<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
DOW JONES & COMPANY, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
Notice of 1998
[LOGO] DOW JONES Annual Meeting and
Proxy Statement
Dow Jones & Company
<PAGE>
DOW JONES & COMPANY, INC.
200 Liberty Street, New York, New York 10281
To Our Stockholders:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders of
Dow Jones & Company, Inc., which will be held on Wednesday, April 15, 1998 at
10:00 a.m. at:
55 Wall Street
New York, New York
Discussions of Company affairs at past Annual Meetings have generally been in-
teresting and useful. I hope you will be able to attend.
This year, you are being asked to act upon the election of six directors, the
adoption of the Dow Jones 1998 Employee Stock Purchase Plan and the Dow Jones
1998 Stock Option Plan, the approval of the appointment of Coopers & Lybrand
L.L.P. and two stockholder proposals. These matters are discussed in greater
detail in the accompanying proxy statement.
The Board of Directors recommends a vote FOR the election of directors, FOR
the adoption of the Employee Stock Purchase Plan, FOR the adoption of the
Stock Option Plan , FOR the approval of the appointment of Coopers & Lybrand
L.L.P. and AGAINST each of the two stockholder proposals.
Regardless of the number of shares you own and whether or not you plan to at-
tend, it is important that your shares are represented and voted at the meet-
ing. You are requested to sign, date and return the enclosed proxy promptly.
If you do attend the Annual Meeting, you may still vote in person if you so
desire.
Sincerely yours,
/s/ Peter R. Kann
Peter R. Kann
Chairman of the Board
March 20, 1998
<PAGE>
DOW JONES & COMPANY, INC.
200 Liberty Street, New York, New York 10281
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, APRIL 15, 1998
To the Stockholders of
DOW JONES & COMPANY, INC.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of Dow
Jones & Company, Inc. will be held at 55 Wall Street, New York, New York on
Wednesday, April 15, 1998 at 10:00 a.m. for the purposes of:
1. Electing five directors to hold office until 2001 and one director to
hold office until 1999;
2. Adopting the Dow Jones 1998 Employee Stock Purchase Plan;
3. Adopting the Dow Jones 1998 Stock Option Plan;
4. Approving the appointment of Coopers & Lybrand L.L.P., independent certi-
fied public accountants, as auditors for 1998;
5. Acting upon a stockholder proposal to establish cumulative voting in the
election of directors;
6. Acting upon a stockholder proposal to establish one-year terms for direc-
tors; and
7. Transacting such other business as may properly come before the meeting.
Your attention is directed to the accompanying proxy statement for further
information with respect to the matters to be acted upon at the meeting.
Stockholders of record at the close of business on February 20, 1998 are en-
titled to notice of and to vote at the meeting. A list of such stockholders
will be open to the examination of any stockholder for any purpose germane to
the meeting for a period of ten days prior to the meeting at the Company's of-
fices, 200 Liberty Street, New York, New York.
Stockholders are requested to complete, date, sign and return the enclosed
proxy in the enclosed postage prepaid envelope. Until your proxy is voted you
may revoke it by delivery to the Company of a subsequently executed proxy or a
written notice of revocation. Your prompt response will be appreciated.
By order of the Board of Directors,
/s/ Peter G. Skinner
Peter G. Skinner
Secretary
March 20, 1998
<PAGE>
DOW JONES & COMPANY, INC.
200 Liberty Street, New York, New York 10281
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD WEDNESDAY, APRIL 15, 1998
SOLICITATION AND REVOCATION OF PROXIES
This proxy statement is furnished in connection with the solicitation on be-
half of the Board of Directors of Dow Jones & Company, Inc. of proxies for use
at the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday,
April 15, 1998 at 55 Wall Street, New York, New York for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. If the en-
closed proxy is executed and returned, all shares represented thereby will be
voted. Each proxy will be voted in accordance with the stockholder's instruc-
tions with respect to (i) the election of directors, (ii) adopting the Dow
Jones 1998 Employee Stock Purchase Plan, (iii) adopting the Dow Jones 1998
Stock Option Plan, (iv) approving the appointment of Coopers & Lybrand L.L.P.
as auditors for 1998, (v) acting upon a stockholder proposal to establish cu-
mulative voting in the election of directors and (vi) acting upon a stock-
holder proposal to establish one-year terms for directors. If no such instruc-
tions are specified, the proxies will be voted FOR the election of each person
nominated for election as a director, FOR the adoption of the Dow Jones 1998
Employee Stock Purchase Plan, FOR the adoption of the Dow Jones 1998 Stock Op-
tion Plan, FOR approving the appointment of Coopers & Lybrand L.L.P. and
AGAINST each of the two stockholder proposals. Until a proxy is voted it may
be revoked by a stockholder by delivery to the Secretary of the Company at the
above address of a subsequently executed proxy or a written notice of revoca-
tion. The cost of preparing and mailing this proxy statement and proxies will
be borne by the Company. Proxies may be solicited by officers, directors and
regular employees of the Company by mail, telephone and personal solicitation,
and no additional compensation will be paid to such individuals. The Company
may also reimburse brokers and other persons holding stock in their names or
in the names of their nominees for their charges and expenses in forwarding
proxies and proxy material to the beneficial owners of such stock. In addi-
tion, the Company has retained D.F. King & Co., Inc., 77 Water Street, New
York, New York 10004 to aid in the solicitation of proxies by mail, telephone,
telecopy and personal solicitation and will request brokerage houses and other
nominees, fiduciaries and custodians to forward soliciting materials to bene-
ficial owners of the Company's Common Stock and Class B Common Stock. For
these services, the Company will pay D.F. King & Co., Inc. a fee of $10,000,
plus expenses.
---------------------------------------------------
COMMON STOCK OUTSTANDING
At the close of business on February 20, 1998 there were outstanding and enti-
tled to vote 75,362,679 shares of Common Stock and 21,546,518 shares of Class
B Common Stock of the Company. Each share of Common Stock is entitled to one
vote. Each share of Class B Common Stock is entitled to ten votes. The Common
Stock, voting separately as a class, is entitled to elect two directors to be
elected at the meeting to serve a three-year term expiring in 2001. The Common
Stock and the Class B Common Stock vote together with respect to the election
of three directors to be elected at the meeting to serve a three-year term ex-
piring in 2001, the election of one director to be elected at the meeting to
serve a one-year term expiring in 1999 and all other matters submitted to the
stockholders.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information, as of January 22, 1998, with re-
spect to the number of shares of Common Stock and Class B Common Stock owned
by the only persons who were known by the Company to own beneficially more
than 5% of the outstanding Common Stock or Class B Common Stock.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(a) PERCENT OF CLASS
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Christopher Bancroft Common 4,797,405(b) 6.4%
c/o Holme Roberts & Owen LLC Class B 3,820,360(b) 17.7%
1700 Lincoln Street
Denver, Colorado 80203
- ----------------------------------------------------------------------------
Barclays Bank PLC Common 4,491,629(c) 6.0%
54 Lombard Street
London, England EC3P 3AH
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Capital Research & Management Co. Common 4,771,300(d) 6.3%
333 South Hope Street
Los Angeles, California 90071
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Judson W. Detrick Common 3,402,272(e) 4.5%
Holme Roberts & Owen LLC Class B 2,266,261(e) 10.5%
1700 Lincoln Street
Denver, Colorado 80203
- ----------------------------------------------------------------------------
Michael B. Elefante Common 3,012,309(e) 4.0%
Hemenway & Barnes Class B 1,689,981(e) 7.8%
60 State Street
Boston, Massachusetts 02109
- ----------------------------------------------------------------------------
Timothy F. Fidgeon Common 1,999,015(e) 2.7%
Hemenway & Barnes Class B 2,163,083(e) 10.0%
60 State Street
Boston, Massachusetts 02109
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Franklin Mutual Advisers, Inc. Common 3,818,100(f) 5.1%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
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Roy A. Hammer Common 11,780,020(e) 15.6%
Hemenway & Barnes Class B 8,454,534(e) 39.2%
60 State Street
Boston, Massachusetts 02109
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Paul D. Holleman Common 3,402,872(e) 4.5%
Holme Roberts & Owen LLC Class B 2,266,211(e) 10.5%
1700 Lincoln Street
Denver, Colorado 80203
- ----------------------------------------------------------------------------
Jane C. MacElree Common 6,507,784(g) 8.6%
c/o Hemenway & Barnes Class B 3,892,016(g) 18.1%
60 State Street
Boston, Massachusetts 02109
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Rod B. MacLeod Common 2,689,448(e) 3.6%
MacLeod & McGinness Class B 1,380,196(e) 6.4%
1800 Second Street, Suite 971
Sarasota, Florida 34236
- ----------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(a) PERCENT OF CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
James H. Ottaway, Sr. Common 2,817,451(h) 3.7%
Ruth B. Ottaway Class B 1,679,014(h) 7.8%
James H. Ottaway, Jr.
David B. Ottaway
Ruth Ottaway Sherer
c/o Ottaway Newspapers, Inc.
Post Office Box 401
Campbell Hall, New York 10916
- ---------------------------------------------------------------------------
Lawrence T. Perera Common 4,510,550(e) 6.0%
Hemenway & Barnes Class B 3,477,000(e) 16.1%
60 State Street
Boston, Massachusetts 02109
- ---------------------------------------------------------------------------
Michael J. Puzo Common 1,292,674(e) 1.7%
Hemenway & Barnes Class B 1,899,488(e) 8.8%
60 State Street
Boston, Massachusetts 02109
- ---------------------------------------------------------------------------
Thomas A. Richardson Common 3,125,372(e) 4.1%
Holme Roberts & Owen LLC Class B 1,928,331(e) 8.9%
1700 Lincoln Street
Denver, Colorado 80203
- ---------------------------------------------------------------------------
George T. Shaw Common 914,232(e) 1.2%
Hemenway & Barnes Class B 1,083,025(e) 5.0%
60 State Street
Boston, Massachusetts 02109
- ---------------------------------------------------------------------------
State Street Bank & Trust Company Common 6,017,075(i) 8.0%
225 Franklin Street Class B 3,230,763(i) 15.0%
Boston, Massachusetts 02110
- ---------------------------------------------------------------------------
Elizabeth Steele Common 3,912,624(e) 5.2%
c/o Hemenway & Barnes Class B 2,146,210(e) 10.0%
60 State Street
Boston, Massachusetts 02109
- ---------------------------------------------------------------------------
Bayne Stevenson Common 3,320,565(e) 4.4%
c/o Hemenway & Barnes Class B 1,739,191(e) 8.1%
60 State Street
Boston, Massachusetts 02109
- ---------------------------------------------------------------------------
</TABLE>
(a) Except as otherwise indicated, the beneficial owner has sole voting and
investment power.
(b) Includes 4,510,000 shares of Common Stock and 3,477,000 shares of Class B
Common Stock held by Mr. Bancroft as trustee, as to which he shares voting and
investment power with other trustees, including Messrs. Hammer and Perera.
Also includes 287,405 shares of Common Stock and 343,360 shares of Class B
Common Stock held by Mr. Bancroft as trustee of a revocable trust, as to which
he shares voting and investment power with other trustees, including Messrs.
Holleman, Richardson and Detrick. Mr. Bancroft could acquire sole voting and
investment power over such shares if he were to revoke the trust.
(c) As of December 31, 1997, which is the most recent date as of which the
Company has such information, Barclays Bank PLC held all of these shares as an
investment adviser or broker-dealer and had sole voting power as to 4,278,017
of these shares and shared investment power over all of these shares with non-
affiliated persons.
(d) As of December 31, 1997, which is the most recent date as of which the
Company has such information, Capital Research & Management Co. held all of
these shares as an investment adviser and had sole investment power over all
of these shares and no voting power over any of these shares.
3
<PAGE>
(e) Includes shares held as trustee, as to which voting and investment power
is shared with other trustees (including other persons named above), by the
following persons, each of whom disclaims beneficial ownership of such shares:
Mr. Detrick--3,402,272 shares of Common Stock and 2,266,211 shares of Class B
Common Stock; Mr. Elefante--3,012,309 shares of Common Stock and 1,689,981
shares of Class B Common Stock; Mr. Fidgeon--1,999,015 shares of Common Stock
and 2,163,083 shares of Class B Common Stock; Mr. Hammer--11,780,020 shares of
Common Stock and 8,454,534 shares of Class B Common Stock; Mr. Holleman--
3,402,272 shares of Common Stock and 2,266,211 shares of Class B Common Stock;
Mr. MacLeod--2,689,448 shares of Common Stock and 1,380,196 shares of Class B
Common Stock; Mr. Perera--4,510,550 shares of Common Stock and 3,477,000
shares of Class B Common Stock; Mr. Puzo--1,292,674 shares of Common Stock and
1,899,488 shares of Class B Common Stock; Mr. Richardson--3,125,372 shares of
Common Stock and 1,928,331 shares of Class B Common Stock; Mr. Shaw--914,232
shares of Common Stock and 1,083,025 shares of Class B Common Stock; Ms.
Steele--3,912,624 shares of Common Stock and 2,146,210 shares of Class B Com-
mon Stock; and Mr. Stevenson--3,301,134 shares of Common Stock and 1,730,393
shares of Class B Common Stock. Also includes 600 shares of Common Stock held
by Mr. Holleman as trustee, as to which Mr. Holleman has sole voting and in-
vestment power.
(f) As of December 31, 1997, which is the most recent date as of which the
Company has such information, Franklin Mutual Advisers, Inc. held all of these
shares as an investment adviser and had sole voting and investment power over
all of these shares.
(g) Includes 5,531,471 shares of Common Stock and 3,348,848 shares of Class B
Common Stock held by Mrs. MacElree as trustee, as to which she shares voting
and investment power with other trustees, including Mr. Elefante with respect
to 2,745,000 shares of Common Stock and 1,440,250 shares of Class B Common
Stock; Mr. Hammer with respect to 2,739,400 shares of Common Stock and
1,746,733 shares of Class B Common Stock; Mr. Puzo with respect to 46,900
shares of Common Stock and 161,800 shares of Class B Common Stock; and Mr.
