SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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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))
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[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-
11(c) or Section 240.14a-12
CCH INCORPORATED
(Name of Registrant as Specified In Its Charter)
JoAnn Augustine, Secretary
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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[X] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i)
(1),
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[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i) (4) and 0-11.
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CCH INCORPORATED
2700 Lake Cook Road, Riverwoods, Illinois 60015
Notice of Annual Meeting of Stockholders
The Annual Meeting of Stockholders of CCH INCORPORATED,
formerly known as Commerce Clearing House, Inc., will be
held at its corporate headquarters, 2700 Lake Cook Road,
Riverwoods, Illinois, on Thursday, March 30, 1995, at 11:00
A.M. for the following purposes:
(1) To elect a Board of eight Directors.
(2) To approve the appointment of independent public
accountants for the fiscal year 1995.
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on February 10, 1995, was fixed by
the Board of Directors as the record date for the
determination of the stockholders entitled to receive notice
of, and to vote at, this annual meeting or any adjournment
thereof.
A Proxy Statement setting forth certain additional
information is enclosed. A copy of the Annual Report to
Stockholders, including financial statements, is also
enclosed.
Stockholders who do not expect to attend the Annual Meeting
in person are asked to date, sign, and mail promptly the
enclosed proxy in the accompanying postpaid envelope.
JoAnn Augustine
Secretary
March 2, 1995
CCH INCORPORATED
2700 Lake Cook Road, Riverwoods, Illinois 60015
(708) 267-7000
March 2, 1995
PROXY STATEMENT
General
Information
Your proxy is solicited by the Board of Directors of CCH
INCORPORATED for use at the Annual Meeting of Stockholders
of CCH scheduled to be held at 11:00 A.M. on Thursday, March
30, 1995, or any adjournment thereof. This Proxy Statement
and the enclosed form of proxy are being mailed to
stockholders of CCH on or about March 2, 1995.
Proxies in the accompanying form, properly executed and
received by CCH prior to the meeting and not revoked will be
voted as directed therein on all matters presented at the
meeting. In the absence of contrary instructions, proxies
will be voted for all eight nominees for directors named
herein and for the other proposals listed in the Annual
Meeting Notice.
The Board of Directors does not know of any other matters
to be brought before the meeting; however, if other matters
should properly come before the meeting, it is intended that
the persons named in the accompanying proxy will vote
thereon at their discretion. Any stockholder may revoke his
or her proxy by giving written notice of revocation to the
Secretary of CCH at any time before it is voted, by
executing a later-dated proxy, or by attending the meeting
and voting his or her shares in person.
The Board of Directors has fixed the close of business on
February 10, 1995, as the record date for the determination
of stockholders of CCH entitled to receive notice of and to
vote at the Annual Meeting of Stockholders to be held on
March 30, 1995, and at any adjournment thereof. There were
17,046,312 shares of Class A Common Stock of CCH (par value
$l.00) ("Class A Shares") outstanding and entitled to one
vote each as of the close of business on February 10, 1995.
As set forth under "Stock Ownership of Principal
Stockholders, Nominee Directors, and Management" on page 13
of this Proxy Statement, an aggregate of 9,564,279 Class A
Shares were beneficially owned by Oakleigh B. Thorne and
Daniel K. Thorne on February 10, 1995.
CCH will bear the cost of preparing, handling, printing, and
mailing this Proxy Statement, the accompanying proxy card,
and any additional material which may be furnished to
holders of Class A Shares, and the actual expense incurred
by brokerage houses, fiduciaries, and custodians in
forwarding such materials to beneficial owners of Class A
Shares held in their names.
Election of
Directors
The nominees listed below are nominated for election for
the ensuing year or until the election of their respective
successors. Each nominee is currently serving as a
director. Oakleigh B. Thorne and Daniel K. Thorne are
brothers, and Oakleigh Thorne is a son of Oakleigh B.
Thorne. William C. Egan III is a cousin (by marriage) of
Oakleigh B. Thorne. C T Corporation System (CT) and CCH
Legal Information Services, Inc. (LIS), referenced below,
are subsidiaries of CCH. Effective January 1, 1995, CCH
Computax Inc. (Computax) merged into CCH.
Director Nominees_Non-Employees
JOHN C. BURTON, 62, Ernst & Young Professor of Accounting
and Finance at Columbia University, New York, New York,
since 1962 except from 1976 to 1977, when he served as
Deputy Mayor for Finance for the City of New York, and from
1972 to 1976, when he served as Chief Accountant of the
Securities and Exchange Commission. Dean of the Columbia
University Graduate School of Business from 1982 to 1988.
Mr. Burton is also a director of Scholastic Inc., Manville
Corporation, CPAC, Inc., and Salomon Swapco, a wholly-owned
subsidiary of Salomon Brothers Inc, and was a Governor at
Large for the National Association of Securities Dealers
from 1991 to 1994. Director of CCH since 1979.
WILLIAM C. EGAN III, 49, Executive Vice President of
Consumer Products Worldwide of Johnson & Johnson Inc. since
January 1995. President of the Arm & Hammer Division of
Church and Dwight, Inc. and Chairman of Church & Dwight,
Ltd. (Canada) from 1990 to 1994; and President of Johnson &
Johnson Baby Products Company and Chairman of Windsor
Minerals, Inc. from 1987 to 1989. Director of CCH since
1993.
ROBERT H. MUNDHEIM, 62, Executive Vice President and General
Counsel for Salomon, Inc. and a Managing Director and member
of the Executive Committee of Salomon Brothers Inc since
1992. Co-chairman of the law firm of Fried, Frank, Harris,
Shriver and Jacobson from 1989 to 1992 and University
Professor of Law and Finance Emeritus, University of
Pennsylvania Law School. Dean of the University of
Pennsylvania Law School from 1982 to 1989. A member of the
faculty of the University of Pennsylvania since 1965, except
for the period from 1977 to 1980, when he served as General
Counsel of the Treasury Department. Served National
Association of Securities Dealers as Governor at Large from
1988 to 1991 and Vice Chairman-Finance, 1990-1991. Director
of CCH since 1981.
