase price or the class of employees
eligible to participate under the Plan without the approval of the holders of a
majority of the outstanding shares of the Company's common stock. In the event
of certain changes affecting the Company's common stock (such as stock splits
and similar events), the number of shares available for purchase under the Plan
is adjusted.
WHAT ARE THE TAX CONSEQUENCES OF EMPLOYEE STOCK PURCHASE PLAN PARTICIPATION?
The granting of the right to purchase shares under the Employee Stock
Purchase Plan has no immediate tax consequence to either the Company or the
participating employee. For tax purposes, employees do not recognize income at
the time they purchase stock under the Plan. If the employee does not dispose of
the stock acquired within two years from the date the purchase right was granted
and one year from the date the shares were transferred, upon subsequent
disposition of the shares the employee will recognize ordinary income to the
extent of the lesser of (a) the amount by which the fair market value (i.e., the
market price) of the shares at the time the purchase right was granted exceeded
the purchase price or (b) the amount by which the fair market value of shares at
the time of their disposition exceeded the purchase price. Any further gain will
be taxed as a capital gain. The Company will not be allowed an income tax
deduction for shares transferred to an employee under the Plan if those shares
are not held for the required period.
If the employee disposes of the stock within the one- and/or two-year
periods described above, the employee will recognize ordinary income to the
extent the fair market value of the shares on the date of purchase exceeded the
purchase price. Any further gain will be taxed as a capital gain. The Company
will be allowed an income tax deduction to the extent the employee recognizes
ordinary income in such a disposition.
On March 1, 1999, the closing price of the Company's common stock on the
New York Stock Exchange was $50.125.
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<PAGE> 20
NEW PLAN BENEFITS
Because purchases under the Employee Stock Purchase Plan are voluntary,
future benefits under the Plan are not determinable. However, shares of the
Company's common stock were purchased during purchase periods in 1998 under the
Plan by the following persons and groups:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND PRINCIPAL POSITION PURCHASED
--------------------------- ----------------
<S> <C>
P. Anthony Ridder........................................... 0
Chairman and CEO
Ross Jones.................................................. 470
Senior Vice President/Finance & CFO
Frank McComas............................................... 470
Senior Vice President/Operations
Robert Woodworth............................................ 455
Vice President
Mary Jean Connors........................................... 496
Senior Vice President/Human Resources
Steve Rossi................................................. 460
Senior Vice President/Operations
All Executive Officers as a Group........................... 7,025
All Non-Executive Directors as a Group(1)................... 0
All Non-Executive Officers as a Group....................... 1,295
</TABLE>
- -------------------------
(1) Non-employees are not eligible to participate in the Employee Stock Purchase
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN.
ITEM 5: SHAREHOLDER PROPOSAL
On behalf of the Newspaper Guild, Robert Laramie, 36 Revere Avenue,
Moorestown, New Jersey 08057, owner of 590 shares of common stock, has informed
the Company that he intends to present the following resolution at the Annual
Meeting and has submitted the following statement of his reasons.
RESOLVED: That the shareholders of Knight Ridder Inc. urge the Board of
Directors to adopt an executive compensation policy that all future stock
options grants shall be performance-based. For purposes of this resolution,
performance-based stock options are defined as either: (1) stock options
with the exercise price indexed to an appropriate S&P 500 peer group index
(such as the index used in the Company's annual proxy statement); or (2)
premium-priced stock options, which set the exercise price of the option
above the current market value of the stock.
SUPPORTING STATEMENT: Compensation policies for senior executives should
provide challenging performance objectives and serve to motivate executives
to achieve long-term shareholder value. However, stock options grants
without performance-based targets can excessively compensate executives for
stock increases due solely to a general stock market rise, rather than
improved or superior performance. By tying stock option grants to
performance goals, such as specific stock price targets or exceeding group
indexes, senior executives will be motivated to achieve superior
performance, rather than merely meeting the market average. In fact, Knight
Ridder stock has consistently under performed its peers over the five-year
period between 1992 and 1997.