Shaw with respect to 14,400 shares of Common Stock and 394,683 shares of Class
B Common Stock. Also includes 819,015 shares of Common Stock and 541,583
shares of Class B Common Stock held by Mrs. MacElree as trustee of a revocable
trust, as to which she shares voting and investment power with other trustees,
including Messrs. Fidgeon and Shaw. Mrs. MacElree could acquire sole voting
and investment power over such shares if she were to revoke the trust.
(h) All of these shares have been deposited in a voting trust by various Otta-
way family trusts, individual members of the Ottaway family and a private in-
vestment company owned by members of the Ottaway family. The voting trustees
under the voting trust are James H. Ottaway, Sr., his wife, Ruth B. Ottaway,
and their adult children, James H. Ottaway, Jr., David B. Ottaway and Ruth Ot-
taway Sherer. The voting trust will remain in effect until January 27, 2003,
but shares may be withdrawn from the voting trust prior thereto. As of January
22, 1998, each of James H. Ottaway, Sr., Ruth B. Ottaway and David B. Ottaway
beneficially owned 2,817,451 shares of Common Stock and 1,679,014 shares of
Class B Common Stock. As of January 22, 1998, Ruth Ottaway Sherer beneficially
owned 2,989,621 shares of Common Stock (4.0%) and 1,716,203 shares of Class B
Common Stock (8.0%). As of January 22, 1998, James H. Ottaway, Jr. benefi-
cially owned 2,886,226 shares of Common Stock (includes 63,699 shares subject
to options) and 1,679,014 shares of Class B Common Stock. Each of the forego-
ing persons is deemed the beneficial owner of the shares held in the voting
trust described above and, accordingly, each of the foregoing figures includes
such shares. In addition, various other shares are also included more than
once in the foregoing figures as a result of other shared ownership arrange-
ments. Each of James H. Ottaway, Sr., Ruth B. Ottaway, James H. Ottaway, Jr.,
David B. Ottaway and Ruth Ottaway Sherer shares voting power over 2,817,451
shares of Common Stock and 1,679,014 shares of Class B Common Stock and in-
vestment power over 28,080 shares of Common Stock and 1,540 shares of Class B
Common Stock. Ruth Ottaway Sherer has sole voting and investment power over
172,170 shares of Common Stock and 37,189 shares of Class B Common Stock.
(i) As of December 31, 1997, which is the most recent date as of which the
Company has such information, State Street Bank & Trust Company held all of
these shares as trustee, disclaimed beneficial ownership of them and shared
voting and investment power with persons named above as to 4,685,182 shares of
Common Stock and 3,197,032 shares of Class B Common Stock.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information as of January 22, 1998, with re-
spect to the number of shares of Common Stock and Class B Common Stock owned by
each director and nominee for director, the five most highly compensated
executive officers, and all directors, nominees and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT OF COMMON STOCK
NAME OWNED(1) CLASS(2) EQUIVALENTS(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rand V. Araskog Common 8,000 * 27,073
Class B 700 *
- -------------------------------------------------------------------------------
Christopher Bancroft (5) (6) Common 4,797,405 6.4% 1,128
(7) Class B 3,820,360 17.7%
- -------------------------------------------------------------------------------
Kenneth L. Burenga (4) Common 127,987 * --
Class B 3,015 *
- -------------------------------------------------------------------------------
William C. Cox, Jr. (5) (6) (8) Common 247,276 * 685
Class B 639,061 3.0%
- -------------------------------------------------------------------------------
Harvey Golub Common 2,000 * 1,110
Class B -- *
- -------------------------------------------------------------------------------
Leslie Hill (5) (6) (9) Common 117,437 * 504
Class B 68,943 *
- -------------------------------------------------------------------------------
Irvine O. Hockaday, Jr. Common 3,000 * 6,479
Class B -- *
- -------------------------------------------------------------------------------
Vernon E. Jordan, Jr. Common 270 * 7,144
Class B 105 *
- -------------------------------------------------------------------------------
Peter R. Kann (4) Common 230,923 * 5,505
Class B 4,027 *
- -------------------------------------------------------------------------------
David K.P. Li Common 8,030 * 8,025
Class B -- *
- -------------------------------------------------------------------------------
Jane C. MacElree (5) (6) (10) Common 6,507,784 8.6% 457
Class B 3,892,016 18.1%
- -------------------------------------------------------------------------------
M. Peter McPherson Common -- * --
Class B -- *
- -------------------------------------------------------------------------------
Frank N. Newman Common 200 * 457
Class B -- *
- -------------------------------------------------------------------------------
James H. Ottaway, Jr. (11) Common 2,886,226 3.8% --
Class B 1,679,014 7.8%
- -------------------------------------------------------------------------------
Peter G. Skinner (4) Common 72,070 * --
Class B -- *
- -------------------------------------------------------------------------------
William C. Steere, Jr. Common 1,000 * 1,238
Class B -- *
- -------------------------------------------------------------------------------
Carl M. Valenti (4) Common 105,860 * --
Class B 2,087 *
- -------------------------------------------------------------------------------
All directors and executive Common 15,169,567 20.1% 60,466
officers Class B 10,111,536 46.9%
as a group (19 persons) (12)
- -------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
(1) Except as otherwise indicated, the beneficial owner has sole voting and
investment power. Includes shares of Common Stock subject to options exercis-
able within 60 days after January 22, 1998 held by: Mr. Burenga (103,368
shares), Mr. Cox (24,905 shares), Mr. Kann (153,385 shares), Mr. Ottaway
(63,699 shares), Mr. Skinner (62,230 shares) and Mr. Valenti (71,641 shares).
(2) For purposes of computing the percentages above, the number of shares of
Common Stock outstanding includes any shares which may be acquired by the
named person within 60 days after January 22, 1998. An asterisk under the col-
umn "Percent of Class" indicates that the named person beneficially owns less
than one percent of the shares of Common Stock or Class B Common Stock out-
standing.
(3) Under the directors' deferred stock equivalent compensation plan, each
non-employee director is credited with $20,000 worth of stock equivalents per
year. Certain directors have elected to defer receipt of some or all of their
fees payable in cash and have invested such deferred amounts in stock equiva-
lents. Amounts previously accrued under the terminated retirement plan for
non-employee directors by directors who continued to serve on the Board after
the 1997 Annual Meeting were added to such directors' deferred compensation
accounts and certain directors have elected to invest such accrued amounts in
stock equivalents. (See page 11 for additional information regarding direc-
tors' stock equivalents.) Also, certain executive officers have elected to
have the amounts allocated to their accounts under the Supplementary Benefit
Plan (see footnote (3) of the Summary Compensation Table on page 13) deemed to
be invested in stock equivalents.
(4) Includes shares owned by, or jointly with, spouses, as follows: Mr.
Burenga--7,522 shares of Common Stock and 1,292 shares of Class B Common Stock
owned by his spouse; Mr. Kann--8,332 shares of Common Stock and 124 shares of
Class B Common Stock owned by his spouse; Mr. Skinner--2,762 shares of Common
Stock owned jointly with his spouse; Mr. Valenti--664 shares of Common Stock
owned by his spouse and 409 shares of Common stock owned jointly with his
spouse. Includes, with respect to Messrs. Kann and Valenti, 32,686 and 19,190
shares of Common Stock, respectively, subject to options exercisable within 60
days after January 22, 1998 held by their respective spouses. Mr. Burenga
shares voting and investment power with his spouse as to those shares owned by
her. Messrs. Kann and Valenti disclaim beneficial ownership of the shares
owned by their respective spouses. Mr. Skinner shares voting and investment
power with his spouse as to those shares owned jointly.
(5) Mr. Cox is the brother of Mrs. MacElree. Mr. Cox and Mrs. MacElree are
first cousins of Mr. Bancroft. Ms. Hill is the daughter of Mrs. MacElree.
(6) As of January 1, 1998, Mr. Cox, Mr. Bancroft, Mrs. MacElree and Ms. Hill,
certain of their relatives, and certain trusts and charitable organizations
established by them owned beneficially a total of 24,913,657 shares (33%) of
the outstanding Common Stock and 17,359,716 shares (80%) of the outstanding
Class B Common Stock. Such shares account for approximately 68% of the votes
represented by the outstanding Common Stock and Class B Common Stock. Mr. Cox,
Mr. Bancroft, Mrs. MacElree and Ms. Hill, trusts as to which they or certain
of their relatives are trustees or have beneficial or reversionary interests,
and the trustees of such trusts, may be considered in control of the Company
and therefore its "parent."
(7) Includes 287,405 shares of Common Stock and 343,360 shares of Class B Com-
mon Stock held by Mr. Bancroft as trustee of a revocable trust, as to which he
shares voting and investment power with other trustees and as to which he
could acquire sole voting and investment power if he were to revoke the trust.
Also includes 4,510,000 shares of Common Stock and 3,477,000 shares of Class B
Common Stock held by Mr. Bancroft as trustee, as to which he shares voting and
investment power with other trustees.
(8) Includes 58,357 shares of Common Stock and 207,400 shares of Class B Com-
mon Stock held by a revocable trust for the benefit of Mr. Cox, as to which he
could acquire sole voting and investment power if he were to revoke the trust.
Also includes 164,014 shares of Common
6
<PAGE>
Stock and 431,621 shares of Class B Common Stock, as to which Mr. Cox dis-
claims beneficial ownership, as follows: 85,514 shares of Common Stock and
379,791 shares of Class B Common Stock held by Mr. Cox as trustee, as to which
he shares voting and investment power; 50,500 shares of Common Stock and
27,130 shares of Class B Common Stock held by trustees for Mr. Cox's spouse;
and 29,000 shares of Common Stock and 24,700 shares of Class B Common Stock
held by a foundation of which Mr. Cox is President.
(9) Includes 6,006 shares of Common Stock and 1,618 shares of Class B Common
Stock owned by Ms. Hill's spouse and minor children.
(10) Includes 819,015 shares of Common Stock and 541,583 shares of Class B
Common Stock held by Mrs. MacElree as trustee of a revocable trust, as to
which she shares voting and investment power with other trustees and as to
which she could acquire sole voting and investment power if she were to revoke
the trust. Also includes 5,531,471 shares of Common Stock and 3,348,848 shares
of Class B Common Stock held by Mrs. MacElree as trustee, as to which she dis-
claims beneficial ownership and shares voting and investment power with other
trustees and 4,255 shares of Common Stock and 1,585 shares of Class B Common
Stock owned by her spouse.
(11) See footnote (h) on page 4 above for a description of Mr. Ottaway's own-
ership of Common Stock and Class B Common Stock.
(12) Includes 573,989 shares of Common Stock subject to options that may be
exercised by executive officers and directors within 60 days after January 22,
1998. Also includes shares owned by or jointly with their spouses and by their
children and relatives sharing their homes.
---------------------------------------------------
ANNUAL REPORT
The Company has mailed to all stockholders its Annual Report for the year
ended December 31, 1997. The Annual Report includes an audited balance sheet
as of that date and audited statements of income, stockholders' equity and
cash flows for the year then ended.
---------------------------------------------------
VOTING PROCEDURES
If a quorum is present at the meeting (i) a plurality of the votes of the
shares of Common Stock present in person or represented by proxy and entitled
to vote is required in order to elect the nominees for election to the office
of director that the Common Stock, voting separately as a class, is entitled
to elect, (ii) a plurality of the votes of the shares of Common Stock and
Class B Common Stock present in person or represented by proxy and entitled to
vote is required in order to elect the nominees for election to the office of
director that the Common Stock and the Class B Common Stock elect together,
(iii) the affirmative vote of a plurality of the votes of the shares of Common
Stock and Class B Common Stock voting together that are present in person or
represented by proxy and entitled to vote is required in order to approve the
appointment of Coopers & Lybrand L.L.P. as auditors, (iv) the affirmative vote
of a plurality of the votes of the shares of Common Stock and Class B Common
Stock voting together that are present in person or represented by proxy and
entitled to vote is required in order for each of the two stockholder propos-
als to be approved and (v) the affirmative vote of a majority of the votes of
the shares of Common Stock and Class B Common Stock voting together that are
present in person or represented by proxy and entitled to vote is required in
order for each of the 1998 Employee Stock Purchase Plan and the 1998 Stock Op-
tion Plan to be adopted. With regard to the election of directors, votes may
be cast in favor or withheld; votes that are withheld will have no effect on
the
7
<PAGE>
outcome of the vote. With regard to other proposals, votes may be cast in fa-
vor or against, or a stockholder may abstain. Abstentions will be counted as
shares that are represented at the meeting and entitled to vote. Under Dela-
ware law, abstentions on the Employee Stock Purchase Plan, the Stock Option
Plan, Coopers & Lybrand or the two stockholder proposals will have the effect
of a negative vote because the Plans require the affirmative vote of a majori-
ty, and Coopers & Lybrand and the stockholder proposals the affirmative vote
of a plurality, of the shares of Common Stock and Class B Common Stock present
in person or represented by proxy and entitled to vote. Shares represented by
limited proxies that prohibit voting on a particular matter (so-called broker
non-votes) will be disregarded and will have no effect on the out- come of the
vote on such matter, although the shares represented by such limited proxies
will be counted for quorum purposes.
---------------------------------------------------
ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of five directors to serve
for a three-year term expiring in 2001 and one director to serve for a one-
year term expiring in 1999. The Board of Directors has nominated the individu-
als listed below for election as directors. The holders of Common Stock voting
separately as a class are entitled to vote for the election of Messrs. Araskog
and Jordan. The holders of Common Stock and Class B Common Stock voting to-
gether are entitled to vote for the election of Messrs. Burenga, Cox, Hockaday
and McPherson. The proxies in the accompanying form will be voted for the
election of such individuals un- less instructions are given to withhold au-
thority to vote for one or more of them. For each nominated individual, the
table below sets forth his age as of the date of the meeting, membership on
committees of the Board of Directors and certain other information. Each of
the persons named below, other than Mr. McPherson, is currently a director. If
for any reason any one or more of the persons named below should become un-
available for election, proxies will be voted for the election of such substi-
tute nominees as the Board of Directors may propose.
