<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
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
A. H. Belo Corporation
--------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------------
<PAGE> 2
A. H. BELO CORPORATION [LOGO]
COMMUNICATIONS CENTER
400 SOUTH RECORD STREET
DALLAS, TEXAS 75202
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 1995
------------------------
To the Shareholders of
A. H. BELO CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of A. H.
Belo Corporation (the "Company"), a Delaware corporation, will be held in the
Pullman Room, Union Station, 400 South Houston Street, Dallas, Texas, on
Wednesday, May 3, 1995, at 10:00 a.m., Dallas, Texas time, for the following
purposes:
1. To elect five Class III directors to hold office for a term of
three years or until their respective successors are elected and qualified;
2. To consider and act upon a proposal to approve the Company's 1995
Executive Compensation Plan;
3. To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to (a) remove from the Certificate of
Incorporation the express denomination of a specific number of shares of
Series A Common Stock constituting such series and (b) permit the issuance
of additional shares of Series B Common Stock, provided that any such
issuance would not result in the Series A Common Stock being excluded from
trading on the New York Stock Exchange (the "NYSE") and other alternative
securities markets; and
4. To transact such other business as properly may come before the
meeting or any adjournment thereof.
The close of business on March 17, 1995 has been fixed by the Board of
Directors as the record date for the Annual Meeting. Only shareholders of record
on that date will be entitled to notice of and to vote at the Annual Meeting or
any adjournment thereof, notwithstanding transfer of any stock on the books of
the Company after such record date. The stock transfer books will not be closed.
A Proxy Statement, form of Proxy, and copy of the Annual Report on the
Company's operations during the fiscal year ended December 31, 1994 accompany
this notice.
It is important that your shares be represented at the Annual Meeting. If
you do not expect to attend in person, please sign and date the form of Proxy
and return it in the enclosed envelope. Shareholders who do plan to attend may
vote at the Annual Meeting. The form of Proxy is enclosed in the sleeve attached
to the front of the mailing envelope in which this Proxy Statement is contained.
Shareholders who attend the Annual Meeting may revoke their proxies and vote in
person if they desire.
By Order of the Board of Directors
MICHAEL J. McCARTHY
Secretary
March 30, 1995
<PAGE> 3
A. H. BELO CORPORATION [LOGO]
COMMUNICATIONS CENTER
400 SOUTH RECORD STREET
DALLAS, TEXAS 75202
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 1995
SOLICITATION OF PROXIES
This Proxy Statement is furnished to shareholders of A. H. Belo
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors to be voted at the Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held in the
Pullman Room, Union Station, 400 South Houston Street, Dallas, Texas, on
Wednesday, May 3, 1995, at 10:00 a.m., Dallas, Texas time, or at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Shareholders. References herein to the "Company" include its subsidiaries,
unless the context otherwise requires.
This Proxy Statement and form of Proxy are being mailed to shareholders on
or about March 30, 1995. If the enclosed form of Proxy is executed and returned,
it may nevertheless be revoked by the shareholder at any time by filing with the
Secretary of the Company a written revocation or a duly executed proxy bearing a
later date. A shareholder who attends the Annual Meeting in person may revoke
his or her proxy at that time and vote in person if so desired. All proxies duly
signed, dated, and returned will be voted as specified therein, but unless
otherwise specified, will be deemed to grant authority to vote:
(1) FOR the election of the five nominees listed under "Election of
Directors" as nominees of the Company for election as Class III directors,
for a three-year term;
(2) FOR the proposal to approve the Company's 1995 Executive
Compensation Plan;
(3) FOR the proposal to amend the Company's Certificate of
Incorporation to (a) remove from the Certificate of Incorporation the
express denomination of a specific number of shares of Series A Common
Stock constituting such series and (b) permit the issuance of additional
shares of Series B Common Stock, provided that any such issuance would not
result in the Series A Common Stock being excluded from trading on the NYSE
and other alternative securities markets; and
(4) At the discretion of the persons named in the enclosed form of
Proxy, on any other matter that may properly come before the meeting or any
adjournment thereof.
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of the Company. The Company is unaware of any additional matters not set forth
in the Notice of Annual Meeting of Shareholders that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting and presented for a vote of the shareholders (see
"Shareholder Proposals" herein), the persons named in the Proxy will vote in
accordance with their best judgment upon such matters, unless otherwise
restricted by law.