DANIEL K. THORNE, 43, Private Investor. Mr. Thorne is
also a Director of Imperial Holly Corporation. Director of
CCH since 1977.
Director Nominees_Employees
EDWARD L. MASSIE, 65, President and CEO and Member of the
Executive Committee of CCH since 1991. Executive Vice
President of CCH from 1980 to 1991, Vice President since
1976. Director of CCH since 1981.
OAKLEIGH B. THORNE, 62, Chairman of CCH since 1975. Mr.
Thorne is also a Director of the Bank of Millbrook and
Fiduciary Trust Company International. President of CT from
1967 to 1977. Director of CCH since 1959.
OAKLEIGH THORNE, 37, Member of Executive Committee since
1992. Executive Vice President of CCH from 1991 to 1992,
President of LIS from 1988 to 1992. Director of CCH since
1988.
RALPH C. WHITLEY, 52, Member of Executive Committee since
1992. President of CCH Computax, Inc. from 1992 to 1994.
Executive Vice President of CCH Computax, Inc. from 1978 to
1992. Director of CCH since 1993.
Board and Committee
Meetings
During 1994 there were 11 meetings of the Board of
Directors. The Board has an Audit Committee and a
Compensation Committee. The CCH Board does not have a
standing nominating committee or any committee serving
similar functions, nor is there an executive committee of
the Board. The Executive Committee mentioned above is an
executive management committee responsible for day-to-day
operations, but it cannot act in lieu of the Board.
The Audit Committee of the Board consists of John C. Burton
(Chairman), Robert H. Mundheim, and Daniel K. Thorne and met
two times during 1994. The principal functions of the Audit
Committee of the Board are to recommend independent auditors
to be engaged by the Board, to review with the auditors the
scope and results of the audit engagement, to review CCH's
financial statements, financial accounting policies, and
decisions embodied in the annual financial statements, and
to exercise general oversight with respect to CCH's internal
accounting control systems.
The Compensation Committee consists of Robert H. Mundheim
(Chairman), John C. Burton, and William C. Egan, III, and
met five times during 1994. The principal function of the
Compensation Committee is to determine the compensation of
all executive officers of CCH, to recommend to the Board the
terms of principal compensation plans requiring stockholder
approval or benefiting executive officers, and to administer
the plans.
Compensation of
Directors
Each non-employee director is entitled to receive $30,000
annually for serving as a director. Employee directors
receive $250 for each meeting of the Board they attend. The
directors who chair the Audit Committee and the Compensation
Committee each receive an additional $5,000 annually for
such services, and directors serving on those committees
receive $500 for each Audit or Compensation Committee
meeting they attend. Each non-employee director made a one-
time irrevocable election in 1993 (or, if later, when such
non-employee director began serving on the Board), to
substitute phantom units of Class B Shares for all or a
portion of such director's next ten years of cash
compensation for services as a director. Such phantom units
will be settled ten years after the deferral election was
made or the director's retirement from the Board, whichever
is earlier, in an amount equal to the then fair market value
of the corresponding Class B Shares.
The number of phantom stock units credited to a director's
account is determined by dividing the amount of the
director's deferred compensation by an amount equal to 75%
of the price of the Class B Shares on February 11, 1993, in
the case of a director elected on March 15, 1993, or, in the
case of a director joining the Board thereafter, by an
amount equal to 75% of the price of the Class B Shares on
the date the director becomes eligible to participate in the
plan. In addition, each director's phantom stock account is
credited with phantom dividends in the form of additional
phantom stock. The amount of phantom stock so credited is
calculated by dividing the amount of dividends that would
have been paid on the phantom shares already credited to the
director's account had those phantom shares been actual
Class B Shares by an amount equal to 75% of the price of
Class B Shares on February 11, 1993, in the case of a
director elected on March 15, 1993, or, in the case of a
director joining the Board thereafter, by an amount equal to
75% of the price of the Class B Shares on the date the
director becomes eligible to participate in the plan.
In addition, non-employee directors who do not have benefits
under any other CCH employee retirement plan are entitled to
a retirement annuity ranging from 50% (for 10 years of
service) to 100% (for 20 years of service) of the amount
payable to such directors for services during the final year
of service. Benefits under this plan will normally begin at
the later of the attainment of age 70 or retirement from the
Board. The retired director will receive full benefits for
life or for the number of years of service on the Board,
whichever is less.
Summary Compensation Table
The Summary Compensation Table shows total annual
compensation for the CEO and the next six most highly
compensated executive officers ("Named Executive Officers").