Compensation tied to performance is particularly important at Knight Ridder
because of the exorbitant stock option grants given to top executives. For
example, the Board agreed to give Mr. Ridder options in 1997 for the
purchase of 80,000 shares of Knight
17
<PAGE> 21
Ridder stock. In 1996 and 1995, Mr. Ridder was awarded options for the
purchase of an additional 70,000 shares of Knight Ridder stock in each
year. By the end of 1997, Mr. Ridder owned options to purchase more than
one-half million shares that were valued at more than $8.7 million.
Stock options were granted to senior executives in addition to salary and
bonuses that totaled $1.5 million for Mr. Ridder in 1997. Also, Mr. Ridder
realized another $1.9 million in 1997 from exercising 90,000 stock options
previously awarded to him.
Stock options are supposed to align the interests of management with those
of the stockholders. But when the options are numbered in the tens of
thousands, a relatively small increase in the price of the stock could
permit Mr. Ridder to reap millions of dollars, without providing material
benefits to the stockholders.
In response to shareholder concern about the lack of strong
performance-based forms of executive compensation, companies are
increasingly adopting stock option plans that require premium pricing or
links to market indexes. According to Executive Compensation Reports, about
16% of the biggest U.S. businesses are granting options with attached
performance targets, up substantially from 7% in 1993. Masco, DuPont,
Monsanto and Bank of America have recently adopted performance-based stock
option plans. Prominent compensation firms, including Pearl Meyer, have
also endorsed the concept.
Shareholders of Knight Ridder will be best served if future stock option
grants are performance-based, motivating senior executives to achieve
superior shareholder returns. For these reasons, we urge a vote FOR this
resolution.
MANAGEMENT'S RESPONSE
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE
SHAREHOLDER PROPOSAL.
We believe that the Company's current executive compensation program is
appropriate for the Company, and that our current policy of granting options
which are exercisable at the market price on the date of the grant is an
appropriate and widely accepted method of providing incentive compensation to
executives.
Under the Company's Employee Stock Option Plan, an executive's compensation
is directly dependent on the performance of the Company's common stock. Company
executives realize no gain on the stock options without an increase in the price
of the Company's common stock that benefits all shareholders. The issuance of
stock options also facilitates stock ownership by Company executives, further
aligning their interests with those of the Company's shareholders.
We strongly believe in the importance of aligning the interests of
executives with those of shareholders. To this end, the Company recently adopted
a policy that requires each executive to own shares at least equal to a multiple
of salary depending upon his or her position. By this policy and by the granting
of stock options, an executive is strongly motivated to increase the share price
of the Company's common stock.
The Compensation Committee of the Board of Directors annually compares
senior executive compensation with compensation levels at similar companies to
assure the appropriateness from a competitive standpoint of base salary, bonus
and long-term compensation, including stock options. We believe that the Company
must offer a competitive compensation program to attract and retain the most
qualified executives to manage the Company's business. Many companies with which
the Company competes
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<PAGE> 22
offer compensation in the form of stock options. We believe that nearly all
comparable companies offer stock options that are exercisable at the market
price on the date of the grant, as is currently the case at the Company. If the
Company implemented a premium-priced stock option or market-indexed stock option
plan, as called for in the shareholder proposal, its stock option program would
compare less favorably to the stock option programs of other comparable
companies, and the Company would be at a competitive disadvantage in attracting
and retaining the most qualified executives. To offset such a less favorable
stock option plan, the Company might have to increase the cash portion of its
executive compensation package, thereby reducing the connection between
executive compensation and shareholder value. Thus, we believe that the
shareholder proposal could, in fact, be contrary to the shareholders' interests.
We believe that the Compensation Committee should have available to it
different ways of compensating executives. One of these ways is the Employee
Stock Option Plan. The Company also compensates executives through its Long-Term
Incentive Plan, which does require that performance objectives be met. Stock
awards to executives are contingent on and related directly to the return
received by shareholders on their investment in the Company's common stock over
a three-year period compared to the return received by holders of stock in the
other companies included in the Standard & Poor's Publishing/ Newspapers Index.
In sum, we believe that the Company's existing executive compensation
policy aligns executive incentives with the long-term interests of its
shareholders. We also believe that the shareholder proposal would undermine the
long-term interests of the shareholders by adversely affecting the Company's
ability to attract and retain the most qualified executives needed to manage its
business.