The cost of solicitation of proxies will be borne by the Company. The
Company has engaged Morrow & Co., Inc. to solicit proxies from beneficial owners
of shares standing in the name of brokers and other nominees. The Company has
agreed to pay Morrow & Co., Inc. a fee of $7,000 and the amount of its expenses
for such service. In addition to the use of the mails, proxies may also be
solicited by personal interview, facsimile transmission, and telephone by
directors, officers, employees, and agents of the Company. The Company will also
supply brokers, nominees, or other custodians with the numbers of Proxy forms,
Proxy Statements, and Annual Reports they may require for forwarding to
beneficial owners, and the Company will reimburse such persons for their expense
in so doing.
<PAGE> 4
OUTSTANDING CAPITAL STOCK AND STOCK OWNERSHIP OF
DIRECTORS, CERTAIN EXECUTIVE OFFICERS
AND PRINCIPAL SHAREHOLDERS
The record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting has been established by the Board of
Directors as the close of business on March 17, 1995. As of the record date, the
Company had issued and outstanding and entitled to vote at the Annual Meeting
15,167,429 shares of Series A Common Stock, par value $1.67 per share ("Series A
shares"), and 4,744,564 shares of Series B Common Stock, par value $1.67 per
share ("Series B shares"). (The Series A shares and Series B shares together are
referred to herein as the "Common Stock.") (For a description of the voting
rights of the Series A shares and Series B shares, see "Quorum and Voting"
herein.)
The following table sets forth information as of December 31, 1994,
regarding the beneficial ownership of the Company's Common Stock by each person
known by management of the Company to own more than five percent of the
outstanding shares of Common Stock of the Company, by each of the Company's
executive officers named in the Summary Compensation Table below, by each of the
Company's directors and nominees, and by all of its directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED
AND PERCENTAGE OF OUTSTANDING SHARES AS OF
DECEMBER 31, 1994(2)
------------------------------------------
NAME AND ADDRESS OF PERCENT OF
INDIVIDUAL OR GROUP SERIES A SERIES B CLASS(3)
------------------------------------------------------- --------- --------- ----------
<S> <C> <C> <C>
Robert W. Decherd(1)*+................................. 588,622(4) 997,764(5) 8.0%
A.H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
</TABLE>
<TABLE>
<S> <C> <C> <C>
Ward L. Huey, Jr.**+................................... 139,276(6) -0- ***
A.H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Burl Osborne*+......................................... 80,445(7) -0- ***
A.H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Michael J. McCarthy+................................... 31,917(8) 1,893 ***
A.H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Michael D. Perry+...................................... 33,827(9) -0- ***
A.H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
John W. Bassett, Jr.*.................................. 9,350(10) 6,600(11) ***
1100 Penn Plaza
400 N. Pennsylvania
Roswell, New Mexico 88201
Judith L. Craven, M.D., M.P.H.**....................... 4,700(12) -0- ***
2200 North Loop West
Houston, Texas 77018
Joe M. Dealey(1)****................................... 409,352(13) 485,982(14) 4.5%
8333 Douglas
Suite 1575
Dallas, Texas 75225
Dealey D. Herndon(1)**................................. 539,908(15) 652,812(16) 6.0%
2903 Tarry Trail
Austin, Texas 78703
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED
AND PERCENTAGE OF OUTSTANDING SHARES AS OF
DECEMBER 31, 1994(2)
------------------------------------------
NAME AND ADDRESS OF PERCENT OF
INDIVIDUAL OR GROUP SERIES A SERIES B CLASS(3)
------------------------------------------------------- --------- --------- ----------
<S> <C> <C> <C>
Lester A. Levy*........................................ 8,750(17) 6,000(18) ***
2727 Chemsearch Boulevard
Irving, Texas 75062
Arturo Madrid, Ph.D.*.................................. 4,000(19) -0- ***
Trinity University
715 Stadium Drive
San Antonio, Texas 78212
James M. Moroney, Jr.(1)**............................. 257,777(20) 577,461(21) 4.2%
A.H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Reece A. Overcash, Jr.(22)............................. 7,950(23) 5,200(18) ***