Long-Term Compensation
Annual Compensation Awards Payouts
Other Securities
Name Annual Restricted Under-
All Other
and Compen- Stock lying LTIP
Compen-
Principal sation Award(s) Options/
Payouts sation(1)
Position Year Salary ($) Bonus ($) ($)
($) SARs (#) ($) ($)
Edward L. Massie
President and Chief Executive Officer 1994 405,962
196,800 _ _ 35,000 _ 6,400
President and Chief Executive Officer 1993 391,546
153,734 _ _ 120,000 _ 7,613
President and Chief Executive Officer 1992 380,000
110,000 _ _ _ _ 13,459
Jonathan Copulsky
Sr. Officer, Product/Customer Mgt. 1994 202,308 87,571
_ _ 20,000 _ 2,824
Sr. Officer, Product/Customer Mgt. 1993 191,538 63,677
9,742(2) _ 60,000 _ 2,585
Sr. Officer, Product/Customer Mgt. 1992 180,000 25,000
34,882(3) _ _ _ _
Richard G. Honor
Sr. Officer, International 1994 210,923 81,408
36,000(4) _ 3,750 _ 3,475
Sr. Officer, International 1993 206,154 29,515
36,571(5) _ 30,000 _ 4,157
Sr. Officer, International 1992 180,870 6,250
11,778(6) _ _ _ 1,491
Oakleigh B. Thorne
Chairman of the Board 1994 290,000 0 _ _ 0
_ 4,661
Chairman of the Board 1993 200,000 90,000 _ _
0 _ 4,315
Chairman of the Board 1992 200,000 90,000 _ _
_ _ 7,084
Oakleigh Thorne
Member of Executive Committee 1994 224,077 110,400 _
_ 35,000 _ 791
Member of Executive Committee 1993 206,154 80,954 _
_ 100,000 _ 4,099
Member of Executive Committee 1992 200,000 65,000 _
_ _ _ 7,084
Ralph C. Whitley
Member of Executive Committee 1994 235,962 115,200
12,500(2) _ 35,000 _ 3,850
Member of Executive Committee 1993 229,717
129,909(7) 41,367(3) _ 100,000 _ 4,264
Member of Executive Committee 1992 216,000 69,000 _
_ _ _ 7,604
Hugh J. Yarrington(8)
Sr. Officer, Knowledge 1994 207,308 87,539 3,013(2)
_ 20,000 _ 1,280
Sr. Officer, Knowledge 1993 73,077 26,250 28,932(3)
_ 60,000 _ 262
(1) The totals in this column reflect the value of the CCH
contributions to the CCH Employees' Profit-Sharing Plan.
The 1994 amounts
include additional 1994 Plan contributions that have been
estimated because the contribution is not calculable at this
time. The estimate is expected to be accurate to within +
5%. The 1993 contributions shown here are actual, whereas in
last year's proxy statement they were
estimated.
(2) Represents reimbursement for taxes incurred as a result
of relocation in the previous year.
(3) Represents reimbursement for relocation expenses.
(4) Represents automobile and housing allowances.
(5) Of this amount, $36,000 was for automobile and housing
allowances, $207 was for relocation expenses, and $364
represents reimbursement for taxes incurred as a result of
relocation expense reimbursement in the previous year.
(6) Of this amount, $9,692 was for automobile and housing
allowances and $11,778 was for relocation.
(7) Of this amount $42,339 was for payment of accrued
vacation upon transfer from Computax to CCH.
(8) Hired August 16, 1993.
Options/SAR Grants
The following tables set forth information pertaining to
grants of stock options to the Named Executive Officers
during 1994 as well as to stock options held by the Named
Executive Officers at the end of 1994. All such options were
granted under the 1993 Long-Term Incentive Plan and relate
to Class B Shares. No stock appreciation rights were granted
during 1994. None of the Named Executive Officers exercised
any stock options during 1994.
Options/SAR Grants in Last Fiscal Year
Individual Grants
% of Total
Number of Options/
Securities SARs
Underlying Granted to Exercise
Options/ Employees or Base Grant Date
SARs in Fiscal Price Expiration Present
Name Granted Year ($/Sh) Date(1) Value ($)(2)
Edward L. Massie 35,000 13.1% 17.000 2/10/04
173,950
Jonathan Copulsky 20,000 7.5% 17.000 2/10/04
99,400
Richard G. Honor 3,750 1.4% 17.000 2/10/04
18,638
Oakleigh B. Thorne 0 0 _ _ 0
Oakleigh Thorne 35,000 13.1% 17.000 2/10/04
173,950
Ralph C. Whitley 35,000 13.1% 17.000 2/10/04
173,950
Hugh J. Yarrington 20,000 7.5% 17.000 2/10/04
99,400
(1) In general, the options granted in 1994 to all executive
officers (other than the Chief Executive Officer and Richard
G. Honor) become exercisable at the rate of one half on the
second anniversary of the grant date and one quarter on the
third and fourth anniversaries of the grant date. For Mr.
Massie and Mr. Honor, all of their 1994 options become
exercisable on the second anniversary of the date of grant.
Under the terms of the 1993 Long Term Incentive Plan, in the
event of a change of control, as defined in the Plan, all
options become immediately vested and exercisable.
(2) The Black-Scholes option pricing model has been used to
calculate present value as of the date of grant, February
10, 1994. The present value as of the date of grant,
calculated using the Black-Scholes model, is based on
assumptions about future interest rates, stock price
volatility, and dividend yield. The Black-Scholes model is a
complicated mathematical formula widely used to value
exchange-traded options. However, stock options granted by
CCH to its executive officers differ from exchange-traded
options in three key respects: CCH's options are long-term,
non-transferable, and subject to vesting restrictions, while
exchange-traded options are short-term and can be exercised
or sold immediately in a liquid market. There is no
assurance that the assumptions used, as described below will
prove to be true in the future. Consequently, the grant date
present values set forth in the table are only theoretical
values and may not accurately determine present value. The
actual value, if any, that may be realized by each
individual will depend on the market price of Class B Shares
on the date of exercise. The following key assumptions were
used in the calculation: a risk-free rate of return equal to
the interest rate on a U.S. Treasury security with a
maturity date corresponding to that of the option term
(5.923%); a 9-month volatility of 25% as reported in
Bloomberg Financial Services as of February 28, 1994; a
dividend yield of 3.20%; and time of exercise of 10 years
(exercisable only at maturity).
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-
End Option/SAR Values
Value of
Number of Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs at
Options/SARs at Fiscal Year-
Fiscal Year-End (#) End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Valued Realized ($) Unexercisable
Unexercisable
Edward L. Massie _ _ 0/155,000 0/0
Jonathan Copulsky _ _ 0/80,000 0/0
Richard G. Honor _ _ 0/33,750 0/0
Oakleigh B. Thorne _ _ 0/0 0/0
Oakleigh Thorne _ _ 0/135,000 0/0
Ralph C. Whitley _ _ 0/135,000 0/0
Hugh J. Yarrington _ _ 0/80,000 0/0
Report of the Compensation Committee
The Compensation Committee has the ultimate responsibility
for CCH's executive compensation policies and practices.