---------------------------------------------------
8
<PAGE>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING:
CLASS OF 2001
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Rand V. Araskog 66 Director of various 1981
Corporate Governance and Executive corporations. Prior to
Committees March 1998, Chairman and
Chief Executive Officer,
ITT Corporation (hotel and
gaming company)(1)
- --------------------------------------------------------------------------------
Kenneth L. Burenga 53 President and Chief Oper- 1990
Executive Committee ating Officer of the Com-
pany
- --------------------------------------------------------------------------------
William C. Cox, Jr. 67 Director of the Company 1976
Corporate Governance and Executive and prior to July 1997,
Committees Executive Director/Client
Relations of the Company
- --------------------------------------------------------------------------------
Irvine O. Hockaday, Jr. 61 President and Chief Execu- 1990
Compensation and Executive tive Officer, Hallmark
Committees Cards, Inc. (greeting card
manufacturer)(2)
- --------------------------------------------------------------------------------
Vernon E. Jordan, Jr.(3) 62 Senior Partner, Akin, 1982
Executive Committee Gump, Strauss, Hauer &
Feld, attorneys, and prior
to 1982 President and
Chief Executive Officer,
National Urban League,
Inc.(4)
- --------------------------------------------------------------------------------
CLASS OF 1999
<CAPTION>
POSITIONS WITH THE COMPANY AND
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
M. Peter McPherson 57 President, Michigan State --
University. Prior to Octo-
ber 1993, Group Executive
Vice President of Bank of
America
- --------------------------------------------------------------------------------
</TABLE>
INCUMBENT DIRECTORS (CLASS OF 1999)
The table below sets forth similar information for each director whose term ex-
pires in 1999.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Christopher Bancroft 46 Director of the Company 1996
Compensation Committee
- ----------------------------------------------------------------------------
Peter R. Kann(5) 55 Chairman and Chief 1987
Executive Committee Executive Officer of the
Company
- ----------------------------------------------------------------------------
Leslie Hill 44 Pilot for American Air- 1997
Corporate Governance Committee lines
- ----------------------------------------------------------------------------
William C. Steere, Jr. 61 Chairman and Chief 1997
Compensation and Corporate Executive Officer, Pfizer
Governance Committees Inc. (pharmaceuticals)(6)
- ----------------------------------------------------------------------------
</TABLE>
9
<PAGE>
INCUMBENT DIRECTORS (CLASS OF 2000)
The table below sets forth similar information for each director whose term
expires in 2000.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Harvey Golub 59 Chairman and Chief Executive 1997
Audit and Corporate Governance Officer, American Express
Committees Company since August 1993.
Previously President (1991--
1993) of American Express
Company (travel and financial
services company)(7)
- ----------------------------------------------------------------------------
David K.P. Li 59 Chairman and Chief Executive 1993
Audit and Corporate Governance Officer, The Bank of East
Committees Asia, Limited(8)
- ----------------------------------------------------------------------------
Jane C. MacElree 68 Director of the Company 1996
Compensation and Corporate
Governance Committees
- ----------------------------------------------------------------------------
Frank N. Newman 55 Chairman, President and Chief 1997
Audit and Corporate Governance Executive Officer, Bankers
Committees Trust New York Corporation and
Bankers Trust Company. Prior
to September 1995, Deputy
Secretary of the United States
Treasury and prior to February
1993, Vice Chairman and Chief
Financial Officer of
BankAmerica Corporation.......
- ----------------------------------------------------------------------------
James H. Ottaway, Jr. 60 Senior Vice President of the 1987
Company
- ----------------------------------------------------------------------------
</TABLE>
(1) Mr. Araskog is a director of Alcatel Alsthom CGE, SA, The Hartford Finan-
cial Services Group, Inc., ITT Industries, Inc., ITT Educational Services,
Inc., Rayonier Inc. and Shell Oil Company.
(2) Mr. Hockaday is a director of Ford Motor Company, Sprint Corporation and
UtiliCorp United, Inc.
(3) During 1997, Akin, Gump, Strauss, Hauer & Feld, the law firm of which Mr.
Jordan is a senior partner, rendered certain legal services to the Company.
The Company expects that this law firm will continue to render legal services
to the Company in 1998.
(4) Mr. Jordan is a director of American Express Company, Bankers Trust Compa-
ny, Bankers Trust New York Corporation, Callaway Golf Company, Chancellor Me-
dia Corporation, J.C. Penney Company, Inc., Revlon, Inc., Ryder Systems, Inc.,
Sara Lee Corporation, Union Carbide Corporation and Xerox Corporation.
(5) Karen Elliott House, President/International Group of the Company and the
spouse of Mr. Kann, received a salary and bonus in 1997 of $400,000. An aggre-
gate of $75,729 was contributed to Ms. House's account under the Dow Jones
Profit Sharing Retirement Plan and the related Supplementary Benefit Plan in
respect of 1997. Ms. House received a payout for 1997 of 1,400 shares of Com-
mon Stock with a fair market value as of January 21, 1998 of $71,925 under the
Dow Jones 1992 Long Term Incentive Plan in respect of the four-year perfor-
mance period 1994-1997. Ms. House also received contingent stock rights and
stock options under the Dow Jones 1997 Long Term Incentive Plan. Ms. House's
compensation is set by the Compensation Committee of the Board of Directors.
(6) Mr. Steere is a director of Minerals Technologies Inc. and Texaco Inc.
(7) Mr. Golub is a director of Campbell Soup Company.
(8) Mr. Li is a director of CBS Corporation, Campbell Soup Company, Hong Kong
Telecommunications Limited, The Bank of East Asia, Limited, The Hong Kong &
China Gas Company Limited, Sime Darby Hong Kong Limited and South China Morn-
ing Post (Holdings) Limited.
---------------------------------------------------
10
<PAGE>
During 1997 the Board of Directors met eight times, the Executive Committee
met three times, the Audit Committee met four times, the Compensation Commit-
tee met five times and the Corporate Governance Committee met two times. In
1997 the fee for each Board meeting attended was $1,200; the fee for each com-
mittee meeting attended was $1,000; and the annual fee for each committee
chairman was $3,000.
At its November 1996 meeting the Board of Directors terminated the retire-
ment plan for non-employee directors, effective immediately after the 1997 An-
nual Meeting. In order to begin to increase the proportion of directors'
stock-based compensation, the Board of Directors at the same meeting lowered
the cash component of the annual director's fee from $26,000 to $20,000 and
adopted a deferred stock equivalent compensation plan for non-employee direc-
tors so as to provide a means to grant compensation based on shares of Common
Stock ("stock equivalents") (and also to keep total directors' compensation
competitive in light of the elimination of retirement benefits). All of these
changes became effective immediately after the 1997 Annual Meeting. In 1998,
the cash component of the annual director's fee and the fees for attending
Board and committee meetings and for serving as a committee chairman will re-
main the same as in 1997.
Under the directors' deferred stock equivalent compensation plan, each non-
employee director is credited with $20,000 worth of stock equivalents per
year. Such stock equivalents are credited quarterly (since the 1997 Annual
Meeting), and the number thereof are determined at the market price of the
Company's Common Stock on the last business day of the quarter in question.
From time to time Board members are invited to attend meetings of Board com-
mittees of which they are not members; in such cases, such Board members re-
ceive a committee meeting fee. Employees of the Company or its subsidiaries
who are directors do not receive director's, committee or committee chairman's
fees.
Directors may elect to defer receipt, in whole or in part, of any of their
fees payable in cash. Deferred amounts will, at the electing director's op-
tion, either be credited to an interest bearing account or be deemed to be in-
vested in shares of Common Stock (i.e., stock equivalents) at the market price
on the last business day of the month in which the deferred amount in question
would have otherwise been received. Deferred cash amounts will be paid in
cash, in a lump sum or in the form of annuity, as the director may elect. De-
ferred stock equivalent amounts will be paid in cash (in a lump sum or in the
form of an annuity) or shares of Common Stock (in up to fifteen annual in-
stallments), or a combination of cash and Common Stock, as the director may
elect.
Non-employee directors who retired at or prior to the 1997 Annual Meeting
will continue to receive benefits under the Company's retirement program for
directors. Any such director who served for five years or more is entitled to
receive an annual amount equal to the annual fee payable at the time of re-
tirement. The fee will be payable for the lesser of 15 years or the number of
years the director served. Upon the death of an eligible director, 75% of the
annual amount is payable to his or her estate or designated beneficiary for
the remaining payment term. Amounts previously accrued under the retirement
plan by directors who continued to serve on the Board after the 1997 Annual
Meeting were added to such directors' deferred compensation accounts and cred-
ited to cash or stock equivalent accounts as specified by the individual di-
rectors.
During 1997 all directors of the Company attended at least 75% of the aggre-
gate meetings of the Board and committees on which they served, except Mr.
Golub, who attended 67% of such meetings.
The Audit Committee makes recommendations to the Board regarding the engage-
ment of the Company's independent auditors and considers the range of audit
and nonaudit fees. It also reviews the work of the Company's internal audi-
tors, meets with the independent auditors to review and approve the scope and
results of their professional services, and reviews the procedures for evalu-
ating the adequacy of the Company's internal controls.
11
<PAGE>
The Compensation Committee reviews remuneration arrangements for the
Company's senior management (including employee benefit plans in which execu-
tive officers are eligible to participate), makes recommendations to the Board
and grants options and other benefits under some of such plans.
The Corporate Governance Committee (formerly the Nominating Committee) rec-
ommends to the Board of Directors the persons to be nominated by the Board for
election as directors of the Company. Stockholders desiring to recommend nomi-
nees should submit their recommen- dations in writing to Peter G. Skinner,
Secretary, Dow Jones & Company, Inc., 200 Liberty Street, New York, New York
10281. Recommendations should include pertinent information concerning the
proposed nominee's background and experience. The Corporate Governance Commit-
tee also considers and makes recommendations to the Board of Directors con-
cerning the size and composition of the Board and considers from time to time
the current Board committee structure and membership.
---------------------------------------------------
EXECUTIVE COMPENSATION
The following tables and report provide information as to the cash and non-
cash compensation paid to, earned by or granted to each of the five most
highly compensated senior policy making executives of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- ---------------------------------------------------------------------------------------------
AWARDS PAYOUTS
- ---------------------------------------------------------------------------------------------
LONG-TERM
INCENTIVE ALL OTHER
OPTIONS (#) PAYOUTS ($) COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (1) (2) SATION ($) (3)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter R. Kann, Chairman 1997 $735,000 $190,000 31,800 $282,562 $180,017
of the Board, Chief 1996 $715,000 $380,000 40,000 $234,525 $210,850
Executive Officer and 1995 $680,000 $445,000 14,800 $507,938 $220,207
Director
- ---------------------------------------------------------------------------------------------
Kenneth L. Burenga, 1997 $590,000 $140,000 16,900 $190,088 $113,472
President, Chief Oper- 1996 $550,000 $270,000 22,500 $198,750 $156,999
ating Officer and Director 1995 $520,000 $310,000 10,200 $358,313 $161,548
- ---------------------------------------------------------------------------------------------
Carl M. Valenti, 1997 $453,000 $130,000 9,000 $128,438 $112,081
Senior Vice President 1996 $440,000 $155,000 12,900 $135,150 $112,940
1995 $422,000 $220,000 7,300 $255,938 $124,166
- ---------------------------------------------------------------------------------------------
Peter G. Skinner, 1997 $435,000 $153,000 10,700 $148,988 $113,074
Senior Vice President 1996 $410,000 $165,000 14,200 $147,075 $109,023
1995 $381,000 $205,000 7,300 $220,500 $113,032
- ---------------------------------------------------------------------------------------------
James H. Ottaway, Jr., 1997 $391,000 $178,000 10,300 $128,438 $109,300
Senior Vice President 1996 $376,000 $160,000 12,900 $135,150 $101,386
and Director 1995 $361,000 $160,000 5,500 $196,875 $100,107
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) In addition to stock option grants, the indicated executives were granted
contingent stock rights under the Dow Jones 1997 Long Term Incentive Plan. The
contingent stock rights granted during the most recently completed fiscal year
are reported in the long-term incentive plan table on page 14.
(2) The payouts shown in the table for 1997 reflect the fair market value as
of January 21, 1998 of the Final Awards made to the indicated executives under
the Dow Jones 1992 Long Term Incentive Plan in respect of the four-year per-
formance period 1994-1997. The payouts shown in the table for 1996 reflect the
fair market value as of January 15, 1997 of the Final
12
<PAGE>
Awards made to the indicated executives under the Dow Jones 1992 Long Term In-
centive Plan in respect of the four-year performance period 1993-1996. The
payouts shown in the table for 1995 reflect the fair market value as of Janu-
ary 17, 1996 of the Final Awards made to the indicated executives under the
Dow Jones 1992 Long Term Incentive Plan in respect of the four-year perfor-
mance period 1992-1995. The 1992 Long Term Incentive Plan was replaced in 1997
by the Dow Jones 1997 Long Term Incentive Plan.