250 Carpenter Freeway
Irving, Texas 75062
Hugh G. Robinson**..................................... 3,350(24) -0- ***
4140 Office Parkway
Dallas, Texas 75204
William H. Seay****.................................... 5,750(24) -0- ***
5500 Preston Road
Suite 385
Dallas, Texas 75205
William T. Solomon*.................................... 7,750(25) 15,000(18) ***
3535 Travis
Suite 300
Dallas, Texas 75204
Thomas B. Walker, Jr.*................................. 10,750(26) 8,000(18) ***
100 Crescent Court
Suite 1000
Dallas, Texas 75201
J. McDonald Williams*.................................. 10,750(25) 8,000(18) ***
3500 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Heine Securities Corporation++......................... 931,100(27) -0- 4.7%(2)
51 J.F.K. Parkway
Short Hills, New Jersey 07078
Luther King Capital Management, Inc.++................. 1,015,532 -0- 5.1%
301 Commerce Street
Suite 1600
Fort Worth, Texas 76102
Michigan Department of Treasury Bureau of
Investments++........................................ -0- 797,100(28) 4.0%(2)
P.O. Box 30177
Lansing, Michigan 48909
Neuberger & Berman..................................... 785,120(29) -0- 4.0%(2)
605 Third Avenue
New York, New York 10158
All directors and executive officers as a group (19
persons)............................................. 2,125,751(30) 2,734,712(31) 24.1%(32)
</TABLE>
3
<PAGE> 6
------------
<TABLE>
<S> <C>
* Director
** Director and Nominee
*** Less than one percent
**** Served as a director during 1994, but will retire as of May 3, 1995 in accordance with
the Company's bylaws. See "Proposal One -- Election of Directors" on page 8.
+ Executive Officer
++ Shareholder
</TABLE>
(1) The family relationships among the directors, executive officers, and
principal shareholders are as follows: Joe M. Dealey and James M. Moroney,
Jr. are cousins and are cousins of each of Robert W. Decherd and Dealey D.
Herndon; and Robert W. Decherd and Dealey D. Herndon are brother and
sister.
(2) Series B shares are convertible at any time on a share-for-share basis into
Series A shares. For purposes of determining the number of Series A shares
beneficially owned by the individuals and entities listed, the individual
or entity may be deemed to be the beneficial owner of the Series A shares
into which the Series B shares owned are convertible. The numbers listed in
the Series A column, however, do not reflect the Series A shares that may
be so deemed to be beneficially owned by the individual or entity listed.
If the Series A shares into which Series B shares held are convertible were
included in the Series A shares total, and if the percent of Series A
shares so held were calculated pursuant to Rule 13d-3(d)(1) of the
Securities Exchange Act of 1934, the individuals and entities listed would
be deemed to be the beneficial owners of the following percentages of the
Series A shares: Mr. Decherd -- 10.4%; Mr. Dealey -- 6.1%; Mrs.
Herndon -- 8.0%; Mr. Moroney -- 5.7%; Heine Securities Corporation -- 6.6%;
Luther King Capital Management, Inc. -- 7.2%; Michigan Department of
Treasury -- 5.3%; Neuberger & Berman -- 5.5% and all directors and
executive officers as a group -- 28.2%. All other individuals listed would
be deemed to own less than 1% of the Series A shares. See footnote (3).
(3) "Percent of Class" is calculated by taking the total number of Series A and
Series B shares beneficially owned by the individual or entity listed and
dividing that number by the total number of Series A and Series B shares
outstanding.
(4) Includes 94,697 Series A shares subject to presently exercisable options
and 35,824 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan. Does not include 300 Series A shares owned by Mr.
Decherd's wife, 1,160 Series A shares owned by Mr. Decherd's son, 19,890
Series A shares held in trusts for which Mr. Decherd serves as trustee, and
35,412 Series A shares held in trusts for the benefit of Mr. Decherd's
children, as to all of which shares Mr. Decherd disclaims beneficial
ownership.
(5) Does not include 300 Series B shares owned by Mr. Decherd's wife, 1,160
Series B shares owned by Mr. Decherd's son, 36,545 Series B shares held in
trusts for which Mr. Decherd serves as trustee, and 32,552 Series B shares
held in trusts for the benefit of Mr. Decherd's children, as to all of
which shares Mr. Decherd disclaims beneficial ownership.