The Compensation Committee determines all elements of
compensation for the members of CCH's "Executive Committee"
(which is an executive management committee, not an
executive committee of the Board of Directors), and approves
all elements of compensation for CCH's other executive
officers. The Compensation Committee also administers CCH's
Short-Term Incentive Plan (the "STIP"), which is an annual
bonus plan, and its Long-Term Incentive Plan (the "LTIP"),
pursuant to which certain stock options or other awards may
be granted to executive officers and other key employees.
In 1994, the compensation of all executive officers, other
than the Chairman, was made up of three components_base
salary, a performance bonus under the STIP, and a grant of
stock options under the LTIP. The Chairman received base
salary only. The Chairman does not participate in the STIP
or the LTIP. The following describes the process by which
CCH's executive officers' 1994 compensation was determined.
Base Salary
In general, the Compensation Committee determines the base
salaries of executive officers on the basis of a subjective
determination. In the first quarter of each year, the
Compensation Committee meets with the Executive Committee to
discuss the appropriate levels of base salary for executive
officers, other than the members of the Executive Committee.
The Compensation Committee then approves, with any
modifications it deems appropriate, the recommendations of
the Executive Committee. Base salary increases for
executives become effective in April of each year.
In recommending and approving appropriate base salaries for
executive officers, the Executive Committee and the
Compensation Committee may take into account a number of
factors, each of which may be given different weight with
respect to each executive officer. These factors include
each executive officer's and CCH's performance during the
prior year (including, in the case of CCH's performance,
CCH's operating profit, net income, and inventory renewal
value); the extent to which the individual met the prior
year's goals; CCH's expected performance in the coming year;
the executive officer's anticipated contribution to CCH's
performance during the coming year; any anticipated
increases or decreases in an individual's responsibilities
in the coming year; the extent to which the Compensation
Committee believes an individual's base salary is
competitive with the base salaries of individuals having
similar positions at competitive companies;1 and the effect
of inflation on the executive officer's base salary. For
1994, the base salaries of executive officers (other than
members of the Executive Committee) increased by between
1.9% and 9.3%, and by 4.8% in the aggregate, over 1993
levels.
The Compensation Committee determines the base salaries of
the members of the Executive Committee in its discretion on
the basis of similar considerations. As with the other
executive officers, base salary increases become effective
in April of each year. The annual base salaries of the
members of the Executive Committee were increased as follows
over 1993 levels: 3.8% for Mr. Massie, 4.5% for Mr. Whitley,
and 11.6% for Mr. Thorne. In the aggregate, Executive
Committee base salaries increased by 6.4% over 1993 levels.
The greater increase in Mr. Thorne's base salary relative to
the other members of the Executive Committee resulted
primarily from the Compensation Committee's desire to make
his base salary comparable to that of Mr. Whitley, with whom
Mr. Thorne shared comparable responsibilities in 1994. The
Chief Executive Officer's annual base salary for 1994 was
$410,000.
The Chairman's base salary in 1994 was $290,000, an amount
equal to the aggregate of his 1993 base salary plus his 1993
bonus. The Chairman's base salary reflected a decision,
explained to shareholders in 1993, to compensate the
Chairman solely through an appropriate base salary. The
amount of the Chairman's compensation was determined on the
basis of a subjective determination by the Compensation
Committee as to the Chairman's contribution to CCH. The
Chairman's total compensation has remained unchanged since
1991.
Performance Pay
A significant portion of the total compensation of CCH's
executive officers is designed to be directly linked to CCH
performance through annual bonuses under the STIP. An
additional significant portion of the total compensation of
CCH's executive officers is intended to be directly linked
to the market performance of CCH stock through grants of
stock options under the LTIP.
Stock Option Grants Under the LTIP. The Compensation
Committee determines the amount of grants to executive
officers under the LTIP on the basis of a subjective
determination by the Compensation Committee as to the number
of options necessary to provide the appropriate incentive.
In determining the appropriate incentive, the Compensation
Committee takes into account various factors, including
prior grants to the executive officers under the LTIP and
the grant that the Compensation Committee believes is
appropriate to provide each particular executive officer
with a realistic notion that the grant will result in
significant wealth creation if CCH's stock performs well.
In determining the appropriate option grants to the
executive officers, the Compensation Committee also
considered, among other things, an analysis prepared by
CCH's compensation consultants in 1993, when the LTIP was
adopted.2 In 1994, the Compensation Committee deviated from
this analysis, however, by granting a greater number of
options to the executive officers than the consultants had
recommended. While the consultants had recommended annual
grants in respect of approximately one-quarter of the shares
with respect to which options were granted in 1993, the
Compensation Committee in 1994 generally granted options
with respect to approximately one-third of the shares with
respect to which options were granted in 1993. The
Compensation Committee believed that these increased grants
were a needed incentive for CCH's executive officers to
continue to exert the necessary energy and commitment to
meet CCH's 1994 projected budget targets.
In 1994, the Compensation Committee granted to all
individuals who were executive officers in 1994 options to
purchase an aggregate of 266,250 Class B Shares under the
LTIP. Of these grants, the Chief Executive Officer (as well
as the other members of the Executive Committee) received
options to purchase 35,000 shares, and the Named Executive
Officers other than the Chief Executive Officer received
options to purchase an aggregate of 113,750 shares.
Because the exercise price of all the options granted to
executive officers in 1994 was the fair market value of
Class B Shares on the date of grant, any value that the
executive officers may derive from these grants will be
based entirely on the growth in value of Class B Shares.