(3) The amounts referred to in the table above under "All Other Compensation"
consist of the aggregate amounts contributed to the accounts of the indicated
executives under the Dow Jones Profit Sharing Retirement Plan and the related
Supplementary Benefit Plan in respect of the years indicated. With respect to
amounts contributed in 1997, the Internal Revenue Code limits the allocation
of the annual Company contribution for the benefit of any individual account
under a qualified profit sharing plan to the amount which would be contributed
to such individual account based on maximum annual compensation of $160,000,
but permits under a supplemental plan an additional allocation by the Company
to such individual equal to the additional amount which would otherwise have
been allocated to him or her under the qualified plan had there been no lim-
its. Executive officers may elect to have the amounts allocated to their ac-
counts under the Supplementary Benefit Plan deemed to be invested in shares of
Common Stock. With respect to 1997, such amounts were deemed to be invested at
the closing price of the Common Stock on the first business day of 1998. With
respect to 1997, the Company has allocated the following amounts to the ac-
counts of the indicated executives under the Profit Sharing Retirement Plan:
Mr. Kann--$28,303; Mr. Burenga--$28,303; Mr. Valenti--$28,303; Mr. Skinner--
$28,303; Mr. Ottaway--$28,303. The Company has also allocated the following
amounts to the accounts of the indicated executives under the Supplementary
Benefit Plan with respect to 1997: Mr. Kann--$151,714; Mr. Burenga--$85,169;
Mr. Valenti--$83,778; Mr. Skinner--$84,771; Mr. Ottaway--$80,997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS EXERCISE AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO OR OF STOCK PRICE
UNDERLYING EMPLOYEES BASE PRICE APPRECIATION OVER STOCK
OPTIONS IN FISCAL ($/SHARE) EXPIRATION OPTION TERM(3)
NAME GRANTED(1) YEAR (2) DATE 5% 10%
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter R. Kann........... 31,800 2.6% $50.75 11/26/07 $ 1,015,056 $ 2,571,984
Kenneth L. Burenga...... 16,900 1.4% $50.75 11/26/07 $ 539,448 $ 1,366,872
Carl M. Valenti......... 9,000 0.7% $50.75 11/26/07 $ 287,280 $ 727,920
Peter G. Skinner........ 10,700 0.9% $50.75 11/26/07 $ 341,544 $ 865,416
James H. Ottaway, Jr. .. 10,300 0.8% $50.75 11/26/07 $ 328,776 $ 833,064
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) One-third of the stock options will become exercisable on November 26,
1998, another one-third will become exercisable on November 26, 1999, and the
remainder will become exercisable on November 26, 2000.
(2) The exercise price of the stock options is $50.75 per share, the fair mar-
ket value of the Common Stock on November 26, 1997, the date on which the
stock options were granted.
(3) These amounts represent gains based on assumed rates of appreciation over
the entire ten-year period. Actual gains, if any, on stock option exercises
are dependent on the future performance of the Company's Common Stock and the
continued employment of the optionee through the vesting period.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-
TOTAL NUMBER OF THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
DECEMBER 31, 1997 (#) DECEMBER 31, 1997 ($)(1)
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter R. Kann........... 1,969 $21,413 153,385 51,800 $2,878,276 $479,663
Kenneth L. Burenga...... -- -- 103,368 28,150 $1,929,197 $266,910
Carl M. Valenti......... -- -- 71,641 15,450 $1,315,507 $151,004
Peter G. Skinner........ 1,422 $13,510 62,230 17,800 $1,164,069 $168,550
James H. Ottaway, Jr. .. 3,266 $54,706 63,699 16,750 $1,219,470 $154,822
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) This represents the difference between the closing price of the Company's
Common Stock on December 31, 1997 ($53.6875) and the exercise price of the op-
tions.
LONG-TERM INCENTIVE PLAN--AWARDS IN 1997
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER
NUMBER OF SHARES, UNITS PERIOD UNTIL MATURATION
NAME OR OTHER RIGHTS(1) OR PAYOUT
- --------------------------------------------------------------------------------
<S> <C> <C>
Peter R. Kann................... 12,500 1998--2001
Kenneth L. Burenga.............. 6,625 1998--2001
Carl M. Valenti................. 3,550 1998--2001
Peter G. Skinner................ 4,225 1998--2001
James H. Ottaway, Jr. .......... 4,050 1998--2001
- --------------------------------------------------------------------------------
</TABLE>
(1) The long-term incentive plan awards are contingent stock rights granted
under the Dow Jones 1997 Long Term Incentive Plan. Each contingent stock right
gives the holder the contingent right to receive up to the number of shares of
Common Stock specified in the right (the "Initial Award") following completion
of a 4-year performance period. The number of shares ultimately received (the
"Final Award") will depend on the extent to which the performance criteria are
achieved during the 4-year performance period, the participant's individual
performance and other factors. Participants may elect, subject to the approval
of the Compensation Committee, to receive all or a portion of their Final
Awards in cash, or Common Stock, or a combination of both. If a participant
elects to receive all or a portion of the Final Award in cash, the amount of
cash will equal the closing price of the Common Stock on the date of the Final
Award multiplied by the number of shares of Common Stock as to which the elec-
tion is being made.
During the performance period relating to each right, the Compensation Com-
mittee may adjust the performance criteria and otherwise modify the terms and
provisions of the right. Also during the performance period, the holder is en-
titled to receive as "dividend equivalents" an amount equal to the cash divi-
dends that the holder would have received if the holder had owned the number
of shares of Common Stock covered by the Initial Award during the entire per-
formance period.
At December 31, 1997, Mr. Kann held contingent stock rights covering a total
of 66,800 shares; Mr. Burenga--41,725 shares; Mr. Valenti--27,950 shares; Mr.
Skinner--26,625 shares; and Mr. Ottaway--23,650 shares. At December 31, 1997,
the fair market value of the Common Stock subject to such rights was as
follows: Mr. Kann--$3,586,325; Mr. Burenga--$2,240,111; Mr. Valenti--
$1,500,566; Mr. Skinner--$1,429,430; and Mr. Ottaway--$1,269,709.
The Final Award ultimately received may be less than or equal to the numbers
set forth above. It is expected that fully satisfactory
14
<PAGE>
competitive performance (as judged by the Compensation Committee in its dis-
cretion at the time of the payouts) would be competitively rewarded if the Fi-
nal Award approximated 80% of the amounts set forth above. Exceptional perfor-
mance would support a Final Award in excess of 80% of the amounts set forth
above but in no event more than 100% of such amounts.
---------------------------------------------------
CARL M. VALENTI RETIREMENT AGREEMENT
Mr. Valenti will retire from the Company, effective March 31, 1998, and has
agreed to provide consulting services to the Company during the period from
April 1, 1998 through December 31, 1999. He has also agreed to refrain from
engaging in any business activity that is competitive with the business of the
Company and its subsidiaries. In consideration for performance of his consult-
ing and non-competition obligations, the Company will pay Mr. Valenti an ag-
gregate of $792,750 in 21 equal monthly installments of $37,750 commencing on
April 1, 1998 and ending on December 1, 1999. In addition, the Company will
credit Mr. Valenti's deferred compensation account with an amount equal to the
amounts he would have received under the Dow Jones Profit Sharing Retirement
Plan and the related Supplementary Benefit Plan had he been an employee of the
Company and continued to receive a salary at his 1997 rate between April 1, 1998
and December 31, 1999.
---------------------------------------------------
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee and its Program
The Committee consists of five non-employee directors. It generally meets five
times a year. The Compensation Committee's objective is to establish and ad-
minister a "total compensation program" that fairly and competitively rewards
Dow Jones executives for current and long-term performance that enhances
stockholder value. The purpose of this report is to explain the Company's ex-
ecutive compensation program and the operation of the Compensation Committee.
Elements of Compensation Program Considered by the Committee
The Committee gives special attention to the total compensation of the chief
executive officer (Mr. Kann), and certain other members of senior management.
We consider four elements of compensation: (1) annual salary; (2) annual in-
centive award (or bonus); (3) long-term incentive compensation; and (4) re-
tirement and other compensation.
Establishing and Administering a Competitive Program
The Committee retains outside compensation consultants and reviews competitive
compensa tion and performance studies in developing and administering the total
compensation program. We give continuing attention to changes in compensation
practices, business trends and changes in applicable law and regulations in
order to establish and administer a sound competitive compensation program. As
was the case for 1996, the competitive universe that we primarily consider
includes the five largest newspaper publishers in the Dow Jones Media/Publishing
Index (the "Company's peer group") (see page 18), but we also review data on
general industry trends and, from time to time, certain other public companies
which compete with one or more of the Company's business segments, such as
Reuters PLC.
We believe that it is difficult to forecast in detail all future develop-
ments that will be relevant to evaluating long-term executive performance. For
that reason our long-term compensation program has vested substantial discre-
tion in the Committee to decide on awards to be made after evaluating actual
Company, business unit and individual performance. With regard to annual in-
centive awards, however, the Committee, in working with management and its
outside compensation consultant, has deter-
15
<PAGE>
mined that a substantial portion of executives' awards will be based on the
achievement of certain pre-determined financial objectives. For the named ex-
ecutive officers, a substantial portion of their annual incentive awards will
be based on the achievement of these pre-determined financial objectives and
the balance will be based on the achievement of strategic goals and individual
performance. The Committee has retained some measure of discretion under the
annual incentive award program because it believes that it is somewhat diffi-
cult to forecast in detail all future developments that will be relevant to an
evaluation of short-term executive performance.
Federal tax legislation in effect since 1994 eliminates the deductibility of
compensation in excess of $1,000,000 paid to the chief executive officer and
certain other executives (i.e., those whose compensation must be detailed in
the proxy statement). The law exempts compensation paid under plans that re-
late compensation to performance. Although our plans are designed to relate
compensation to performance, certain elements of them do not meet the tax
law's requirements because they allow the Committee to exercise discretion in
setting compensation. It may be appropriate in the future to recommend changes
in the Company's compensation program to take account of the tax law. However,
the Committee is of the opinion that it is better to retain discretion than to
give it up in exchange for the tax deduction. For 1997 the deductibility of
certain compensation paid to Mr. Kann was affected by this limitation.
Committee Reporting
The Committee makes full reports to the Board of Directors, which approves the
structure and general administration of the compensation program. The Board
reviews the specific compensation awards for the chief executive officer and
each of the other four executives whose compensation is described in the proxy
statement.
In 1997 the chief executive officer's salary was $735,000, an increase of
$20,000 from his 1996 salary of $715,000. The 1997 salaries for all the five
officers listed in the table on page 12 were set after evaluating their indi-
vidual contribution and performance and the value of their jobs in the market-
place based on a review of the competitive compensation guidelines that were
developed with advice from our outside compensation consultants.
For 1997 Mr. Kann was granted a bonus of $190,000. That represented a 50%
decrease from his 1996 bonus of $380,000. In determining the bonuses for Mr.
Kann and the other officers listed in the table, we compared the Company's re-
sults to those of companies with operations similar to ours (e.g., those in
the Company's peer group and Reuters) and considered the performance of indi-
vidual operating units of the Company, including the 37% increase in operating
income for the business publishing segment and the continued loss of revenues
and market share by Dow Jones Markets (formerly Dow Jones Telerate), and the
contributions of the individual executives. The reduced bonus awards for 1997
reflect the Committee's view that despite the positive results at certain of
the Company's business units during 1997, the Company's performance overall
was less than fully satisfactory, due mainly to the results at Dow Jones Mar-
kets. The varying levels of salary and bonus for each of the executives also
reflect differences in their relative responsibilities.
We awarded long-term compensation to the chief executive officer and other
members of senior management in January 1998 under the Company's 1992 Long
Term Incentive Plan. The Final Awards covered performance for the period 1994-
1997 and were made after reviewing the Company's financial performance (in-
cluding total stockholder return, return on equity, earnings growth, profit
margins, and other financial criteria, such as the Company's performance rela-
tive to other newspaper and information services companies). We also consid-
ered progress toward achieving other Company objectives (quality of Dow Jones'
publications and services, development of products and services for a global
marketplace, quality of customer service and level of customer satisfaction,
development of human resources, including the recruitment and advancement of
women and minorities, promotion of teamwork throughout the Company, and com-
mitment to innovative products and services). And, finally, we considered each
individual executive's responsibility and performance. Overall, the Committee
determined that
16
<PAGE>
performance for the 1994-1997 period was less than fully satisfactory. In the
case of the 1994 Initial Award, it was expected that fully satisfactory com-
petitive performance would be competitively rewarded if the Final Award ap-
proximated the number of shares in the Initial Award. Exceptional performance
would support a Final Award in excess (up to 125%) of the Initial Award.
Final Awards were made in January 1998 to Mr. Kann and the other executives
named in the table on page 12 in amounts approximating 36% to 55% of their
1994 Initial Awards. Mr. Kann's Final Award was 5,500 shares of Common Stock,
and constituted approximately 40% of his Initial Award. That represented a de-
crease of 400 shares from the 1996 Final Award. The net number of shares of
Common Stock received in January 1998 by Mr. Kann, after tax withholding,
amounted to 3,464. All of the executives named in the table on page 12 also
received their Final Awards in the form of Common Stock. The fair market value
of Mr. Kann's 1994-1997 Final Award was $282,562, which is approximately 20%
higher in value than the 1996 award of $234,525, despite the fact that fewer
shares were awarded. This increase is attributable to the increase in the
value of Company stock from $39.75 on January 15, 1997 (last year's award
date) to $51.375 on this year's award date, January 21, 1998.
In late 1997 we granted members of senior management contingent stock rights
and stock options under the 1997 Long Term Incentive Plan for the 1998-2001
performance period. These grants were estimated by our outside compensation
consultants to be at the median of industry practice and somewhat below the
median award opportunity of the companies in the Company's peer group. The
grants tie a significant portion of each senior executive's potential compen-
sation to the Company's long-term objectives and to the market value of the
Company's stock. The Committee will determine the actual number of shares of
stock payable to an executive under the contingent stock rights at the end of
the performance period, based on the financial and non-financial criteria de-
scribed in the immediately preceding paragraph.
The Committee believes that the number of contingent stock rights and stock
options granted to individual executives should be set annually by the Commit-
tee after consultation with its consultants on competitive compensation lev-
els. Accordingly, the Committee does not base the amount of stock option or
contingent stock rights to be granted in any given year on the amounts previ-
ously granted.
The Committee reaffirms its view that salaries and bonus and other incentive
compensation opportunities for the senior executives of the Company generally
should not deviate substantially from the median of the competitive guidelines
developed with the advice of our consultant and that, particularly with re-
spect to long-term incentive compensation, it is important that the Committee
have a substantial degree of discretion as to the actual amounts paid. The
Committee believes that the compensation levels for the chief executive offi-
cer and other senior executives reflect these criteria and are appropriate
given performance during the periods covered.
Irvine O. Hockaday, Jr., Chairman
Christopher Bancroft
Jane C. MacElree
James Q. Riordan
William C. Steere, Jr.