(6) Includes 88,186 Series A shares subject to presently exercisable options
and 40,196 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(7) Includes 38,951 Series A shares subject to presently exercisable options
and 35,968 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(8) Includes 15,573 Series A shares subject to presently exercisable options
and 14,392 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
4
<PAGE> 7
(9) Includes 15,587 Series A shares subject to presently exercisable options
and 14,216 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(10) Includes 7,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
8,540 Series A shares owned by Mr. Bassett's adult children, as to which
Mr. Bassett shares dispositive power, 2,600 Series A shares held in trust
for the benefit of Mr. Bassett's children, 64,983 Series A shares owned by
Mr. Bassett's wife, and 15,000 Series A shares held in trusts for which Mr.
Bassett's wife serves as trustee, as to all of which shares Mr. Bassett
disclaims beneficial ownership.
(11) Includes 5,000 Series B shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
18,430 Series B shares owned by Mr. Bassett's adult children, as to which
Mr. Bassett shares dispositive power, 18,341 Series B shares held in trust
for the benefit of Mr. Bassett's children, 79,580 Series B shares owned by
Mr. Bassett's wife, and 15,000 Series B shares held in trusts for which Mr.
Bassett's wife serves as trustee, as to all of which shares Mr. Bassett
disclaims beneficial ownership.
(12) Includes 4,000 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(13) Includes 30,000 Series A shares owned by the E. M. Dealey Trust, for which
Mr. Dealey shares the voting power as a co-trustee, and as to which shares
Mr. Dealey disclaims beneficial ownership, but does not include 300 Series
A shares owned by Mr. Dealey's wife, as to which shares Mr. Dealey also
disclaims beneficial ownership.
(14) Includes 30,000 Series B shares owned by the E. M. Dealey Trust, for which
Mr. Dealey shares the voting power as a co-trustee, and as to which shares
Mr. Dealey disclaims beneficial ownership, but does not include 300 Series
B shares owned by Mr. Dealey's wife, as to which shares Mr. Dealey also
disclaims beneficial ownership.
(15) Includes 7,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
24,620 Series A shares owned by Mrs. Herndon's husband, 10,870 Series A
shares held in trust for the benefit of one of Mrs. Herndon's sons, and
24,614 Series A shares held in trusts for which Mrs. Herndon serves as
trustee, as to all of which shares Mrs. Herndon disclaims beneficial
ownership.
(16) Does not include 3,545 Series B shares held in trust for the benefit of one
of Mrs. Herndon's sons, and 24,614 Series B shares held in trusts for which
Mrs. Herndon serves as trustee, as to all of which shares Mrs. Herndon
disclaims beneficial ownership.
(17) Includes 5,250 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
1,000 shares owned by Mr. Levy's wife and 400 shares owned by Mr. Levy's
stepson, as to all of which shares Mr. Levy disclaims beneficial ownership.
(18) Includes 5,000 Series B shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(19) Includes 4,000 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(20) Includes 7,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
10,500 Series A shares owned by Mr. Moroney's wife, as to which shares Mr.
Moroney disclaims beneficial ownership.
(21) Includes 5,000 Series B shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
10,500 Series B shares owned by Mr. Moroney's wife, as to which shares Mr.
Moroney disclaims beneficial ownership.
(22) Mr. Overcash, who served as a director of the Company since 1983, died in
January 1995.
5
<PAGE> 8
(23) Includes 7,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
400 Series A shares held in trusts for the benefit of Mr. Overcash's
children for which Mr. Overcash served as co-trustee, and as to which
shares Mr. Overcash disclaimed beneficial ownership.
(24) Includes 2,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(25) Includes 7,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(26) Includes 7,750 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
5,000 shares owned by Mr. Walker's wife, as to which shares Mr. Walker
disclaims beneficial ownership.
(27) Shares are beneficially held, to the Company's knowledge, by Heine
Securities Corporation as investment advisor to one or more of its advisory
clients.
(28) Shares are held, to the Company's knowledge, by the Michigan Department of
Treasury Bureau of Investments as custodian for the following State of
Michigan employee retirement plans: Michigan Public School Employees'
Retirement System Funds, State Employees' Retirement System Funds, Michigan
State Police Retirement System Funds, and Michigan Judges' Retirement
System Funds.