FOR THESE REASONS, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE
SHAREHOLDER PROPOSAL.
HOW THE COMPANY COMPENSATES EXECUTIVE OFFICERS
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
The Compensation Committee of the Board administers the Company's executive
compensation program. The members of the Committee are independent, non-employee
directors. The Compensation Committee has furnished the following report on
executive compensation for 1998:
WHAT IS OUR EXECUTIVE COMPENSATION PHILOSOPHY?
We firmly believe that the interests of the Company and its employees are
inseparable. In support of that principle, the Compensation Committee has
designed the Company's executive compensation program to support what we believe
to be an appropriate relationship between executive pay and the creation of
shareholder value. To promote Company performance, we link a significant portion
of executive compensation to the Company's operating results. The objectives of
our program are:
- To align the interests of executives with the long-term interests of
shareholders through awards whose value over time depends upon the
performance of the Company's common stock;
- To provide compensation comparable to that offered by other companies in
our industry, enabling the Company to attract, retain and motivate
talented executives who are critical to the Company's long-term success;
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<PAGE> 23
- To motivate key executives to achieve strategic business initiatives and
to reward them for their achievement; and
- To set guidelines for substantial stock ownership by executives.
WHAT ARE THE ELEMENTS OF EXECUTIVE COMPENSATION?
We compensate our executives through base salary, bonus paid in cash and
long-term incentive awards under the Employee Stock Option Plan and the
Long-Term Incentive Plan. In this way, a significant portion of the value
ultimately realized by the executives will depend upon the Company's performance
and can be considered "at risk."
Our executives participate in a retirement plan, health plan, savings
incentive (401(k)) plan and other voluntary benefit plans that we make available
to all employees generally. Among these are relocation benefits, such as
temporary living expenses. One-time relocation bonuses are sometimes provided to
employees to assist with miscellaneous moving expenses and help compensate for
housing differentials, as was the case with the relocation benefits provided to
employees who moved as part of the relocation of Knight Ridder's corporate
offices from Miami to San Jose in 1998. We also provide our executives with a
voluntary deferred compensation arrangement, which is similar to those typically
offered to executives by the companies with which we compete for talent.
HOW DID WE DETERMINE BASE SALARIES FOR 1998?
In General
The Compensation Committee establishes senior executive salaries based on
our review of the executive's performance and compensation history, and
information on salary levels at comparable companies. We annually review the
base salaries of our executives to determine if adjustments are appropriate to
ensure that their salaries are competitive and that they reflect any changes in
the executive's responsibilities at the Company.
For executives other than the Chief Executive Officer, we also consider the
recommendations of Mr. Ridder, the Company's Chairman and Chief Executive
Officer.
Comparative Data
In conducting our review for 1998, we considered comparative data prepared
by both the Company's senior human resources officer and by SCA Consulting, the
Compensation Committee's outside consultant for executive compensation.
The comparison group we chose for compensation purposes (the "Comparison
Group") consisted of our competitors in the newspaper industry. The index we
chose for our performance graph was the S&P Publishing/Newspapers Index. This
was the publicly available index that we found best corresponded to our business
and included the greatest number of companies in the Comparison Group. The
performance graph follows this Report.
We obtained data for the Comparison Group from a number of sources,
including proxy statements, publicly available information and surveys by
consulting firms. We used this comparative data as a benchmark in reaching our
own determination of what were appropriate salary levels for the Company's
executives.
Base Salaries of Executive Officers
Data for the Comparison Group supported an annual increase in base salaries
for 1998. Except in the case of Mr. Ridder, who received no adjustment, cost of
living adjustments were made to the base salaries of executives who relocated to
San Jose from
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<PAGE> 24
Miami as part of the corporate relocation. We believe that the base salaries of
our executives were generally near the median for salaries of executives in the
Comparison Group. The base salary for each of the named executive officers is
reported in the Summary Compensation Table that follows this Report.
Base Salary of the Chief Executive Officer
The Committee also increased the base salary of Mr. Ridder effective March
1, 1998 to $815,000. We believe that Mr. Ridder's base salary in 1998 was near
the median for salaries of chief executive officers in the Comparison Group.