---------------------------------------------------
17
<PAGE>
COMPARISON OF STOCKHOLDER RETURN
The following line graph compares the performance of the Company's Common Stock
during the five-year period ended December 31, 1997 with the Standard & Poor's
500 Stock Index ("S&P 500") and two published industry indices. The S&P 500 in-
cludes 500 U.S. companies in the industrial, transportation, utilities and fi-
nancial sectors and is weighted by market capitalization. Prior to this year,
the Company used the Standard & Poor's Publishing/Newspapers Index for compara-
tive purposes. However, in 1997, Standard & Poor's removed the Company from
this index, and included the Company in the S&P Publishing Index, together with
Meredith Corporation, McGraw-Hill Companies Inc. and The Times Mirror Company.
The Company believes the S&P Publishing Index is less meaningful for compara-
tive purposes and accordingly has adopted a new industry index, the Dow Jones
Media/Publishing Index. The Dow Jones Media/Publishing Index, which is also
weighted by market capitalization, includes, in addition to the Company, the
following twelve publishing companies: A.H. Belo Corp., American Greetings
Corp., E.W. Scripps Co., Gannett Co., Inc., Knight-Ridder, Inc., Lee Enter-
prises Inc., McGraw-Hill Companies Inc., Reader's Digest Assn. Inc., The New
York Times Company, The Times Mirror Company, Tribune Company, and The Washing-
ton Post Company.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Dow Jones Media/
Dow Jones & Co. vs. S&P 500 vs. Publishing Index vs. S&P Publishing Index
<TABLE>
<CAPTION>
Measurement period Dow Jones Media/ S&P Publishing
(Fiscal year covered) Dow Jones & Co. S&P 500 Publishing Index Index
- --------------------- --------------- ------- ---------------- --------------
<S> <C> <C> <C> <C>
Measurement PT -
12/31/92 $ 100 $ 100 $ 100 $ 100
FYE 12/31/93 $ 136 $ 110 $ 112 $ 127
FYE 12/31/94 $ 121 $ 112 $ 108 $ 122
FYE 12/31/95 $ 159 $ 153 $ 132 $ 158
FYE 12/31/96 $ 139 $ 189 $ 153 $ 160
FYE 12/31/97 $ 225 $ 252 $ 226 $ 236
</TABLE>
For purposes of the graph, it was assumed that $100 was invested in the
Company's Common Stock, the S&P 500, the Dow Jones Media/Publishing Index and
the S&P Publishing Index at closing prices on December 31, 1992. Dividends are
assumed to be reinvested on the ex-dividend date with respect to the Company's
Common Stock, the S&P 500 and the Dow Jones Media/Publishing Index and monthly
with respect to the S&P Publishing Index.
-----------------------------------------------
18
<PAGE>
ADOPTION OF THE DOW JONES 1998 EMPLOYEE STOCK PURCHASE PLAN
At the 1998 Annual Meeting the stockholders will be requested to adopt the Dow
Jones 1998 Employee Stock Purchase Plan, which is set forth in Appendix A and
which was unanimously approved by the Board of Directors on February 18, 1998,
subject to its adoption by the stockholders. If the Employee Stock Purchase
Plan is adopted by the stockholders at the Annual Meeting, it will be effec-
tive as of April 15, 1998.
The 1998 Employee Stock Purchase Plan provides for the setting aside of an
aggregate of 2,000,000 shares of Common Stock (subject to adjustment for stock
splits or other changes in the Common Stock) for purchase by regular employees
of the Company and its designated subsidiaries who have been employed at least
two years or such shorter period as the Company shall specify. The Board of
Directors believes the 1998 Employee Stock Purchase Plan will provide a conve-
nient method for the Company's employees to purchase Common Stock, encourage
such employees to continue in the employ of the Company and motivate them to
exert their best efforts on behalf of the Company and its subsidiaries. The
1998 Employee Stock Purchase Plan is substantially similar to its predecessor,
the Dow Jones 1990 Employee Stock Purchase Plan. The latter plan, approved by
the stockholders at the 1990 Annual Meeting, no longer has enough shares
available for issuance to meet expected needs for this year's offering.
Shares of Common Stock will be offered pursuant to the Plan from time to
time on behalf of the Company by the Board of Directors. The Board determines
the terms and conditions of each offering, including the period of each offer-
ing (the "Purchase Period"), and the subsidiaries of the Company whose employ-
ees may participate in an offering. The number of shares which may be pur-
chased by any employee is based upon his annual rate of compensation (exclud-
ing overtime, bonuses, incentive compensation and contributions made to any
employee benefit plan maintained by the Company or any subsidiary). The Plan
provides that the number of shares offered to any employee during such offer-
ing shall be not less than five shares nor more than such number of shares as
shall have a fair market value, determined as of the first day of the Purchase
Period, of $25,000.
Purchases under the Plan may be made through either automatic payroll deduc-
tions or lump sum cash payments. Any employee who purchases shares by means of
payroll deductions may cancel his or her election to purchase shares under the
Plan by delivering written notice to the Company not less than two weeks prior
to the last day of the Purchase Period. The price at which the shares may be
purchased in any offering under the Plan shall be the lower of: (a) 85% of the
fair market value of the stock on the first day of the Purchase Period and (b)
85% of the fair market value of the stock on the date the option is exercised.
Under the 1998 Plan, an employee will generally only be subject to tax when
he or she makes a disposition of the Common Stock, provided the employee (i)
remains an employee from the commencement of the Purchase Period through three
months prior to the date of exercise and (ii) refrains from disposing of Com-
mon Stock purchased under the Plan for a period of two years from the com-
mencement of the applicable Purchase Period and one year from the date of
transfer of such stock to him or her. An employee will also be subject to tax
if the employee dies while owning such stock. Upon such a disposition or death
there will be included in the employee's gross income an amount equal to the
lesser of (i) the excess of the fair market value of the stock on the date of
such disposition or death over the purchase price or (ii) the excess of the
fair market value of the stock at the commencement of the Purchase Period over
the purchase price computed as if the stock had been purchased on the first
day of the Purchase Period. Any such amount included in the employee's gross
income will be treated as ordinary income. The employee's basis in the stock
will be increased by the amount of ordinary income recognized and any remain-
ing gain upon such a disposition is generally treated as long-term capital
gain subject to a maximum federal income tax rate of 28% if the stock has been
held more than 12 months and not more than 18 months, and at a maximum federal
income tax rate of 20% if the stock has been held more than 18
19
<PAGE>
months. Any loss upon such a disposition will generally be treated as long-
term capital loss. The Company will not be entitled to a federal income tax
deduction if the employee qualifies for the above-described tax treatment.
If an employee fails to meet the employment condition or makes a disposition
of Common Stock before the expiration of the time period described above, then
ordinary income will be recognized by the employee in the year of purchase if
such employment condition is not met or in the year of making such a disposi-
tion. The amount of ordinary income recognized will be equal to the excess of
the stock's fair market value on the date of purchase over its purchase price.
The employee's basis in the stock will equal the sum of the purchase price and
the amount of ordinary income recognized. Any addi tional gain or any loss re-
alized upon a disposition of the Common Stock will be treated as long or
short-term capital gain or loss, depending upon the holding period. The Com-
pany will be entitled to a corresponding deduction in the year in which the
employee recognizes ordinary income.
The 2,000,000 shares of Common Stock which would be available under the 1998
Stock Purchase Plan represent approximately 2.0% of the shares outstanding at
the close of business on February 20, 1998.
An affirmative vote of a majority of the votes cast by holders of shares of
Common Stock and the Class B Common Stock present and voting together at the
1998 Annual Meeting is required to adopt the Dow Jones 1998 Employee Stock
Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE DOW JONES 1998
EMPLOYEE STOCK PURCHASE PLAN.
---------------------------------------------------
ADOPTION OF THE DOW JONES 1998 STOCK OPTION PLAN
At the 1998 Annual Meeting the stockholders will be requested to adopt the Dow
Jones 1998 Stock Option Plan, which is set forth in Appendix B and which was
unanimously approved by the Board of Directors on February 18, 1998, subject
to its adoption by the stockholders. If the Stock Option Plan is adopted by
the stockholders at the Annual Meeting, it will be effective as of April 15,
1998. The Stock Option Plan is substantially similar to its predecessor, the
Dow Jones 1991 Stock Option Plan. The latter plan, adopted by the stockholders
at the 1991 Annual Meeting, no longer has enough shares available for issuance
upon exercise of options expected to be needed this year to make competitive
grants.
The Board of Directors of the Company believes that the 1998 Plan, like the
1991 Plan, will enable the Company to attract and retain persons of ability as
key employees of the Company and its subsidiaries, and motivate such employees
to exert their best efforts on behalf of the Company and its subsidiaries. The
Company currently intends to grant options under the 1998 Plan primarily to
middle management employees who are not eligible to participate in the Dow
Jones 1997 Long Term Incentive Plan. The number of employees to whom options
under the 1998 Plan may be granted is anticipated to be approximately 750. The
1998 Plan provides for the grant of options on 3,000,000 shares of Common
Stock (subject to adjustment for stock splits or other changes in the Common
Stock); shares issued upon exercise of options may be authorized and unissued
shares or treasury shares.
Options under the 1998 Plan must expire not later than ten years after their
grant, except that "incentive stock options" granted to owners of 10% or more
of the outstanding Common Stock must expire not later than five years after
their grant. The exercise price must be at least equal to the fair market
value (but not less than the par value) of the Common Stock on the date of
grant and must be paid to the Company at the time of exercise either (i) in
cash (including the proceeds of a "cashless exercise" with the assistance of a
broker), (ii) by delivering Common Stock already owned by the optionee and
having a total fair market value on the date of delivery equal to the exercise
price or (iii) by delivering a combination of cash and Common Stock having
20
<PAGE>
a total fair market value on the date of delivery equal to the exercise price.
Each option will be evidenced by an agreement incorporating the terms and con-
ditions of the 1998 Plan. During the lifetime of the optionee an option may be
exercised only by such person.
If the 1998 Plan is adopted by the stockholders, the Compensation Committee,
consisting of not less than two directors each of whom qualifies as an "out-
side director" within the meaning of Section 162(m) of the Internal Revenue
Code and as a "non-employee director" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, will administer the Plan, including the
designation of those employees to whom options are to be granted, the number
of shares to be covered by such options, the exercise price and other terms of
such options.
The Committee may from time to time, with the consent of the optionee, can-
cel all or any portion of any option granted under the 1998 Plan and pay the
optionee shares of Common Stock or cash, or any combination thereof as the
Committee may determine, in an amount equal to the difference between the ag-
gregate fair market value of the shares subject to the portion of the option
so canceled at the time of the cancellation and the aggregate purchase price
of such shares under the option. In the event of such a cancellation, the num-
ber of shares as to which such option was canceled shall not become available
for use under the Plan.
The 3,000,000 shares of Common Stock which would be available under the 1998
Plan represent approximately 3.0% of the shares outstanding at the close of
business on February 20, 1998.
Generally, at the time of exercise of a "nonqualified option," any excess of
the fair market value of the stock on the date of exercise over the exercise
price will be treated as ordinary income for federal income tax purposes. Any
cash or the fair market value of shares of Common Stock received upon the can-
cellation of options will also be treated as ordinary income. The Company will
be entitled to an income tax deduction for such amount at the time the
optionee includes such amount in income. At the time of the sale of any shares
received upon exercise of a nonqualified option or cancellation of an option,
the difference, if any, between the amount the optionee receives from the sale
of the shares and the fair market value of the shares on the date of such ex-
ercise or cancellation will be treated as long-term or short-term capital gain
(or loss) depending on whether he or she has then held the shares for more
than one year from the date of such exercise or cancellation. Long-term capi-
tal gain will be subject to a maximum federal income tax rate of 28% if the
stock has been held more than 12 months and not more than 18 months, and to a
maximum federal income tax rate of 20% if the stock has been held more than 18
months.
Optionees generally will not be subject to income tax upon their exercise of
an "incentive stock option". However, any excess of the fair market value of
Common Stock on the date the option is exercised over the option exercise
price will be included in the calculation of the optionee's alternative mini-
mum taxable income, which may subject him or her to the alternative minimum
tax of up to 28%. The portion of any such alternative minimum tax attributable
to the exercise of an incentive stock option can be credited against the
optionee's regular tax liability in later years to the extent that in any such
year his or her regular tax liability exceeds the alternative minimum tax. If
the optionee later sells the shares he or she received upon exercising the op-
tion at least two years after the option was granted and after having held the
shares for at least one year, the optionee will incur a long-term capital gain
(or loss) on the sale equal to the difference between the sales proceeds and
the exercise price. In the event of such a sale, no amount will be taxable as
ordinary income, and the Company will not be entitled to any income tax deduc-
tion.
If, however, the optionee sells the incentive stock or applies it to the ex-
ercise of another incentive stock option before the expiration of the one-year
holding period or less than two years after the option was granted, he or she
must report as ordinary income in the year of such disposition the amount by
which the lesser of (i) the fair market value of the stock on the exercise
date, or (ii) the amount realized on disposition of the stock, exceeds the ex-
ercise price. In addition, the excess, if any, of the amount realized
21
<PAGE>
on such a disposition over the stock's fair market value on the date of exer-
cise will be treated as long-term or short-term capital gain, depending on the
period of time the stock has been held. In the event of such a "disqualifying
disposition," the Company will be entitled to an income tax deduction equal to
the amount included as ordinary income by the optionee.
If the 1998 Plan is adopted by the stockholders, the Board of Directors may
amend or discontinue it at any time. However, without approval by the stock-
holders no such amendment may, except in the case of stock splits or other
changes in the Common Stock, (i) increase the number of shares with respect to
which options may be granted, (ii) permit granting options exercisable at a
price less than that described above or (iii) permit the extension or granting
of options which expire later than ten years after their grant.
An affirmative vote of a majority of the votes cast by holders of shares of
Common Stock and Class B Common Stock present and voting together at the 1998
Annual Meeting is required to adopt the Dow Jones 1998 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE DOW JONES 1998
STOCK OPTION PLAN.
---------------------------------------------------
APPROVAL OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
At its February meeting the Board of Directors unanimously recommended that
the stockholders vote to approve the appointment of Coopers & Lybrand L.L.P.,
independent certified public accountants, as auditors of the Company for 1998.