(29) Shares are beneficially held, to the Company's knowledge, by Neuberger &
Berman as investment advisor to one or more of its advisory clients.
(30) Includes 326,782 Series A shares subject to presently exercisable options.
(31) Includes 35,000 Series B shares subject to presently exercisable options.
(32) Represents approximately 41.9% of the voting power of all outstanding
shares of Common Stock.
As of March 17, 1995, Cede & Co., a central clearinghouse and nominee in
New York, New York, was the record holder of 12,461,242 Series A shares
(approximately 62.6% of the total outstanding shares of Common Stock,
representing approximately 19.9% of the voting power of the total outstanding
shares of Common Stock).
6
<PAGE> 9
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
voting power of the outstanding shares of Common Stock of the Company entitled
to vote is necessary to constitute a quorum at the Annual Meeting; provided,
however, that in no event may a quorum consist of less than one-third of the
outstanding shares of Common Stock entitled to vote. The affirmative vote of a
plurality of the voting power represented at the Annual Meeting and entitled to
vote is required for the election of directors. Approval of the 1995 Executive
Compensation Plan will be decided by a majority of the voting power represented
at the Annual Meeting and entitled to vote. Approval of the proposal to amend
the Company's Certificate of Incorporation will be decided by a majority of the
voting power of the outstanding shares of Common Stock.
A holder of Series A shares will be entitled to one vote per Series A share
as to each matter properly brought before the Annual Meeting, and a holder of
Series B shares will be entitled to 10 votes per Series B share as to each
matter properly brought before the Annual Meeting. The holders of Series A
shares and Series B shares vote together as a single class on all matters except
with respect to (1) any amendments to the Company's Certificate of Incorporation
that alter or change the powers, preferences, or special rights of their
respective series so as to affect them adversely, and (2) such other matters as
require class votes under the Delaware General Corporation Law. Cumulative
voting is not permitted in the election of directors. Abstentions and broker
non-votes are each included in the determination of the number of shares present
at the Annual Meeting for purposes of determining a quorum. Abstentions and
broker non-votes have no effect on determinations of plurality, except to the
extent that they affect the total votes received by any particular candidate.
For the proposal to approve the 1995 Executive Compensation Plan and other
matters requiring approval of a quorum, abstentions will have the effect of
negative votes but broker non-votes will have no effect since they are not
treated as shares entitled to vote on such matter. For the proposal to amend the
Company's Certificate of Incorporation, abstentions and broker non-votes will
both have the effect of negative votes.
7
<PAGE> 10
PROPOSAL ONE
ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board of Directors is to be
divided into three classes, approximately equal in number, with staggered terms
of three years. Classes I and II consist of four directors each and Class III
consists of five directors. Four of the five nominees designated by the Board of
Directors for election as Class III directors at the 1995 Annual Meeting will
serve a three-year term if elected. In February 1995, the Company's Board of
Directors amended the bylaws of the Company to conform to the Board's policy
that a director who attains age 75 shall retire on the date of the annual
meeting of shareholders next following his or her 75th birthday. The amendment
also provides that a director shall not stand for election once he or she has
obtained age 75. As a result of this amendment, (1) Joe M. Dealey, a director of
the Company since 1952, will not stand for election at the 1995 Annual Meeting
of Shareholders, (2) William H. Seay, a director of the Company since 1973, will
retire on the date of the 1995 Annual Meeting of Shareholders, and (3) James M.
Moroney, Jr., if elected, will retire from the Board on the date of the 1997
Annual Meeting of Shareholders. In the event of a vacancy on the Board of
Directors, in accordance with the Company's bylaws, the Board of Directors may
fill the vacancy for the remaining term, may choose a nominee to stand for
election at the next annual meeting or may decrease the size of the Board.
NOMINEES FOR DIRECTORS
Class III Directors (Term expires in 1998)
<TABLE>
<S> <C>
[PHOTO] JUDITH L. CRAVEN, M.D., M.P.H., age 49, has served as a director of the
Company since December 1992. Since July 1992, she has served as
President of the United Way of the Texas Gulf Coast. From February 1983
to June 1992, Dr. Craven served as Dean of the School of Allied Health
Sciences of the University of Texas Health Science Center at Houston and
from September 1987 to June 1992 as Vice President of Multicultural
Affairs for the University of Texas Health Science Center.