HOW DID WE DETERMINE BONUSES FOR 1998?
Annual Incentive Compensation Plan
We award cash bonuses under, or taking into consideration, the Company's
Annual Incentive Compensation Plan. Under that 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 1998 to specific nonfinancial objectives for the Company that were
established at the beginning of 1998. Sixty-five percent of the bonus potential
was tied to financial performance. (For corporate participants, it was the
financial performance of the Company on a consolidated basis compared to budget;
and for newspaper participants, it was the financial performance of the
individual newspaper compared to its budget.) For 1998, the measure of financial
performance was shareholder value added ("SVA"), which is the increase in
operating profit after taxes after deducting the cost of capital.
Under the Company's Annual Incentive Compensation Plan, if the Company (or
newspaper) meets its financial budget, the executive receives 100% of that part
(65%) of the potential bonus tied to financial performance. If SVA is above or
below budget, then the aggregate of the financial awards paid to participants at
that unit will equal their target awards plus or minus a percentage of the
amount by which actual SVA exceeds or falls below budgeted SVA. The "standard"
percentages of SVA above and below budget that will be shared with participants
are about 15% for participants whose award is tied to the performance of their
individual newspapers, and 5% for corporate participants whose award is based on
the performance of the Company on a consolidated basis. In 1998, the Plan was
revised to put greater focus on strategic management and SVA.
Plan participants may elect to defer any portion of their bonus to a later
year.
Bonuses for Executive Officers
The Committee awarded bonus compensation for 1998 to each executive (other
than Mr. Ridder) based on the Company's SVA as compared to budget and upon an
assessment of the Company's performance against the nonfinancial goals on a
consolidated basis. The bonus for each of the named executive officers is set
forth in the Summary Compensation Table that follows this Report.
Bonus for the Chief Executive Officer
In 1998, we awarded Mr. Ridder a bonus of $415,242. Although Mr. Ridder is
not a participant in the Company's Annual Incentive Compensation Plan, we have
for a number of years, including 1998, considered in part the criteria that
would have been applicable to him had he been a Plan participant. Beginning in
1996, based on advice by SCA Consulting, we set Mr. Ridder's bonus target at 70%
of salary to provide a more
21
<PAGE> 25
competitive award. The maximum bonus Mr. Ridder could have received under the
Plan in light of the level of Company performance in 1998 would have been
$415,242.
WHAT IS OUR POSITION ON THE DEDUCTIBILITY OF EXECUTIVE COMPENSATION?
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 $1,000,000 in any year. It is the Company's policy that
executives should defer payment of that portion of cash compensation which might
exceed the $1,000,000 limit, to the extent such amounts can be estimated before
the beginning of the year, when such deferral elections are required to be made.
As a result, payment of a significant portion of Mr. Ridder's 1998 bonus award
will be deferred.
WHAT WERE THE LONG-TERM INCENTIVE AWARDS IN 1998?
In General
Long-term incentives consist of stock options and Long-Term Incentive Plan
awards. Both types of awards serve to focus executive attention on the long-term
performance of the business.
1998 Stock Option Grants
After reviewing the Company's financial performance and competitive
analysis by SCA Consulting, in 1998 we provided long-term incentive awards for
executives by granting stock options under the Company's Employee Stock Option
Plan. We believe the number of the stock options awarded to each of the senior
executives (including Mr. Ridder) was at the median of recent awards given by
companies within the Comparison Group. The Employee Stock Option Plan is
described under Item 3 of this Proxy Statement. The number of stock options
awarded to each of the named executive officers is set forth in the Stock Option
Grants table that follows this Report.
Long-Term Incentive Plan
At the 1997 Annual Meeting, shareholders approved a Long-Term Incentive
Plan, the goal of which is to consistently deliver a total shareholder return at
least in the top half of the companies in the Comparison Group. Under the Plan,
an executive's right to receive a stock award is 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 ending December 31, 1999, compared to
the return received by holders of stock in the other companies that comprise the
S&P Publishing/Newspapers Index. Had the performance period ended on December
31, 1998, no shares would have vested. A description of the Long-Term Incentive
Plan follows this Report. All of the named executive officers (except Mr.