Performance Bonuses Under the STIP. The Compensation
Committee also links executive officer compensation to CCH
performance through annual incentive bonuses under the STIP.
In 1994, all of CCH's executive officers, other than the
Chairman, participated in the STIP. The STIP provides for
bonuses that generally vary with the degree to which
participants and CCH meet specific performance goals, as
described more fully below. If performance goals were met,
an individual would receive his or her target bonus. Target
bonuses for executive officers in 1994 were between 25% and
40% of 1994 base salary.
Provided that minimum performance goals were achieved,
awards under the STIP could range from 50% to 150% of the
individual's target bonus. Minimum, maximum, and target
bonus levels were selected to reflect the at-risk nature of
the bonus and in order to keep the prospect of bonus
earnings in line with competitive practices in companies of
comparable size.3 As described in 1993, this program
entails substantially more risk than CCH's bonus practice
prior to the program's inception in 1993. Accordingly, a
transitional approach was approved by the Compensation
Committee when the STIP was established. Under that
transitional approach, even if minimum performance goals
were not achieved in 1994, an individual, other than a
member of the Executive Committee, still would receive 50%
of his or her 1992 bonus. Members of the Executive Committee
did not have any such guaranteed bonus under the STIP in
1994. In 1995, it is anticipated that no bonuses will be
paid to executive officers if minimum performance goals are
not achieved.
The amount of an individual's bonus under the STIP depends
on meeting a combination of corporate and organizational
financial and nonfinancial performance goals. The corporate
financial goals on which 1994 STIP bonuses were based were
(a) 1994 budgeted corporate operating earnings prior to
restructuring and not including the effects of acquisitions
and divestitures and (b) a targeted increase in U.S.
publishing inventory renewal value during 1994.
Bonuses for executive officers, other than members of the
Executive Committee, also were based in part on financial
objectives relating to each executive's function.
Nonfinancial objectives varied with each executive's
function. Subjective performance determinations included
internal peer evaluations and Executive Committee
discretion. As a group, CCH's executive officers received
bonuses equal to 120% of their targets under the STIP.
The Chief Executive Officer's STIP bonus (as well as the
STIP bonus of each of the other members of the Executive
Committee) was based on two objective corporate performance
goals (with the weightings shown) _CCH's corporate operating
earnings (50%) and increases in U.S. publishing inventory
renewal value during 1994 (20%), and one subjective goal
(with the weighting shown)_implementation of certain
reengineered business processes (30%). The Chief Executive
Officer's bonus payable if minimum performance goals were
met was $82,000, his target bonus was $164,000, and his
maximum bonus was $246,000. The Chief Executive Officer's
actual bonus under the STIP for 1994 was $196,800.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986 places a
limit on tax deductions for compensation paid to certain
"covered employees" in excess of $1 million. In 1994, none
of the executive officers received compensation approaching
$1 million. Further, because the stock options granted
under the LTIP are expected to constitute "performance-based
compensation," amounts received by "covered employees" as a
result of those options will not be taken into account under
the $1 million limit.
Compensation Committee
Robert H. Mundheim
John C. Burton
William C. Egan, III
1 CCH did not commission a study of the salary
structures of competitive companies during 1994. In 1993,
CCH's compensation consultants prepared a study comparing
CCH's salary structure to the salary structures of companies
having similar gross revenues. This study compared CCH
executive positions with benchmark positions reported in
several published surveys. This information was augmented
with data obtained from proxy statements of 17 companies in
the printing and publishing industry and a telephone survey
of accountants and consultants conducted by CCH's
compensation consultants. In 1993, the Committee undertook
to assure that the base salaries (other than those of the
members of the Executive Committee) were at or near the
median base salaries of individuals having similar positions
at competitive companies, using the 1993 consultants'
report. In 1994, the Committee determined that the 1993
consultants' report continued to provide relevant data and
used it in determining the extent to which CCH base salaries
were competitive.
2 According to this analysis, prior to 1992, when the
LTIP was adopted, employee equity exposure through stock,
stock options, and restricted stock at CCH was significantly
below such equity exposure in the publishing and printing
industry generally. Shares beneficially owned by employees
through qualified retirement plans were excluded from the
competitive analysis and from all figures presented here.
Shares held by Oakleigh B. Thorne were omitted from the
study. The companies included in the competitive analysis
were: Affiliated Publications, Inc.; Bowne & Co., Inc.;
Capital Cities/ABC, Inc.; CBS, Inc.; R.R. Donnelly Co.; Dow
Jones & Co.; Dun and Bradstreet Corp.; Gannett Co.;
Jefferson-Pilot Corp.; Knight-Ridder, Inc.; Lee Enterprises,
Inc.; McGraw Hill, Inc.; Media General, Inc.; Multimedia,
Inc.; Times Mirror Co.; Tribune Co.; and Washington Post Co.
Two-thirds of these companies are included in the
Information Industry Bulletin 45, which is the peer group in
the shareholder return performance information on page 10 of
this Proxy Statement. The consultants' analysis suggested
an initial grant in 1993 of approximately 2.18% of CCH's
shares outstanding, thus raising CCH officer equity exposure
to 2.8% of shares outstanding (which was just above the 25th
percentile of employee stockholdings for the competitive
companies), and further recommended annual aggregate grants
thereafter in respect of approximately one-quarter of the
1993 grants (approximately 200,000 shares per year in the
aggregate), or .57% of shares outstanding (placing CCH
slightly below the median of the annual option grants or the
competitive companies, which granted an average of .72% of
shares outstanding in the three years prior to the
analysis).
3 In determining competitive practices, the Committee
relied on a study prepared in 1993 by CCH's compensation
consultants. For a discussion of the methodology used in
this study, see the footnote accompanying the text under
"Base Salary" on page 7 of this Proxy Statement.