[PHOTO] DEALEY D. HERNDON, age 48, has served as a director of the Company since
May 1986. Mrs. Herndon is the Executive Director of the State
Preservation Board of the State of Texas and is a director of the
Friends of the Governor's Mansion and St. Edward's University in Austin,
Texas. Mrs. Herndon is also a Trustee of the National Trust for Historic
Preservation in Washington, D.C. and is active in a variety of civic
organizations in Austin, Texas.
[PHOTO] WARD L. HUEY, JR., age 56, has served as a director of the Company since
April 1982. He has been Vice Chairman of the Board and President,
Broadcast Division since January 1987. He was President and Chief
Executive Officer of the Company's broadcasting subsidiary, Belo
Broadcasting Corporation, from April 1981 through December 31, 1986, at
which time the stock ownership of the broadcasting subsidiaries changed
from Belo Broadcasting Corporation to the Company.
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C>
[PHOTO] JAMES M. MORONEY, JR., age 73, has served as a director of the Company
since February 1952. He served as Chairman of the Board of the Company
from April 1984 through December 1986, and from January 1983 through
December 1986 he served as Chief Executive Officer of the Company.
[PHOTO] HUGH G. ROBINSON, age 62, has served as a director of the Company since
May 1989. Mr. Robinson is Chairman and Chief Executive Officer of The
Tetra Group, a construction management firm. He has held that position
since 1989, and for more than five years prior to such date Mr. Robinson
was President of Cityplace Development Corporation, a real estate
development subsidiary of The Southland Corporation. Mr. Robinson is a
former Chairman and Board member of the Federal Reserve Bank of Dallas.
He is currently a member of the Boards of Directors of TU Electric
Company, Guaranty Federal Savings Bank and Canonie Environmental
Services, Inc., and is a Trustee of Columbus Realty Trust, a real estate
investment trust.
</TABLE>
In the event that a nominee is unable to serve or for good cause will not
serve, the proxies will be voted at the meeting for such other person as the
Board of Directors of the Company may recommend.
DIRECTORS CONTINUING IN OFFICE
Class I Directors (Term expires in 1996)
<TABLE>
<S> <C>
[PHOTO] JOHN W. BASSETT, JR., age 57, has served as a director of the Company
since March 1979. He is a practicing attorney and has been a stockholder
in the law firm of Atwood, Malone, Mann & Turner, P.A., Roswell, New
Mexico, for more than the past five years.
[PHOTO] LESTER A. LEVY, age 72, has served as a director of the Company since
April 1985. He has been Chairman of the Board of Directors of NCH
Corporation, a chemical products company, since 1965 and has been with
NCH Corporation since 1946.
</TABLE>
9
<PAGE> 12
<TABLE>
<S> <C>
[PHOTO] BURL OSBORNE, age 57, has served as a director of the Company since
January 1987. Since January 1991, Mr. Osborne has been Publisher and
Editor of The Dallas Morning News, Inc., a subsidiary of the Company.
Mr. Osborne was President and Editor of The Dallas Morning News, Inc.
from 1985 through December 1990.
[PHOTO] J. MCDONALD WILLIAMS, age 53, has served as a director of the Company
since April 1985. Mr. Williams is Chairman of Trammell Crow Company, a
real estate services firm. From 1991 until July 1994, Mr. Williams was
President and Chief Executive Officer of Trammell Crow Company and from
1977 to December 1990, he was managing partner of Trammell Crow Company.
Mr. Williams is a member of the Board of Directors of Mitchell Energy &
Development Corp.
</TABLE>
Class II Directors (Term expires in 1997)
<TABLE>
<S> <C>
[PHOTO] ROBERT W. DECHERD, age 43, has served as a director of the Company since
March 1976. He has been Chairman of the Board and Chief Executive
Officer of the Company since January 1987. Mr. Decherd became President
of the Company in January 1994, and previously served as President from
1985 through December 1986. From January 1984 through December 1986, he
served as Chief Operating Officer.