Woodworth who resigned as an employee) participate in the Plan.
WHAT ARE THE COMPANY'S STOCK OWNERSHIP GUIDELINES?
To support the Company's desire to increase management stock ownership, the
Company has established stock ownership guidelines for all of the Company's
executive officers and certain other key employees. The guidelines set what we
believe is an appropriate level of ownership of Knight Ridder common stock as a
multiple of the executive's annual base salary (based on the market value of the
stock). The multiple ranges from a high of four times base salary (in the case
of Mr. Ridder) to a low of one times base salary (in the case of corporate vice
presidents and publishers of the Company's largest newspapers).
22
<PAGE> 26
The Compensation Committee believes these guidelines have the positive
effect of further aligning the interests of the executives and key employees
with all shareholders.
THE COMPENSATION COMMITTEE
John L. Weinberg, Chairman
James I. Cash, Jr.
Barbara Barnes Hauptfuhrer
Thomas L. Phillips
Randall L. Tobias
This table shows the compensation during the past three years of the chief
executive officer and each of the other five most highly compensated senior
executive officers in 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------ -------------
STOCK ALL
OPTION OTHER
SALARY BONUS AWARDS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) (# OF SHARES) ($)(3)
--------------------------- ---- ------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
P. Anthony Ridder.......................... 1998 810,000 415,242 80,000 614,448
Chairman and CEO 1997 775,000 760,000 80,000 14,762
1996 708,333 695,000 70,000 13,612
Ross Jones................................. 1998 491,250 179,883 45,000 610,145
Senior Vice President/Finance 1997 448,750 318,613 45,000 10,326
& CFO 1996 412,583 250,696 34,000 7,777
Frank McComas.............................. 1998 492,083 180,188 45,000 607,927
Senior Vice President/ 1997 441,667 297,545 45,000 8,315
Operations 1996 332,917 188,510 33,000 7,096
Robert Woodworth........................... 1998 447,500 0 0 9,679
Vice President 1997 254,278 450,000 80,000 4,068
Mary Jean Connors.......................... 1998 416,250 152,420 45,000 605,962
Senior Vice President/ 1997 362,500 256,423 45,000 6,490
Human Resources 1996 306,250 181,530 33,000 5,335
Steve Rossi................................ 1998 268,750 189,801 70,000 580,192
Senior Vice President/Operations
</TABLE>
- -------------------------
(1) Mr. Rossi became a Senior Vice President of the Company on December 1, 1998
at an annual salary of $450,000. He was previously Executive Vice President
and General Manager of Philadelphia Newspapers, Inc., a subsidiary of the
Company.
(2) Mr. Woodworth became Vice President of the Company on June 1, 1997 and
resigned on December 15, 1998. The $450,000 bonus shown for Mr. Woodworth in
1997 includes $200,000 paid to Mr. Woodworth when he joined the Company.
(3) In connection with the relocation of the Company's headquarters in 1998,
each employee (including the executives named above, except Mr. Woodworth)
received a one-time payment equal to one year's salary, subject to a minimum
payment of $70,000 and a maximum payment of $300,000, plus tax
reimbursement. Included in the 1998 amounts are one-time relocation payments
of $574,163 each to Messrs. Ridder, Jones, McComas and Rossi and Ms.
Connors, of which $300,000 was a relocation bonus and $274,163 was a related
tax reimbursement. Also included in the 1998 amounts are incidental
relocation expense allowances of $25,000 each to Messrs. Ridder, Jones and
McComas and Ms. Connors. Included for each year are 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 1998 were: Mr. Ridder, $4,800; Mr. Jones, $4,800;
Mr. McComas, $4,800; Mr. Woodworth, $4,800; Ms. Connors, $4,800; and Mr.
Rossi, $4,800. The life insurance amounts in 1998 were: Mr. Ridder, $10,485;
Mr. Jones, $6,182; Mr. McComas, $3,964; Mr. Woodworth, $4,879; Ms. Connors,
$1,999; and Mr. Rossi, $1,229.