Shareholder Return
Performance Information
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareholder return
on the Class A Shares against the change in the cumulative
total return of the Russell 2500 market index and the
Information Industry Bulletin 45 U.S. Cumulative Total
Return Index for the five-year period that commenced January
1, 1990 and ended December 31, 1994.
Russell 2500
CCH believes that the companies listed in the S&P 500 are
too large to be representative of the market influences on
CCH's stock. CCH is not within the S&P 500 Stock Index. The
Russell 2500 index is made up of the next 2500 largest
companies by market capitalization after the S&P 500. CCH
believes that the Russell 2500 is more representative than
the S&P 500 because the average market capitalization of the
companies comprising the Russell 2500 approximates that of
CCH.
Peer Group
CCH has chosen the Information Industry Bulletin 45 U.S.
Index for its peer group index. The IIB 45, a published and
readily available index, tracks companies that derive at
least 50% of their annual revenues from information
activities. CCH believes that the industry factors and
market conditions faced by the IIB 45 companies are similar
to those encountered by CCH. Moreover, since this group
consists of domestic companies only, it provides an index
that is not subject to the fluctuations of overseas stock
markets.
Five-Year Cumulative Return Comparison*
CCH Class A Russell 2500 Index and IIB 45 U.S. Index
CCH Class A, IIB 45 and Russell 2500 Indicies, Trailing
Twelve Months
December 31, 1994
CCH Russell 2500 IIB 45 Index
Annual Indexed Index Annual Indexed Index
Annual Indexed Index
Year Return Return Value Return Return Value
Return Return Value
1989 100.00 100.00 100.00
1990 6.74% 1.0674 106.74 (14.87%) 0.8513 85.13
(17.00%) 0.8300 83.00
1991 (4.72%) 0.9528 101.70 46.68% 1.4668
124.87 23.00% 1.2300 102.09
1992 (7.56%) 0.9244 94.01 16.17% 1.1617
145.06 12.20% 1.1220 114.54
1993 3.84% 1.0384 97.62 16.54% 1.1654
169.05 16.50% 1.1650 133.44
1994 (3.10%) 0.9690 94.60 (1.60%) 0.9840
166.35 (8.15%) 0.9185 122.57
*Total return assumes reinvestment of dividends.
**Returns are based on information from outside sources.
Stocks in the index are selected from the
Information Industry Bulletin's index for domestic
companies.
Pension Plan
CCH maintains an integrated pension plan (the "Pension
Plan") that provides for defined benefits to eligible
officers and employees of CCH and its participating
subsidiaries upon retirement at a specified age. These
benefits are based on the participant's number of years of
service, final average pay (the individual's highest average
pay in any 60 consecutive months in his or her last 120
months of service), and the individual's "excess final
average pay" (the portion, if any, of final average pay that
exceeds the average amount of pay subject to Social Security
tax). Under the Pension Plan, a participant's pay includes
base salary, overtime, commissions, and bonuses (subject to
certain limitations under the Code). CCH also maintains an
unfunded supplemental employee retirement plan, described
more fully below (the "SERP"). The estimated aggregate
benefits payable upon retirement under the Pension Plan and
the SERP to persons in specified final average pay and years
of service classifications are listed in the table below.
The normal retirement pension at age 65 is shown in the
table below in the form of a straight life annuity (although
other options, including lump sum and a joint and survivor
annuity option, are available) for different levels of
earnings and years of service.
Years of Service
Average Annual
Earnings 15 20 25 30 35 40
$ 25,000 $ 4,417 $ 5,939 $ 7,462 $ 8,837 $
10,112 $ 11,362
$ 50,000 11,205 15,039 18,874 21,624
24,174 26,674
$100,000 24,780 33,239 41,699 47,199
52,299 57,299
$250,000 65,505 87,839 110,174 123,924
136,674 149,174
$500,000 133,380 178,839 224,299 251,799
277,299 302,299
$750,000 201,255 269,839 338,424 379,674
417,924 455,424
As of January 1, 1995, each Named Executive Officer had
the following number of years of service under the Pension
Plan and the SERP:
Years of Service
Edward L. Massie 40
Jonathan Copulsky 3
Richard G. Honor (1) 2
Oakleigh B. Thorne 33
Oakleigh Thorne 8
Ralph C. Whitley 26
Hugh J. Yarrington 1
The Pension Plan formula provides that a participant's
annual benefit will equal the sum of (a) 1.2% of final
average pay multiplied by the participant's years of service
prior to 1989 plus 1.1% of final average pay multiplied by
the participant's years of service after 1988 (up to 25
years of service), (b) 1% of final average pay multiplied
by the participant's years of service over 25, and (c) .65%
of "excess final average pay" multiplied by the
participant's years of service up to 25.
The Pension Plan is integrated with Social Security.
However, benefit amounts are not subject to deduction for
Social Security benefits or other offset amounts.
(1) Mr. Honor retired under the pension plan of CCH
Australia in 1992 prior to relocating to the United States
to establish the
International Organization for the parent company.
Supplemental Retirement Plan
The SERP provides benefits to certain "highly compensated"
employees (as defined in Section 414(q)(1)(B) of the Code)
equal to the excess, if any, of the benefit they would have
received under the Pension Plan formula as it existed on
December 31, 1988, without regard to certain limitations
contained in the Code that generally are applicable under
the Pension Plan, over the benefit they receive under the
Pension Plan. The Pension Plan formula as of December 31,
1988 provided that a participant's annual benefit would
equal the sum of (a) 2% of final average pay multiplied by
the participant's years of service up to 25 and (b) 1% of
final average pay multiplied by the participant's years of
service over 25, reduced by (c) 2% of the participant's
estimated primary Social Security benefit multiplied by the
participant's years of service up to 25.
Under the SERP, a participant's pay generally is the same as
his or her pay under the Pension Plan but is not subject to
any limitations imposed on the Pension Plan by the Code.