[PHOTO] ARTURO MADRID, PH.D., age 56, has served as a director of the Company
since January 1994. He is the Murchison Distinguished Professor of the
Humanities at Trinity University in San Antonio, Texas. He assumed this
position in September 1993 after serving from 1984 until 1993 as the
founding president of the Tomas Rivera Center, a national institute
co-located at The University of Texas at Austin and the Claremont (CA.)
Graduate School which focuses on Latino policy issues.
[PHOTO] WILLIAM T. SOLOMON, age 52, has served as a director of the Company
since April 1983. He is the Chairman, President and Chief Executive
Officer of Austin Industries, Inc., a general construction company, a
position he has held since 1987. Prior to 1987, Mr. Solomon was
President and Chief Executive Officer of Austin Industries, Inc.
</TABLE>
10
<PAGE> 13
<TABLE>
<S> <C>
[PHOTO] THOMAS B. WALKER, JR., age 71, has served as a director of the Company
since April 1982. He has been a partner, either general or limited, in
The Goldman Sachs Group, L.P., investment bankers, since 1968. Mr.
Walker is a member of the Boards of Directors of NCH Corporation, SYSCO
Corporation, and Riviana Foods, Inc.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held a total of seven meetings in 1994. Each
director attended at least seventy-five percent of the aggregate of the total
number of meetings held by the Board of Directors and the total number of
meetings held by all committees of the Board on which he or she served. The
Board of Directors has an Audit Committee, a Compensation Committee, and a
Directors Planning Committee, all of the members of each of which are
nonemployee directors.
Audit Committee. The Audit Committee consists of Judith L. Craven, Dealey
D. Herndon, Arturo Madrid, Hugh G. Robinson, and Thomas B. Walker, Jr. Mr.
Robinson serves as Chairman of the Audit Committee. The Audit Committee consults
with the Company's independent auditors and with personnel from the internal
audit and financial staffs with respect to corporate accounting, reporting, and
internal control practices. The Audit Committee met two times during 1994.
Compensation Committee. The Compensation Committee consists of John W.
Bassett, Jr., Lester A. Levy, William H. Seay, and J. McDonald Williams. Mr.
Williams serves as Chairman of the Compensation Committee. The Compensation
Committee makes recommendations to the Board of Directors for salary and bonus
levels for executive officers and total compensation for senior executive
officers, and administers the Company's 1986 Long Term Incentive Plan, Executive
Compensation Program, Employee Savings and Investment Plan, Supplemental
Executive Retirement Plan, Management Security Plan, and the G.B. Dealey
Retirement Pension Plan. The Compensation Committee will also administer the
1995 Executive Compensation Plan if it is approved by the shareholders. The
Compensation Committee met four times during 1994.
Directors Planning Committee. The Directors Planning Committee consists of
Joe M. Dealey, Dealey D. Herndon, Lester A. Levy, James M. Moroney, Jr., William
T. Solomon, and Thomas B. Walker, Jr. Mr. Solomon serves as Chairman of the
Directors Planning Committee. Reece A. Overcash, Jr. served as Chairman until
his death in January 1995. The Directors Planning Committee reviews possible
nominees for openings on the Board of Directors and reviews the long-range
financial and strategic planning efforts of the Company. The Directors Planning
Committee met two times in 1994.
11
<PAGE> 14
PROPOSAL TWO
APPROVAL OF THE A.H. BELO CORPORATION
1995 EXECUTIVE COMPENSATION PLAN
For many years, the Company has provided both short-term and long-term
incentive compensation to executives and key employees. The Company believes
that such incentives permit it to attract and retain high quality talent and to
motivate directors, executives and key employees to achieve business and
financial goals that create value for shareholders. A recently enacted change to
the Internal Revenue Code of 1986, as amended (the "Code") would increase the
cost to the Company of continuing these incentives unless certain requirements,
including the approval of certain material terms of incentive compensation by
the Company's shareholders, are satisfied.
Subject to the approval of the Company's shareholders, the Board of
Directors has adopted the 1995 Executive Compensation Plan (the "1995 ECP")
effective as of January 1, 1995. As described below, the 1995 ECP would continue
to provide long-term and short-term incentives to executives, key employees and
directors which are substantially similar to those provided by the Company's
Executive Compensation Program (the "1989 ECP") and its 1986 Long Term Incentive
Plan (the "1986 Plan"). (For descriptions of the 1989 ECP and the 1986 Plan, see
"Board Compensation Committee Report on Executive Compensation" on page 29.)