Coopers & Lybrand have been the auditors for many years. Stockholder approval
of the appointment of such firm as auditors will be requested at the 1998 An-
nual Meeting. Representatives of Coopers & Lybrand will be present at the
meeting, will have the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
---------------------------------------------------
STOCKHOLDER PROPOSAL 1
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, D.C. 20037, who holds of record 90 shares of Common
Stock and 30 shares of Class B Common Stock, has informed the Company that she
intends to present to the meeting the following resolution:
RESOLVED: "That the stockholders of Dow Jones, assembled in Annual Meeting
in person and by proxy, hereby request the Board of Directors to take the nec-
essary steps to provide for cumulative voting in the election of directors,
which means each stockholder shall be entitled to as many votes as shall equal
the number of shares he or she owns multiplied by the number of directors to
be elected, and he or she may cast all of such votes for a single candidate,
or any two or more of them as he or she may see fit."
Mrs. Davis has submitted the following statement in support of her proposal:
"Many states have mandatory cumulative voting, so do National Banks.
In addition, many corporations have adopted cumulative voting.
If you AGREE, please mark your proxy FOR this resolution."
BOARD OF DIRECTORS' POSITION
The Board opposes Mrs. Davis' proposal because it believes that the existing
class voting structure provides greater Board representation for holders of
Common Stock than if all directors were elected as a single class with cumula-
tive voting. This is because the holders of Common Stock currently account for
approximately a quarter of the total votes outstanding but are en-
22
<PAGE>
titled to elect one-third of the directors to be elected at every annual meet-
ing.
The Company's certificate of incorporation and bylaws provide that at every
meeting of stockholders called for the election of directors, holders of Com-
mon Stock, voting separately as a class, are entitled to elect at least one-
third of the number of directors to be elected. Thus for example, as a result
of these provisions, holders of Common Stock will be entitled to elect two of
the six Board members to be elected at this year's annual meeting.
Adopting cumulative voting in place of the existing class voting structure
would, in fact, cause holders of Common Stock to be entitled to elect fewer
Board members. Based on the number of shares currently outstanding, if holders
of Common Stock and Class B Common Stock voted together for six directors us-
ing cumulative voting, holders of Common Stock would be ensured only one seat
on the Board of Directors, instead of the two seats that they are entitled to
under the existing class voting structure.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ADOPTION OF THIS PROPOSED
RESOLUTION.
---------------------------------------------------
STOCKHOLDER PROPOSAL 2
The Independent Association of Publishers' Employees ("IAPE"), which holds of
record 55 shares of Common Stock and 10 shares of Class B Common Stock, has
informed the Company that it intends to present to the meeting the following
resolution:
RESOLVED, that shareholders request the Board of Directors to take steps
that may be necessary in accordance with state law, and without affecting the
unexpired terms of previously elected directors, to declassify the Board of
Directors so that all directors may be elected annually.
IAPE has submitted the following statement in support of its proposal:
The election of directors is the primary means by which shareholders may in-
fluence corporate policies and hold management accountable for the implementa-
tion of those policies. However, this avenue of influence is limited at Dow
Jones & Co. where the Board is divided into three classes of directors, with
staggered three-year terms.
This means directors face election only once every three years. As a result,
shareholders are deprived of the opportunity to hold two-thirds of the direc-
tors accountable for their conduct during the past year.
The need for Board accountability is compelling, given Dow Jones's dismal
performance. On Nov. 19, 1997, Dow Jones said it would take "a very sizable
charge," which would result in a "large net loss" for 1997, because "the value
of Dow Jones Markets on our books no longer fully represents its true value as
best we currently can determine it." The New York Times reported "analysts and
other experts said . . . the loss could possibly reach $600 million or more."
As Fortune magazine noted, the stock of Dow Jones, "down from its 1987 high
of 561/4 . . . has missed the greatest bull market in history." (February 3,
1997, issue). Fortune said that "the litany of mistakes that Dow Jones manage-
ment has made over the years -- selling its stake in Continental Cablevision
in the 1980s; losing out to NBC for the Financial News Network; passing on the
chance to control business news at CNN; and so on . . .(have) probably cost
Dow Jones billions of dollars."
Chief Executive, in its October 1997 issue, said: "The company's 1996 per-
formance was weak, and its cumulative total return fell far below the S&P 500
and its peer group of publishing companies. For 10 years, Dow Jones has been
the weakest performer in the publishing peer group."
The Board bears ultimate responsibility for Dow Jones's poor performance.
Strict accountability by the Board is important because, as Chief Executive
reported, Dow Jones is in the
23
<PAGE>
category of companies that have "allowed their boards to deteriorate into do-
nothing tribunals and have failed to serve the best interests of their share-
holders."
It should be noted that the current Board still includes two company execu-
tives and five directors with family connections. As Fortune said, some direc-
tors have been "content to collect dividends . . (and) rubber-stamp management
requests . . ." Also, the 1997 proxy statement said Vernon Jordan attended
only 60% of board and committee meetings in 1996, while David Li attended only
55% of such meetings; both are current directors.
Annual elections of directors would help to make the Board more accountable
to shareholders. And that could be a significant step toward improved corpo-
rate performance.
BOARD OF DIRECTORS' POSITION
The Corporate Governance Committee of the Board of Directors intends to review
a number of corporate governance matters during 1998, including the classified
board structure. The Board believes that such a review should proceed in an
orderly fashion and that, pending its outcome, this proposed resolution should
not be adopted.
The Company's stockholders adopted the staggered board structure in 1986 by
approving an amendment to the Company's Certificate of Incorporation which
provides that the Board of Directors be divided into three classes of direc-
tors as nearly equal in number as possible, with each class serving a three-
year term. That amendment also provides that an affirmative vote of more than
80% of the votes represented by the outstanding Common Stock and Class B Com-
mon Stock, voting together, would be required to return to the annual election
of directors.
Substantially similar stockholder proposals seeking to declassify the Board
have been presented at the 1987, 1988, 1993, 1994 and 1995 Annual Meetings and
have been defeated by the vote of the Company's stockholders in each instance.
While the Board of Directors believes that the classified board has served
the Company well in the past, the Board also recognizes that such structures
present legitimate issues of corporate governance. Accordingly, as noted
above, the Board's Corporate Governance Committee plans to review the classi-
fied board structure along with other corporate governance matters in 1998,
and the Board recommends a vote against adoption of this proposed resolution
pending the outcome of that review.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ADOPTION OF THIS PROPOSED
RESOLUTION.
---------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the outstanding Common Stock or Class B Common Stock, to file reports of own-
ership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Such persons are also required by SEC regula-
tion to furnish the Company with copies of all Section 16(a) reports they
file.
In 1991 the SEC completed an extensive revision of its rules in this area.
In addition to increasing the number and kind of reports to be filed, the SEC
has obliged companies to report in their proxy statements failures to file re-
ports on a timely basis. The Company believes that the failures to file listed
below were inadvertent.
Based solely on its review of the copies of such forms received by the Com-
pany, or written representations from certain reporting persons that no Form 5
annual reports were required for those persons, the Company believes that dur-
ing 1997, all filing requirements under Section
24
<PAGE>
16(a) of the Exchange Act applicable to its executive officers, directors, and
greater than ten-percent beneficial owners were complied with except that as
of March 17, 1998 Mr. William C. Cox, Jr., Ms. Leslie Hill and Mrs. Jane C.
MacElree had not yet filed their respective Form 5 annual reports reporting
the deferred stock equivalents which they were credited with during 1997. The
Company has been advised that such reports will be filed shortly.
---------------------------------------------------
CORPORATE GOVERNANCE
In 1997 the Board of Directors adopted the "Dow Jones & Company Principles of
Corporate Governance." The Principles are listed below. Following adoption,
the existing Nominating Committee assumed additional responsibilities and was
renamed the Corporate Governance Committee. These Principles are being pub-
lished in this proxy statement to inform stockholders of the Board's current
thinking with respect to selected corporate governance issues considered to be
of significance to stockholders. The Board will continue to assess the appro-
priateness and efficacy of the Principles and it is likely that changes to the
Principles will be considered from time to time.
DOW JONES & COMPANY PRINCIPLES OF CORPORATE GOVERNANCE
1. The principal duty of the Board of Directors and management of Dow Jones &
Company is to assure that the company is well-managed in the interests of
its shareholders. Dow Jones seeks to protect and preserve the independence
and integrity of its products and services, including The Wall Street Jour-
nal, on which the company's long-term prosperity depends.
2. Dow Jones is owned by its shareholders; the shareholders, in turn, elect
the company's Board of Directors. The Board plays the central role in the
company's governance; it is the company's decision-making authority on all
matters except those reserved to the shareholders. The Board, in turn, se-
lects the company's chief executive officer and approves the appointment of
other members of senior management; senior management is charged with the
conduct of the company's business.
3. The primary functions of the Board are:
. review and, where appropriate, approval of the financial objectives, ma-
jor strategies and plans, and major corporate actions of Dow Jones;
. selection and evaluation of Dow Jones' chairman and chief executive of-
ficer;
. determining senior management compensation;
. periodic review of management succession plans;
. selection and recommendation to shareholders for election of appropriate
candidates for service on the Board;
. review of the adequacy of the company's systems for compliance with all
applicable laws and regulations, for safeguarding the company's assets
and for managing the major risks it faces; and
. provision of advice and counsel to senior management.
4. It is the policy of Dow Jones that the Board should consist of a majority
of "outside" directors. Consistent with this policy, and the underlying
philosophy of promoting vigorous representation for shareholders, Dow Jones
does not consider that anyone should be deemed an "inside" director by vir-
tue of the size of his or her shareholdings, no matter how great. On the
other hand, the company does consider any present or former member of se-
nior management to be an "inside" director, no matter the extent of his or
her shareholdings.
5. The number of directors shall not exceed a number that can function effi-
ciently as a body. The Corporate Governance Committee (formerly the Nomi-
nating Committee), in
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consultation with the chairman and CEO, considers and makes recommendations
concerning the appropriate size and membership needs of the Board. The size
of the Board will be not less than 10 nor more than 20 members; normally the
number of directors will be approximately 15. The Corporate Governance Com-
mittee also considers candidates to fill new Board positions created by ex-
pansion and vacancies that occur by resignation, retirement or for any other
reason.
6. Prospective members of the Board are selected for their character and wis-
dom, judgment and integrity, business experience and acumen. The Corporate
Governance Committee also seeks to have a variety of occupational and a di-
versity of personal backgrounds represented on the Board. Directors are re-
quired to retire from the Board at the annual meeting of shareholders fol-
lowing their 70th birthday. Upon the adoption of these principles, no direc-
tor who is an employee of the company shall be eligible for re-election as a
director after the termination of his or her employment.
7. Upon election, directors receive a package of orientation materials and an
extensive review of the company and its businesses from senior managers. In
addition, Board members are encouraged to visit company facilities through-
out their tenure on the Board.
8. All directors are expected to own stock in Dow Jones. The Compensation Com-
mittee annually reviews the compensation of directors. The company believes
that a substantial part of directors' compensation should be stock-based.
9. Because of the nature of the company's publishing business, no "inside" di-
rectors are permitted to serve as directors of other public companies, ex-
cept as representatives of Dow Jones in cases in which the company owns
shares in another company.
10. It is the general policy of the company that all major decisions be consid-
ered by the Board as a whole. This allows the company to gain the advantage
of the collective wisdom of the Board. As a consequence, the committee
structure of the Board is limited to those committees considered to be ba-
sic to or required for the operation of Dow Jones as a publicly-owned com-
pany. Currently these committees are the Executive Committee, the Audit
Committee, the Compensation Committee and the Corporate Governance Commit-
tee. The members and chairs of these committees are recommended to the
Board by the Corporate Governance Committee in consultation with the chair-
man and CEO. The responsibilities of each of the committees are determined
by the Board from time to time.
11. Membership on the Audit, Compensation and Corporate Governance committees
is limited to outside directors. The chairman and CEO and other senior man-
agers attending meetings of these committees do so by invitation. The
chairs of these committees act as the chair at executive sessions or meet-
ings of outside directors at which the principal items to be considered are
within the scope of one of these committees' authority. This provides for
board leadership without the need to designate a lead director.
12. The frequency, length and agenda of meetings of each of the committees are
determined by the chair of the committee. Whenever possible, materials re-
lated to agenda items are provided to committee members sufficiently in ad-
vance of committee meetings to allow the directors to prepare for discus-
sion. Sufficient time to consider the agenda items is provided.
13. The Compensation Committee ensures that a proper system of current and
long-term compensation is in place to provide performance-oriented incen-
tives to management; reviews remuneration arrangements for senior manage-
ment; reviews and approves the structure of employee benefit plans; makes
recommendations to the Board; and grants options or other benefits under
certain employee benefit plans. The committee also is responsible for set-
ting annual and long-term performance goals (based on criteria established
in advance) for the chair-
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man and CEO, and for evaluating performance against these goals. The com-
mittee makes full reports to the entire Board, which approves the structure
and general administration of the compensation program for the chairman and
CEO and other senior managers.
14. The Audit Committee recommends to the shareholders the appointment of in-
dependent auditors; makes recommendations to the Board regarding their en-
gagement; and considers the range of audit and nonaudit fees. The commit-
tee also reviews the work of the company's internal auditors, meets with
the independent auditors to review and approve the scope and results of
their professional services, and reviews the procedures for evaluating the
adequacy of the company's internal controls. The Audit Committee provides
a direct channel of communication to the Board for the independent audi-
tors, internal auditors, the chief financial officer and the general coun-
sel.
15. It is the policy of Dow Jones that the positions of Chairman of the Board
and Chief Executive Officer be held by the same person, except in unusual
circumstances. This combination has served the company well over a great
many years.
16. The chairman and CEO is responsible for establishing effective communica-
tions with the company's stakeholder groups, i.e. shareholders, customers,
employees and others. It is the policy of Dow Jones that management speaks
for the company.
17. The chairman and CEO sets the agenda for meetings of the Board with the
understanding that certain items pertinent to the advisory and monitoring
functions of the Board be brought to it periodically by the chairman and
CEO for review or decision. For example, the annual corporate budget is
reviewed by the Board, and capital expenditures above a certain threshold
amount (currently $10 million) are approved by the Board. Agenda items
that fall within the scope of responsibilities of a Board committee are
reviewed with the chair of that committee, who presents these matters to
the Board. Any Board member may request that an item be included on the
agenda.