23
<PAGE> 27
LONG-TERM INCENTIVE PROGRAMS
The Company's long-term incentive programs consist of the Employee Stock
Option Plan and the Long-Term Incentive Plan.
Employee Stock Option Plan. Under the terms of the Plan, the Compensation
Committee may grant executive officers and other key employees options to
purchase shares of the Company's common stock at the fair market value (i.e.,
market price) at the option grant date. The options granted in 1998 vest in
three equal installments over a three-year period from the date of grant and
expire in 10 years.
The Plan is designed to permit those executives who contribute to the
performance of the Company and the market price of its common stock to benefit
along with shareholders in increases in the value of the Company's common stock.
This table shows information on stock options granted in 1998 to each of
the executive officers named in the Summary Compensation Table:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED FISCAL YEAR ($/SHARE) DATE ($)
---- ---------- ------------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
P. Anthony Ridder..................... 80,000 5.3 49.625 12-Dec-2008 926,400
Ross Jones............................ 45,000 2.98 49.625 12-Dec-2008 521,000
Frank McComas......................... 45,000 2.98 49.625 12-Dec-2008 521,000
Robert Woodworth...................... 0 0 -- -- --
Mary Jean Connors..................... 45,000 2.98 49.625 12-Dec-2008 521,000
Steve Rossi........................... 70,000(1) 4.72 49.625 12-Dec-2008 810,600
</TABLE>
- -------------------------
(1) Options to purchase 25,000 shares of the Company's common stock were granted
to Mr. Rossi in connection with his becoming a Senior Vice President of the
Company in December 1998.
The "grant date present value" shown is a hypothetical value based upon
application of the Black-Scholes model. This model 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 option -- 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 .171; risk-free rate of return of 4.7%; dividend yield of 1.61%;
and vest over a three-year period from the date of grant.
The stock options are not transferable. The Black-Scholes estimate
notwithstanding, an option granted under the Employee Stock Option Plan will
have value only if and to the extent the optionee exercises the option at a time
when the market price of the Company's common stock rises above the market price
on the date the option was granted.
24
<PAGE> 28
This table shows information on stock options exercised in 1998 by the
executive officers named in the Summary Compensation Table, as well as the
number of unexercised options held by them at the end of the year:
AGGREGATE STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE (#) ($)(1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- --------- --------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. Anthony Ridder.................... 62,000 2,133,586 349,334 / 156,666 6,816,041 / 363,330
Ross Jones........................... 68,000 1,984,487 71,667 / 86,333 887,546 / 183,767
Frank McComas........................ 0 0 53,999 / 86,000 613,286 / 179,938
Robert Woodworth..................... 0 0 11,667 / 0 9,479 / 0
Mary Jean Connors.................... 0 0 132,200 / 86,000 2,452,411 / 179,938
Steve Rossi.......................... 12,334 249,392 10,333 / 81,333 93,642 / 121,455
</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 Plan, which covers the three-year period from
January 1, 1997 to December 31, 1999, is intended to motivate and reward
executives for achieving total shareholder return ("TSR") equal to or greater
than the other companies in the S&P Newspaper Index. At the start of the
performance period, we granted each participant restricted shares of the
Company's common stock with a value (based on the average closing price in
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. Later-added
participants receive pro-rated grants based on the amount of time remaining in
the performance period.
None of the shares will vest unless the Company's TSR is positive and at
least equal to the median TSR of the other companies in the S&P Newspaper Index
during the performance period. The percentage of shares vesting ranges from 15%
if the Company's TSR is equal to the peer group median to 100% if the Company's
TSR is 5% or more above the peer group median.
When the shares vest, the Company will pay participants (in either cash or
additional shares) the amount they would have received if dividends had been
paid to them on their vested shares between the date of grant and December 31,
1999 and the dividends reinvested in the Company's common stock.