The benefit under the SERP is integrated with Social
Security, and the formula incorporates a deduction for
Social Security benefits.
Stock Ownership of Principal Stockholders,
Nominee Directors, and Management
The following table shows the number of Class A and Class B
Shares beneficially owned and the percentage of the
outstanding shares of Class A and Class B Shares so owned,
as of February 10, 1995, as to (1) each person known to the
management of CCH to be the beneficial owner of more than
five percent of the outstanding shares of Class A or Class B
Shares, (2) each nominee director, and (3) the Named
Executive Officers. Unless otherwise indicated, the shares
owned are less than 1% of the indicated class. Unless
otherwise indicated, the owner has sole voting and
investment power with respect to the listed shares.
Beneficial Owner Class A Percent of Class B
Percent of
and Address(1) Shares Owned Class A Shares Shares Owned(2)
Class B Shares
Ariel Capital Management Inc.(3) 1,429,585 8.4% 0
307 North Michigan Avenue
Chicago, Illinois
David L. Babson & Co., Inc.(4) 0 1,259,110 7.4%
One Memorial Drive
Cambridge, Massachusetts
John C. Burton 2,000 2,000
Jonathan Copulsky 245 7,782
William C. Egan, III 0 0
Richard G. Honor 1,000 15,000
Edward L. Massie 13,545 75,391
Robert H. Mundheim 500 2,000
Daniel K. Thorne 1,546,852 9.0% 1,546,852 9.2%
Oakleigh B. Thorne(5) 8,017,427 47.0% 8,021,272 47.4%
Oakleigh Thorne 1,370 14,042
Ralph C. Whitley 4,249 17,373
Hugh J. Yarrington 0 0
All Executive Officers and 9,581,973 56.2% 9,750,933
57.2%
Directors as a group (18 persons)
All Executive Officers and 27,694 182,809 1.1%
Directors as a group (16 persons) other
than Oakleigh B. and Daniel K. Thorne
(1) Address of 5% stockholders is 2700 Lake Cook Road,
Riverwoods, IL, except where specified.
(2) Class B Shares owned includes shares issuable upon the
exercise of options that will be exercisable within 60 days
as follows: Edward L. Massie, 60,000; Jonathan Copulsky,
7,500; Richard G. Honor, 15,000;Oakleigh Thorne, 12,500;
Ralph Whitley, 12,500; all other executive officers and
directors as a group, 43,750; all executive officers and
directors as a group, 151,250.
(3) Based on the most recent report on Schedule 13G filed
with the SEC, Ariel Capital Management Inc. reported sole
voting power with respect to 940,150 Class A Shares, shared
voting power with respect to 91,975 Class A Shares, and sole
investment discretion for 1,429,585 Class A Shares.
(4) Based on the most recent report on Schedule 13G filed
with the SEC, David L. Babson & Co., Inc. reported sole
voting power with
respect to 568,370 Class B Shares, shared voting power with
respect to 690,740 Class B Shares, and sole investment
discretion for 1,259,110 Class B Shares.
(5) Includes 7,673,945 Class A and Class B Shares held by
certain trusts over which Oakleigh B. Thorne has sole or
shared voting and investment authority and 200,009 Class A
and Class B Shares held by a charitable foundation of which
Oakleigh B. Thorne is a co-trustee. Chemical Banking
Corporation and its subsidiary, Chemical Bank, 277 Park
Avenue, New York, New York, have advised CCH that they have
shared voting authority over 1,912,852 Class A and Class B
Shares, sole voting authority over 3,000 Class A Shares, and
shared investment authority over 1,912,852 Class A and Class
B Shares (11.2% and 11.3% of Class A and Class B Shares
respectively). Oakleigh B. Thorne has advised CCH that
substantially all of the shares that are held by various
trusts of which he is co-trustee with Chemical Bank are
included in the table above. CCH has been advised that an
additional 1,268,816 Class A and Class B Shares (7.4% and
7.5% of Class A and Class B Shares respectively) included in
the table above are held by Oakleigh B. Thorne and John Akin
of Seattle, Washington, as co-trustees under a trust in
which voting authority over such Class A Shares is held by
Mr. Thorne and investment authority over such Class A and
Class B Shares is shared with Mr. Akin.
Section 16 Filings
Section 16(a) of the Securities Exchange Act of 1934
requires CCH's officers and directors and persons who own
more than ten percent of a registered class of CCH's equity
securities ("Reporting Persons") to file reports of
ownership and changes in ownership with the SEC. Reporting
persons are required by SEC regulation to furnish CCH with
copies of all Section 16(a) reports they file.
Based solely on its review of copies of such forms received
by it and written representations from certain Reporting
Persons, CCH believes that during 1994 its Reporting Persons
complied with all Section 16(a) reporting requirements
applicable to them.
Appointment of Auditors
The Board of Directors recommends approval of the
appointment of Deloitte & Touche to audit the books and
accounts of CCH for the fiscal year ending December 31,
1995. These professional accountants have served CCH in
this capacity without interruption since 1943. Grant
Thornton performs review work at CCH Editions Limited in
accordance with programs and procedures established by
Deloitte & Touche. A representative of Deloitte & Touche
will be present at this meeting and will have the
opportunity to make a statement and to respond to
appropriate questions. During 1994, CCH paid Deloitte &
Touche fees related to the audit function totalling $580,490
and $1,714,427 for non-audit services.
Voting Information
A stockholder may, with respect to the election of
directors, (i) vote for the election of all eight director
nominees named herein, (ii) withhold authority to vote for
all such director nominees, or (iii) vote for the election
of all such director nominees other than any nominee with
respect to whom the stockholder withholds authority to vote
by so indicating on the proxy. A stockholder may, with
respect to each other matter specified in the notice of the
meeting, (i) vote "FOR" the matter, (ii) vote "AGAINST" the
matter, or (iii) "ABSTAIN" from voting on the matter. A
vote to abstain from voting on a matter has the legal effect
of a vote against such matter. However, for quorum purposes
abstentions would be counted to determine the number of
shares present at the meeting. Shares will be voted as
instructed in the accompanying proxy on each matter
submitted to stockholders.