18. Whenever possible, materials related to agenda items are provided to Board
members sufficiently in advance of Board meetings to allow the directors
to prepare for discussion. Sufficient time to consider the agenda items is
provided.
19. Generally, presentations of matters to be considered by the Board are made
by the manager responsible for that area of the company's operations. In
addition, Board members have free access to all other members of manage-
ment and employees of the company.
20. Executive sessions or meetings of outside directors without management
present are held at least once per year to review:
. the report of the independent auditors;
. the criteria upon which the performance of the chairman and CEO and
other senior managers is based;
. the performance of the chairman and CEO against such criteria;
. the compensation of the chairman and CEO and other senior managers; and
. the performance of the Board.
Additional executive sessions or meetings of outside directors may be
held from time to time as required, or as requested by directors.
21. These principles are reviewed by the Board from time to time.
-------------------------------------------------
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DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at the 1999 Annual Meeting
must be received by the Company at its principal executive offices
not later than November 20, 1998 in order to be considered for inclusion in
the Company's 1999 proxy statement and form of proxy.
OTHER MATTERS
The Company knows of no other matter to be brought before the 1998 Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the meeting, it is the intention of the persons named in the proxy to
vote the same with respect to any such matter in accordance with their best
judgment.
Stockholders who do not expect to attend the 1998 Annual Meeting in person
are requested to complete, date, sign and return the enclosed proxy promptly
in the enclosed postage prepaid envelope.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WHICH WAS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON MARCH 17, 1998 IS AVAILABLE TO INTER-
ESTED STOCKHOLDERS UPON WRITTEN REQUEST TO MR. RICHARD TOFEL, VICE PRESIDENT--
CORPORATE COMMUNICATIONS, DOW JONES & COMPANY, INC., 200 LIBERTY STREET, NEW
YORK, NEW YORK 10281.
By order of the Board of Directors,
Peter G. Skinner
Secretary
New York, New York
March 20, 1998
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APPENDIX A
DOW JONES 1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The Employee Stock Purchase Plan (the "Plan") of Dow Jones & Com-
pany, Inc. (the "Company") is designed to provide an opportunity for the em-
ployees of the Company and of its designated subsidiaries to purchase shares
of Common Stock of the Company ("Common Stock") through voluntary systematic
payroll deductions and to encourage such employees to continue in the employ
of the Company or such subsidiaries and to motivate such employees to exert
their best efforts on behalf of the Company and such subsidiaries. It is in-
tended that this Plan constitute an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code (the "Code").
2. OFFERINGS UNDER THE PLAN. From time to time within the limits of the Plan,
shares of Common Stock will be made available for purchase only by employees
through offerings thereof made on behalf of the Company by its Board of Direc-
tors (the "Board"). The Board may from time to time designate the subsidiaries
of the Company whose employees may participate in an offering under the Plan
and shall within the limits of the Plan fix the terms and conditions of each
offering, including the period of each offering (the "Purchase Period") which
shall not exceed twelve months.
3. ELIGIBILITY AND PARTICIPATION OF EMPLOYEES. All regular, full-time employ-
ees of the Company and of such subsidiaries as may be designated by the Board
shall be eligible to participate in the Plan, except that (i) there shall be
excluded on a uniform basis from each offering: (a) employees whose customary
employment by the Company or a designated subsidiary is twenty hours or less
per week, (b) employees whose customary employment by the Company or a desig-
nated subsidiary is for not more than five months in any calendar year, (c)
any employee who, as of the first day of the Purchase Period, would own stock
or hold outstanding options to purchase stock, possessing in the aggregate (as
determined under Sections 423(b)(3) and 424(d) of the Code) 5% or more of the
total combined voting power or value of all classes of stock of the Company or
of any subsidiary and (d) any employee if the grant of an option hereunder
would permit his rights to purchase stock under this Plan and under all other
employee stock purchase plans, if any, of the Company and its subsidiaries to
accrue (as determined under Section 423 of the Code) at a rate which exceeds
$25,000 of fair market value of such stock, determined at the time such option
is granted, for each calendar year in which such option is outstanding at any
time, and (ii) there may be excluded on a uniform basis from any offering, in
the discretion of the Committee described in Section 11, employees who at the
commencement of the Purchase Period for any such offering have been employed
by the Company or a designated subsidiary for less than two years, or such
other, shorter period of time as the Committee shall prescribe.
4. NUMBER OF SHARES PURCHASABLE. The number of shares that may be purchased by
any employee under an offering, which shall be not less than five shares nor
more than such number of shares as shall have a fair market value, determined
as of the first day of the Purchase Period, of $25,000, shall be determined by
the Board and shall be based upon a uniform relationship to the annual rate of
basic or regular compensation of such employee in effect at the commencement
of the Purchase Period for such offering, excluding overtime, bonuses, incen-
tive compensation and contributions made to any employee benefit plan main-
tained by the Company or any subsidiary.
5. SHARES SUBJECT TO THE PLAN. The shares which may be offered under the Plan
may be authorized and unissued Common Stock or Common Stock reacquired by the
Company and held in its treasury. The aggregate number of shares of Common
Stock which may be issued under the Plan is 2,000,000 except as such
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number may be increased or decreased pursuant to Section 10. All shares of-
fered under the Plan and for any reason not purchased as well as all shares
not previously offered will be available for subsequent offerings.
6. PRICE. The price at which the shares may be purchased in any offering under
the Plan shall be the lower of: (a) 85% of the fair market value of the stock
on the first day of the Purchase Period and (b) 85% of the fair market value
of the stock on the date the option is exercised. As used in this Section 6
"fair market value" shall mean the composite closing price of the Common Stock
on the New York Stock Exchange on the date as of which the Common Stock is to
be valued or if the Common Stock shall not have been traded on said Exchange
on such date, the composite closing price on said Exchange on the first day
prior thereto on which the Common Stock was traded.
7. PAYROLL DEDUCTIONS; RIGHT OF CANCELLATION; RIGHTS ON TERMINATION OF EMPLOY-
MENT OR DEATH. Except as otherwise provided herein, shares purchased under the
Plan will be paid for by payroll deductions during the Purchase Period. Prior
to commencement of the Purchase Period for each offering, the Committee ap-
pointed to administer the Plan pursuant to Section 11 (the "Committee") shall
adopt a schedule of the periodic payroll deductions required to be made in or-
der to purchase specified numbers of shares during such offering. In lieu of
any and all participation through payroll deductions, any employee may at the
commencement of the Purchase Period make a lump sum cash payment to the Com-
pany for such number of shares as he shall determine, but not to exceed the
maximum number of shares that he is entitled to purchase pursuant to any of-
fering. Each participant may by written notice to the Company cancel his elec-
tion to purchase shares under the Plan not later than two weeks prior to the
last day of the Purchase Period and in such case any amount withheld for the
account of such participant shall be paid to him as promptly as practicable,
without interest.
If the employment of any participant shall terminate prior to the end of the
Purchase Period for any offering because of his retirement or death, such par-
ticipant or, in the case of the death of a participant, his legal representa-
tive, may within three months after the date of the participant's retirement
or death, but in no event later than the expiration of such Purchase Period,
purchase the number of shares the participant had elected to purchase in such
offering by making a lump sum cash payment to the Company which, when added to
the amounts deducted prior to the participant's retirement or death for the
purchase of Common Stock in such offering, will be sufficient to cover the
purchase price of such number of shares as determined under Section 6. If no
such election is exercised, there shall be paid to such participant or, in the
case of a participant's death, his legal representative, the amount thereto-
fore deducted under the Plan for the participant's account, without interest.
If the employment of any participant shall terminate prior to the end of the
Purchase Period for any offering for any reason other than his retirement or
death, the Company shall pay to such participant the amount theretofore de-
ducted under the Plan for his account, without interest.
8. ISSUE OF SHARES. Shares purchased under the Plan shall be issued as soon as
practicable after the end of the Purchase Period applicable to such shares or
upon full payment in cash in a lump sum at the commencement of the Purchase
Period or upon the retirement or death of a participant. No participant shall
have any rights as a stockholder with respect to any shares which he may pur-
chase under the Plan prior to the date of issuance to him of such shares.
9. ASSIGNABILITY. No assignment or transfer by an employee, former employee or
his legal representatives of any option, election to purchase shares, or any
other interest under this Plan will be recognized; any purported assignment or
transfer, whether voluntary or by operation of law (except by will or the laws
of descent and distribution), shall have the effect of terminating such op-
tion, election to purchase or other interest. An employee's option and elec-
tion to purchase shall be exercisable only by him during his lifetime. If an
election to purchase is terminated by reason of the provisions of this Section
9, the only right thereafter continuing shall be the right to have the amount
of payroll deduc-
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tions then credited to the employee's account paid without interest to the em-
ployee or other person entitled thereto, as the case may be.
10. ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK. In the event of any change
in the Common Stock by reason of any stock dividend, recapitalization, reorga-
nization, merger, consolidation, split-up, combination or exchange of shares,
or rights offering to purchase Common Stock at a price substantially below
fair market value, or of any similar change affecting the Common Stock, the
number and kind of shares which thereafter may be sold under the Plan and the
number and kind of shares which may be purchased under any outstanding offer-
ing and the purchase price per share thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, participants in the Plan.
11. ADMINISTRATION OF THE PLAN. The Plan shall be administered and interpreted
by a Committee appointed by the Board consisting of three or more persons,
none of whom shall be eligible to vote on or make any decision affecting any
rights he may be granted to purchase shares under the Plan. The members of the
Committee shall serve without compensation, but shall be reimbursed for any
reasonable expenses incurred in their capacities as members. The Committee
shall serve at the pleasure of the Board and may from time to time adopt rules
and regulations for the administration of the Plan. In the absence of fraud or
willful misconduct no member of the Committee shall be liable for any action
or determination made with respect to the Plan. Any interpretation, determina-
tion or other action made or taken by the Committee shall be final, binding
and conclusive.
12. APPLICATION OF FUNDS. The funds deposited with the Company pursuant to the
terms of any offering and the proceeds received by the Company from the sale
of Common Stock under the Plan will be used for general corporate purposes.
13. COMPLIANCE WITH GOVERNMENT LAW AND REGULATIONS. The Plan, each offering
thereunder, and the obligation of the Company to sell and deliver Common Stock
thereunder shall be subject to all applicable Federal and State laws, rules
and regulations and to such approvals by any governmental or regulatory agency
as may be required. The Company shall not be required to issue or deliver any
certificates for shares of Common Stock prior to (a) the listing of such
shares on any stock exchange on which the Common Stock may then be listed and
(b) the completion of any registration or qualification of such shares under
any State or Federal law, or any ruling or regulation of any government body
which the Company shall, in its sole discretion, determine to be necessary or
advisable.
14. SALE OF SHARES PURCHASED UNDER THE PLAN. It is the hope of the Company
that Common Stock purchased under the Plan will be held for investment and not
for resale; in furtherance thereof, the Company may impose such limitations on
the sale or other disposition of such Common Stock as it deems appropriate.
Nothing contained in the Plan shall restrict any employee from selling any
Common Stock purchased under the Plan at any time he chooses provided any such
sale is consistent with any limitations imposed pursuant to the preceding sen-
tence, and does not violate the Company's Conflicts of Interest policy, or any
successor to such policy. Each employee shall assume the risk of any market
fluctuations in the price of Common Stock purchased by him under the Plan.
15. COMPANY'S PAYMENT OF EXPENSES RELATED TO THE PLAN. The Company will bear
all expenses incurred in administering the Plan, including expenses of issuing
Common Stock under the Plan.
16. PLAN AND RIGHTS TO PURCHASE COMMON STOCK NOT TO CONFER RIGHT WITH RESPECT
TO CONTINUANCE OF EMPLOYMENT. The Plan and any rights to purchase Common Stock
granted under the Plan shall not confer upon any employee any right with re-
spect to continuance of employment by the Company or any subsidiary, nor shall
they interfere in any way with the right of the Company or any subsidiary by
which an employee is employed to terminate his employment at any time.
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17. GENERAL.
(a) Each eligible employee may enroll in any offering under the Plan by sign-
ing and delivering to the Treasurer of the Company, not later than a date
specified by the Board for such offering, an Authorization:
(i) authorizing the Company to deduct regularly from his compensation such
amount (based upon the number of shares which such employee elects to purchase
in any offering) as shall be set forth in the schedule of payroll deductions
for such offering adopted by the Committee pursuant to Section 7;
(ii) specifying the number of shares which he elects to purchase at the end
of the Purchase Period for such offering; and
(iii) specifying the exact name in which shares purchased by him are to be
issued, which shall be the name of the employee or the names of the employee
and his or her spouse.
Any adjustments necessary to accumulate the necessary funds to purchase the
number of shares which any employee has elected to purchase in any offering
shall be made by appropriate adjustments in payroll deductions during the
three weeks immediately preceding the end of the Purchase Period. Unless the
employee withdraws from the Plan, his Authorization so filed shall continue in
effect throughout the Purchase Period of the offering to which it relates. The
Company will accumulate and hold for the employee's account the amount de-
ducted from his basic compensation and will maintain accounts for all partici-
pants. No interest will be paid on such payroll deductions.
(b) Only full shares of Common Stock may be purchased. Any balance remaining
in any employee's account after the purchase of the shares he has elected to
purchase in any offering will be promptly refunded to the employee, without
interest.
(c) Each eligible employee who continues to be a participant in the Plan on
the last day of the Purchase Period of any offering shall be deemed to have
purchased from the Company such number of full shares of Common Stock reserved
for the purposes of the Plan as his accumulated payroll deductions on such day
will pay for at the purchase price.
(d) If at any time shares of Common Stock reserved for the purposes of the
Plan remain available for purchase but not in sufficient number to satisfy all
then unfilled purchase requirements, the available shares shall be apportioned
among participants in proportion to their rights and the Plan shall terminate.