25
<PAGE> 29
This table shows information on the restricted stock awards granted to the
executives named in the Summary Compensation Table:
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYMENTS
-------------------------------------------------------------------------
MINIMUM # OF NUMBER OF
UNVESTED PARTICIPATION SHARES PAYABLE MAXIMUM
NAME SHARES GRANTED(1) PERIOD UNDER THE PLAN(2) # SHARES(3)
---- ----------------- ------------------- ----------------- -----------
<S> <C> <C> <C> <C>
P. Anthony Ridder............. 0 0 0 0
Ross Jones.................... 0 0 0 0
Frank McComas................. 0 0 0 0
Robert Woodworth.............. 0 0 0 0
Mary Jean Connors............. 0 0 0 0
Steve Rossi................... 6,985 12/1/98 - 12/31/99 0 7,094
</TABLE>
- -------------------------
(1) The number of shares granted to Mr. Rossi is based on the average closing
price of the stock on the New York Stock Exchange during December 1998,
which was $52.425.
(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/Newspapers Index. Had the performance period
ended on December 31, 1998, 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 median of the other companies in the
S&P Publishing/Newspapers Index.
OTHER BENEFITS
This table shows the annual benefits payable as a straight-life annuity
under the Company's pension plan to an officer retiring in 1998 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 reduction
for Social Security or other benefits.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
------------ ------- ------- ------- ------- ------- -------
<S> <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 executive officers of the Company are
shown in the Summary Compensation Table. As of the end of 1998, Mr. Ridder had
37 years of service with the Company; Mr. Jones, 6; Mr. McComas, 29; Ms.
Connors, 19; and Mr. Rossi, 11.
No officer of the Company has an employment agreement. The Company has
agreements with its executive officers, including those named in the Summary
Compensation Table, that entitle each executive to receive a lump sum cash
severance payment equal to three times the executive's annual salary and bonus
if, after a change in control of the Company (as defined in the agreements), the
Company terminates the executive's employment or the executive resigns because
of a reduction in position, salary or benefits.
26
<PAGE> 30
PERFORMANCE OF KNIGHT RIDDER COMMON STOCK
The following graph compares the cumulative total return on the Company's
common 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, 1993 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, 1993 -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Knight-Ridder, Inc. 100.00 86.91 110.33 137.27 190.10
S & P 500 100.00 101.37 139.51 172.00 229.60
S & P Publishing/Newspapers 100.00 92.70 116.71 144.67 227.24
<CAPTION>
1998
------
<S> <C>
Knight-Ridder, Inc. 189.66
S & P 500 295.72
S & P Publishing/Newspapers 250.45
</TABLE>
27
<PAGE> 31
KNIGHT-RIDDER, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints P. Anthony Ridder, Ross Jones and Karen
Stevenson, or any one of them, each with full power of substitution, to vote all
the shares the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Knight-Ridder, Inc. to be held at the Fairmont Hotel, 170 South
Market Street, San Jose, California at 9:30 a.m. on May 12, 1999 and any
adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION, FOR ITEMS 2, 3
AND 4, AND AGAINST ITEM 5 AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES, FOR ITEMS 2, 3 AND 4
AND AGAINST ITEM 5.
(THIS PROXY IS CONTINUED ON REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 32
<TABLE>
<CAPTION>
<S> <C> <C>
Please mark
your vote as [X]
indicated in
the example
1. Election of directors for a term ending in 2002: Nominees: 01 James I. Cash, 2. Ratify the appointment
02 P. Anthony Ridder of Ernst & Young LLP
FOR all nominees WITHHOLD and 03 Randall L. Tobias
listed to the right AUTHORITY To withhold authority to vote for any
(except as marked to vote for all nominees individual nominee, write the name of
to the contrary) listed to the right that nominee in the space below.
FOR AGAINST ABSTAIN
[ ] [ ] --------------------------------------- [ ] [ ] [ ]
3. Amendment of the Employee Stock Option Plan to 4. Amendment of the Employee Stock Purchase 5. Shareholder proposal
increase the number of shares of common stock Plan to increase the number of shares of concerning executive
available for grant common stock available for purchase compensation policy
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
I will attend the annual meeting in
San Jose, California
YES NO
[ ] [ ]
Signature ___________________________________________ Signature ___________________________________________ Date ___________________
NOTE: Please sign exactly as your name or names appear(s) hereon. For joint accounts, each owner should sign. When signing as
officer, executor, administrator, attorney, trustee or guardian, or in any other legal capacity please give your full title(s)
under signature(s).