A proxy submitted by a stockholder may indicate that all or
a portion of the shares represented by such proxy is not
being voted by such stockholder with respect to a particular
matter. This could occur, for example, when a broker is not
permitted to vote stock held in street name on certain
matters in the absence of instructions from the beneficial
owner of the stock. The shares subject to any such proxy
that are not being voted with respect to a particular matter
(the "nonvoted shares") will be considered shares not
present and entitled to vote on such matter, although such
shares may be considered present and entitled to vote for
other purposes and will count for purposes of determining
the presence of a quorum. (Shares voted to abstain as to a
particular matter will not be considered nonvoted shares.)
Directors are elected by a plurality of the votes cast.
Approval of each matter specified in the annual meeting
notice requires the affirmative vote of a majority of the
Class A Shares present in person or by proxy at the meeting
and entitled to vote on such matter. Accordingly, nonvoted
shares with respect to such matters will not affect the
determination of whether such matters are approved or the
outcome of the election of directors.
Stockholder Proposals
In order to be considered for inclusion in the CCH proxy
statement for the annual meeting to be held in 1996, any
stockholder proposals must be received in proper form by CCH
on or prior to November 2, 1995.
Additionally, in accordance with CCH By-Laws, only items of
business brought before the annual meeting with proper
notice may be conducted. Also, nominations for the Board of
Directors (other than those made by or at the direction of
the Board) must be made pursuant to timely notice. Such
notices must be received by CCH at its executive offices not
less than 60 days nor more than 90 days prior to the
meeting; provided, however, that in the event that less than
75 days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the
stockholder to be timely must be received not later than the
close of business on the 10th day following the day on which
the notice of the date of the annual meeting was mailed or
such prior disclosure was made. Any shareholder interested
in presenting any such additional business or nomination at
the 1996 annual meeting should contact the Secretary of CCH
for details of the required form and substance of notices.
By Order of the Board of
Directors
CCH INCORPORATED JoAnn Augustine
2700 Lake Cook Road Secretary
Riverwoods, Illinois 60015
March 2, 1995
A copy, without exhibits, of CCH's Annual Report on Form 10-
K for 1994 as filed with the Securities and Exchange
Commission will be furnished without charge upon the written
request of any stockholder entitled to vote at the meeting,
directed to the attention of CCH's Secretary at the address
shown above.
PROXY CARD 1995
FRONT
CCH INCORPORATED
Proxy is Solicited By the Board of Directors
For the Annual Meeting of Stockholders - March 30, 1995
The undersigned stockholder of CCH INCORPORATED hereby
constitutes John I. Abernethy, Edward L. Massie and James C.
Rooney proxies, with full authority, which may be exercised
by any one or more of them, with power of substitution, to
vote and act for the undersigned at the annual meeting of
stockholders to be held at the corporation's office, 2700
Lake Cook Road, Riverwoods, Illinois, at
11:00 A.M. on March 30, 1995, and at any adjournment
thereof, as designated below, and in their discretion, the
proxies are authorized to vote upon such other business as
may properly come before the meeting.
[ ] Check here for the address change
[ ] Check here if you plan to attend the meeting.
New address: _______________________________________
_______________________________________
_______________________________________
(Continued and to be signed on reverse side.)
BACK
The Board of Directors recommends approval of ALL proposals.
1. Nominees: John C. Burton, William C. Egan, III,
Edward L. Massie, Robert H. Mundheim, Daniel FOR
WITHHOLD FOR ALL (Except Nominees
K. Thorne, Oakleigh B. Thorne, Oakleigh Thorne
written below) _________________________
and Ralph C. Whitley
2. To Ratify the selection of Deloitte & Touche as FOR
AGAINST ABSTAIN
Independent Auditors for the Company for 1995.
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted FOR Proposals 1
and 2.
Dated: ____________________, 1995
Signature(s) ___________________________________
_____________________________________________
Please sign exactly as name appears hereon. Joint owners
should each sign personally.
Executors, trustees, etc., should indicated their titles
when signing.
March 1, 1995
By Electronic Submission
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: CCH INCORPORATED
Definitive Proxy Materials for Annual Meeting of
Shareholders to be
held on March 30, 1995
Ladies and Gentlemen:
On behalf of CCH INCORPORATED, a Delaware corporation, (the
"company") and in connection with its Annual Meeting of
Shareholders to be held on March 30, 1995 (the "Annual
Meeting"), we submit herewith for filing pursuant to Rule
14a - 6(b) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as modified by item 309 of
Regulation S-T, definitive copies of the following documents
relating to the Annual Meeting: (i) the Company's Notice of
Annual Meeting, (ii) Proxy Statement and (iii) form of Proxy
(collectively, the "Proxy Material"). The filing fee of $125
required by Rule 14a-6(i) (1) has previously been remitted
by wire transfer to the U.S. Treasury designated lockbox
depository at the Mellon Bank in Pittsburgh, Pennsylvania.
Pursuant to Item 304 (d) of Regulations S-T, the performance
graph required by Item 402 (1) Regulation s-K has been
furnished to the Securities and Exchange Commission (the
"Commission") in connection with this electronic filing by
submission of a paper copy of such performance graph to the
Branch Chief in the Division of Corporation Finance.
Three copies of the Proxy Material and one copy of the
Annual Report will be mailed to the NASDAQ National Market
System in accordance with rule 14a-6(b) under the Exchange
Act.
If questions arise concerning the foregoing or the Proxy
Material, please contact JoAnn Augustine at (312) 267-2257.
Very truly yours,
JoAnn Augustine
Secretary
/tam
Enclosures