Upon such termination or any other termination of the Plan, all payroll deduc-
tions not used to purchase Common Stock will be refunded without interest to
the employees for whose account they are held.
18. AMENDMENT OR DISCONTINUANCE. The Board may amend, discontinue or terminate
the Plan at any time, provided, however, that no amendment, discontinuance or
termination shall alter or impair any rights outstanding at the time of such
amendment, discontinuance or termination to purchase shares pursuant to any
offering hereunder. The Plan will terminate in any event when all or substan-
tially all of the shares reserved for the purposes of the Plan have been is-
sued.
19. NAME. The Plan shall be known as the "Dow Jones 1998 Employee Stock Pur-
chase Plan."
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<PAGE>
APPENDIX B
DOW JONES 1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to provide a means whereby Dow Jones &
Company, Inc. (the "Company") may, through the grant of options to purchase
Common Stock of the Company to employees of the Company and of any Subsidiary,
attract and retain persons of ability as key employees (including officers and
directors who are also employees) and motivate such employees to exert their
best efforts on behalf of the Company and any Subsidiary. When used in the
Plan with reference to employment, the term "Company" shall include Subsidiar-
ies of the Company. As used herein the term "Subsidiary" shall mean any legal
entity 50% or more of the voting equity of which is owned or controlled di-
rectly or indirectly by the Company.
2. SHARES SUBJECT TO THE PLAN. Options may be granted by the Company from time
to time to key employees of the Company to purchase shares of Common Stock
($1.00 par value) of the Company ("Common Stock"), and may be either autho-
rized and unissued or held by the Company in its treasury. The maximum number
of shares of Common Stock with respect to which options may be granted under
the Plan shall be 3,000,000 shares, subject to adjustment as provided in Sec-
tion 4(h). If any option granted under the Plan shall terminate, expire or,
with the consent of the optionee, be canceled, new options may thereafter be
granted covering such shares. Anything contained herein to the contrary not-
withstanding, the aggregate number of shares of Common Stock with respect to
which options may be granted during any calendar year to any individual shall
be limited to 200,000.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Compensa-
tion Committee (the "Committee") consisting of not less than two members ap-
pointed by the Board of Directors of the Company. Each member of the Committee
shall be a member of the Board who qualifies both as an "outside director"
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), and as a "non-employee director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934.
Any vacancy occurring in the membership of the Committee shall be filled by
appointment of the Board.
Subject to the provisions of the Plan, the Committee shall have the power to:
(a) determine and designate from time to time those employees of the Company
to whom options are to be granted and the number of shares to be optioned to
each such employee;
(b) authorize the granting of options which qualify as incentive stock options
within the meaning of Section 422 of the Code ("Incentive Stock Options"), and
options which do not qualify as Incentive Stock Options, both of which are re-
ferred to herein as options;
(c) determine the number of shares subject to each option;
(d) determine the time or times and the manner when each option shall be exer-
cisable and the duration of the exercise period, which period shall in no
event exceed ten years (or five years as specified in Section 4(m) hereof)
from the date the option is granted;
(e) extend the term of an option (including extension by reason of an
optionee's death, permanent disability or retirement) but not beyond ten years
(or five years as specified in Section 4(m) hereof) from the date of the
grant; and
(f) cancel all or any portion of any option as provided in Section 4(k).
No director of the Company who is not also an employee of the Company shall be
entitled to receive any option under the Plan.
The Committee may interpret the Plan, prescribe, amend and rescind any rules
and regulations necessary or appropriate for the administration of the Plan,
and make such other determinations and take such other action as it deems nec-
essary or advisable, except as otherwise expressly reserved to the Board of
Directors of the Company in the Plan. Without limiting
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the generality of the foregoing sentence, the Committee may, in its discre-
tion, treat all or any portion of any period during which an optionee is on
military or on an approved leave of absence from the Company as a period of
employment of such optionee by the Company for purposes of accrual of his or
her rights under his or her option; provided, however, that no option may be
granted to an employee while he or she is on a leave of absence. Any interpre-
tation, determination or other action made or taken by the Committee shall be
final, binding and conclusive.
4. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan shall
be evidenced by an agreement, in form approved by the Committee, which shall
be subject to the following express terms and conditions and to such other
terms and conditions as the Committee may deem appropriate:
(a) Option Period. Each option agreement shall specify the period for which
the option thereunder is granted (which in no event shall exceed ten years (or
five years as specified in Section 4(m) hereof) from the date of grant) and
shall provide that the option shall expire at the end of such period.
(b) Option Price. The option price per share shall be determined by the Com-
mittee at the time any option is granted, and shall be not less than the fair
market value (but in no event less than the par value) of the Common Stock of
the Company on the date the option is granted, as determined by the Committee.
(c) Exercise of Option. No part of any option may be exercised until the
optionee shall have remained in the employ of the Company for such period af-
ter the date on which the option is granted as the Committee may specify in
the option agreement.
(d) Payment of Purchase Price upon Exercise. The purchase price of the shares
as to which an option shall be exercised shall be paid to the Company at the
time of exercise either (i) in cash (including the proceeds of a "cashless ex-
ercise" with the assistance of a broker), or (ii) by delivering Common Stock
of the Company already owned by the optionee and having a total fair market
value on the date of such delivery equal to the purchase price, or (iii) by
delivering a combination of cash and Common Stock of the Company having a to-
tal fair market value on the date of such delivery equal to the purchase
price.
(e) Exercise in the Event of Death or Termination of Employment. (1) If an
optionee's employment by the Company shall terminate because of his or her
death, retirement or permanent disability, his or her option may be exercised,
to the extent provided in the option agreement, by him or her or by the person
or persons to whom the optionee's rights under the option pass by designation
pursuant to Section 5, or, absent a designation, by will or applicable law, or
if no such person has such right, by the executor or administrator of his or
her estate, at any time, or from time to time, but not later than the earlier
of (i) the expiration date specified pursuant to paragraph (a) of this Section
4 or (ii) the expiration of the period, if any, prescribed in the agreement
for such an exercise. (2) If an optionee's employment shall terminate for any
reason other than death, permanent disability or retirement, all right to ex-
ercise his or her option shall terminate at the date of such termination of
employment.
(f) Transferability of Options. No option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee an option shall be exercisable only by him
or her.
(g) Investment Representation. Upon demand by the Committee, the optionee (or
any person acting under Section 4(e)) shall deliver to the Committee at the
time of any exercise of an option a written representation that the shares to
be acquired upon such exercise are to be acquired for investment and not for
resale or with a view to the distribution thereof. Upon such demand, delivery
of such representation prior to the delivery of any shares issued upon exer-
cise of an option and prior to the expiration of the option period shall be a
condition precedent to the right of the optionee or such other person to pur-
chase any shares (and each option agreement shall contain an undertaking to
deliver such a representation).
(h) Adjustments in Event of Change in Common Stock. In the event of any change
in the Common Stock of the Company by reason of any
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stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or rights offering to purchase
Common Stock at a price substantially below fair market value, or of any simi-
lar change affecting the Common Stock, the number and kind of shares which
thereafter may be optioned and sold under the Plan and the number and kind of
shares subject to option in outstanding option agreements and the purchase
price per share thereunder shall be appropriately adjusted consistent with
such change in such manner as the Committee may deem equitable to prevent sub-
stantial dilution or enlargement of the rights granted to, or available for,
participants in the Plan.
(i) Optionees to Have No Right as a Stockholder. No optionee shall have any
rights as a stockholder with respect to any shares subject to his or her op-
tion prior to the date of issuance to him or her of a certificate or certifi-
cates for such shares.
(j) Plan and Option Not to Confer Rights with Respect to Continuance of
Employment. The Plan and any option granted under the Plan shall not confer
upon any optionee any right with respect to continuance of employment by the
Company, nor shall they interfere in any way with the right of the Company to
terminate his or her employment at any time.
(k) Other Option Provisions. The form of option authorized by the Plan may
contain such other provisions as the Committee may, from time to time, deter-
mine. Without limiting the foregoing, the Committee may, with the consent of
the optionee, from time to time cancel all or any portion of any option then
subject to exercise, and the Company's obligation in respect of such option
may be discharged either by (i) payment to the optionee of an amount in cash
equal to the excess, if any, of the fair market value at such time of the
shares subject to the portion of the option so cancelled over the aggregate
purchase price of such shares, (ii) the issuance or transfer to the optionee
of shares of Common Stock of the Company with a fair market value at such time
equal to any such excess, or (iii) a combination of cash and shares with a
combined value equal to any such excess, all as determined by the Committee in
its discretion. In the event of such a cancellation, the number of shares as
to which such option was canceled shall not again become available for use un-
der the Plan. The Committee may also authorize options that permit payment of
the purchase price and taxes arising upon exercise by having the Company with-
hold a sufficient number of shares, otherwise issuable thereunder, to cover
such amounts.
(l) Limitation on Value of Incentive Stock Options. The aggregate fair market
value (determined as of the time the option is granted) of the stock for which
Incentive Stock Options granted to any one employee under this Plan and under
all stock option plans of the Company and its Subsidiaries may by their terms
first become exercisable during any calendar year shall not exceed $100,000.
(m) Grants to Certain Holders. Notwithstanding Sections 4(a) and 4(b) hereof,
if an Incentive Stock Option is granted to an optionee who owns stock repre-
senting more than ten percent of the voting power of all classes of stock of
the Company or a Subsidiary, the period specified in the option agreement for
which the Incentive Stock Option thereunder is granted and at the end of which
the Incentive Stock Option shall expire, shall not exceed five years from the
date of grant and the option price shall be at least 110% of the fair market
value (as of the time of grant) of the Common Stock subject to the option.
5. DESIGNATION OF BENEFICIARIES. An optionee may file with the Company a writ-
ten designation of a beneficiary or beneficiaries under the Plan and may from
time to time revoke or change any such designation of beneficiary. Any desig-
nation of beneficiary under the Plan shall be controlling over any other dis-
position, testamentary or otherwise; provided, however, that if the Committee
shall be in doubt as to the entitlement of any such beneficiary to any option,
the Committee may determine to recognize only the legal representative of such
optionee, in which case the Company, the Committee and the members thereof
shall not be under any further liability to anyone.
6. COMPLIANCE WITH GOVERNMENT LAW AND REGULATIONS. The Plan, the grant and ex-
ercise of options thereunder, and the obligation of the
B-3
<PAGE>
Company to sell and deliver shares under such options, shall be subject to all
applicable laws, rules and regulations and to such approvals by any government
or regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to (i) the
listing of such shares on any stock exchange on which the Common Stock may
then be listed and (ii) the completion of any registration or qualification of
such shares under any state or federal law, or any ruling or regulation of any
governmental body which the Company shall, in its sole discretion, determine
to be necessary or advisable.
7. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Board of Directors of the Com-
pany may at any time amend or discontinue the Plan; provided, however, that,
subject to the provisions of Section 4(h) no action of the Board of Directors
or of the Committee may (i) increase the number of shares with respect to
which options may be granted under the Plan, (ii) permit the granting of any
option at an option price less than that determined in accordance with Section
4(b) or (iii) permit the extension or granting of options which expire beyond
the ten-year period provided for in Sections 3(e) and 4(a). Without the writ-
ten consent of an optionee, no amendment or discontinuance of the Plan shall
alter or impair any option previously granted to him or her under the Plan.
8. EFFECTIVE DATE OF THE PLAN. The effective date of the Plan shall be the
date of approval of the Plan by stockholders of the Company holding not less
than a majority of the votes of the shares present and voting at a meeting at
which the Plan is proposed for approval.
9. NAME. The Plan shall be known as the "Dow Jones 1998 Stock Option Plan."
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<PAGE>
DOW JONES & COMPANY, INC.
Proxy Solicited on behalf of the Board of Directors for
Annual Meeting of Stockholders--April 15, 1998
P R O X Y
The undersigned stockholder of Dow Jones & Company, Inc. hereby appoints WILLIAM
C. COX, JR., PETER R. KANN and KENNETH L. BURENGA and each of them jointly and
severally, proxies, with full power of substitution, to vote all shares of
Common Stock and Class B Common Stock of the Company which the undersigned is
entitled to vote at the 1998 Annual Meeting of Stockholders to be held on
Wednesday, April 15, 1998, at 10:00 a.m. and at any adjournment thereof, upon
such business as may properly come before the meeting, including the following
proposals, which are described in the Proxy Statement dated March 20, 1998, a
copy of which has been received by the undersigned:
Election of Directors.
Nominees:
For Election by the Holders of Common Stock Voting Separately as a Class:
Rand V. Araskog and Vernon E. Jordan, Jr.
For Election by the Holders of Common Stock and Class B Common Stock Voting
Together:
Kenneth L. Burenga, William C. Cox, Jr., Irvine O. Hockaday, Jr. and
M. Peter McPherson
PLEASE SIGN AND DATE ON REVERSE SIDE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in
this example [X]
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(a), 1(b), 2, 3 and 4, and AGAINST Proposals 5 and 6.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1(a), 1(b), 2, 3 and 4,
and AGAINST Proposals 5 and 6.
- --------------------------------------------------------------------------------
1(a). Election of Directors by Common Stock.
(see reverse)
FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
- ------------------
1(b). Election of Directors by Common Stock and Class B Common Stock.
(see reverse)
FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominees(s):
- ------------------
2. Adoption of Dow Jones 1998 Employee Stock Purchase Plan.
FOR ABSTAIN AGAINST
[ ] [ ] [ ]
3. Adoption of Dow Jones 1998 Stock Option Plan.
FOR ABSTAIN AGAINST
[ ] [ ] [ ]
4. Approval of Auditors for 1998.
FOR ABSTAIN AGAINST
[ ] [ ] [ ]
5. Stockholder Proposal to establish cumulative voting in the election of
directors.
FOR ABSTAIN AGAINST
[ ] [ ] [ ]
6. Stockholder Proposal to establish one-year terms for directors.
FOR ABSTAIN AGAINST
[ ] [ ] [ ]
Signature(s) Date: , 1998
------------------------------------------- -----------
NOTE: Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator or trustee or for a corporation, please give your full
title. For joint accounts, each owner must sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