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
[TELEPHONE [COMPUTER
GRAPHIC] VOTE BY TELEPHONE OR INTERNET GRAPHIC]
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
Knight Ridder encourages you to take advantage of the new and convenient way to vote you shares. If voting by proxy, this year you
may vote by mail, or choose one of the two methods described below. Your telephone or internet vote authorizes the named proxies
to vote your shares in the same manner as if you marked, signed, and returned your proxy card. To vote by telephone or internet,
read the accompanying proxy statement and then follow these easy steps:
1. To vote by telephone call toll free on a touch tone telephone 1-800-840-1208 - anytime.
Enter the 11 digit control number located in the lower right hand corner.
OPTION #1: To vote as the Board of Directors recommends on ALL Items: Press 1.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
OPTION #2: If you choose to vote on each item separately, press 0. You will hear three instructions.
Item 1: To vote FOR ALL nominees, press 1: to WITHHOLD FOR ALL nominees, press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions.
Item 2: To vote FOR, press 1: AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for the Items 3, 4 and 5.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
OR
2. TO VOTE BY INTERNET: FOLLOW THE INSTRUCTIONS AT OUR INTERNET ADDRESS: http://www.eproxy.com/KRI
OR
3. TO VOTE BY PROXY: MARK, SIGN AND DATE YOUR PROXY CARD AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTED BY PHONE OR INTERNET.
CALL ** TOLL FREE ** ON A TOUCH TONE TELEPHONE
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
</TABLE>
<PAGE> 33
PROXY SERVICES CORPORATION/AUTOMATED VOICE LINK INC.
UNIVERSAL SCRIPT FOR REGISTERED SHAREOWNER TELEPHONE
VOTING
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Shareowner Hears This Script
- --------------------------------------------------------------------------------
Speech 1* Welcome. Please enter the control number located in the lower
right hand corner of the form.
- --------------------------------------------------------------------------------
Speech 2 To vote as the name of the company Board recommends Press 1 now.
- --------------------------------------------------------------------------------
Speech 2A You voted as the Board recommended. If correct, press 1. If
incorrect, Press 0.
- --------------------------------------------------------------------------------
Speech 3 To vote on each proposal separately, press 0 now.
- --------------------------------------------------------------------------------
Speech 4 Proposal 1:
To vote FOR all nominees, Press 1
To WITHHOLD for all nominees, Press 9
To WITHHOLD for an individual nominee, press 0
- --------------------------------------------------------------------------------
Speech 5 Enter the two digit number that appears next to the nominee you
DO NOT wish to vote for.
- --------------------------------------------------------------------------------
Speech 5A Press 1 to withhold for another nominee or Press 0 if you have
completed voting for Directors.
- --------------------------------------------------------------------------------
Speech 6 Proposal 2:
To vote FOR, Press 1; AGAINST, Press 9, ABSTAIN, Press 0
- --------------------------------------------------------------------------------
Speech 7 Proposal 3:
To vote FOR, Press 1; AGAINST, Press 9, ABSTAIN, Press 0
- --------------------------------------------------------------------------------
Speech 7A You voted as follows:
Proposal 1: For ALL or WITHHOLD All OR For ALL Except . . .
Proposal 2: For, Against, Abstain
and so on, if this is correct, Press 1, now; if incorrect,
Press 0
- --------------------------------------------------------------------------------
Closing A Thank you for voting
- --------------------------------------------------------------------------------
Closing B** Your vote has been canceled. Please try again, or mark, sign and
return your proxy.
- --------------------------------------------------------------------------------
Speech 8*** If you do NOT wish to receive an Annual Report for this current
account, Press 1 now.
- --------------------------------------------------------------------------------
Speech 9*** If you plan to attend the Annual Meeting, Press 1 -- if not,
Press 0
- --------------------------------------------------------------------------------
</TABLE>
* Name: Speech 1 wording for location of control number can be changed.
** Closing B -- If shareholder indicates their vote was incorrect.
*** Optional to save future production and postage costs, or to obtain
attendance information.