Shareholder approval of the 1995 ECP is sought (1) to qualify the 1995 ECP under
Section 162(m) of the Code, and thereby allow the Company to deduct for federal
income tax purposes compensation paid to executives under the 1995 ECP and (2)
to qualify the 1995 ECP pursuant to Rule 16b-3 under the Securities Exchange Act
of 1934 (the "Act"), and thereby render certain transactions under the 1995 ECP
exempt from certain provisions of Section 16 of the Act.
The 1995 ECP is substantially similar to the 1986 Plan, under which
stock-based awards are currently granted to executive officers and other key
employees. In addition, the 1995 ECP includes a performance-based cash bonus
opportunity similar to the bonus opportunity currently available under the 1989
ECP. (See "Annual Performance Bonus Opportunity" under "Board Compensation
Committee Report on Executive Compensation" on page 30.) Approximately 250,500
shares of Common Stock relating to awards under the 1986 Plan remain unissued as
of December 31, 1994. The Company currently intends to continue to issue non-
qualified stock options to nonemployee directors, as provided under the 1986
Plan, until all shares under the 1986 Plan have been issued. See "Compensation
of Directors" under "Executive Compensation and Other Matters" on page 28.
The following summary of certain material features of the 1995 ECP is
qualified in its entirety by reference to the full text of the 1995 ECP, which
is set forth in the attached Exhibit A.
GENERAL
The purposes of the 1995 ECP are (1) to attract and retain the best
available talent for the Company and (2) by providing appropriate incentives, to
encourage the directors and executives to put forth their maximum efforts for
the success of the Company's business, thereby serving the best interests of the
Company and its shareholders.
All executive officers and other key employees of the Company and its
subsidiaries ("Participants") are eligible to participate in the 1995 ECP.
Subject to shareholder approval of the 1995 ECP, the Compensation Committee of
the Board of Directors (the "Committee") has designated 111 employees as
Participants in the 1995 ECP in addition to the five senior executives named in
the Summary Compensation Table on page 23. Twelve nonemployee directors will be
eligible to receive director options under the 1995 ECP.
The 1995 ECP is a flexible plan that will provide the Committee with broad
discretion to fashion the terms of the awards to provide eligible Participants
with stock-based incentives and performance-based bonus opportunities, payable
in cash or stock as the Committee deems appropriate. The 1995 ECP will permit
the issuance of awards in a variety of forms, including: (1) non-qualified and
incentive stock options (collectively, "Stock Options"), (2) appreciation
rights, (3) restricted stock (4) performance units and (5) bonuses
12
<PAGE> 15
("Executive Compensation Plan Bonuses") which become payable annually upon
achievement of specified Management Objectives (hereinafter defined).
The 1995 ECP provides for the grant of up to 2,000,000 shares of Common
Stock. Shares of Common Stock issued or transferred pursuant to the 1995 ECP
will be shares of Series A Common Stock or Series B Common Stock, as determined
by the Committee in its discretion. Notwithstanding the foregoing, the Committee
will not authorize the issuance or transfer of Series B Common Stock if the
Committee determines that such issuance or transfer would cause the Series A
Common Stock to be excluded from trading on the NYSE and other alternative
securities markets.
Under certain circumstances, shares of Common Stock subject to an award
that remain unissued upon termination of the award will become available for
additional awards under the 1995 ECP. Shares not issued as a result of being
retained by the Company in payment of an option exercise price or taxes upon
exercise of a stock option will also become available for additional awards
under the 1995 ECP. In the event of a stock dividend, stock split,
recapitalization, merger, reorganization or similar event, the Committee may
equitably adjust the aggregate number of shares subject to the 1995 ECP and the
number, class and price of shares subject to awards outstanding.
ADMINISTRATION OF THE 1995 ECP
Unless the administration of the 1995 ECP has been expressly assumed by the
Board pursuant to a resolution of the Board, the 1995 ECP (other than the
provisions of the 1995 ECP relating to Stock Options for Directors) will be
administered by the Committee, which at all times will consist of nonemployee
directors appointed by the Board, each of whom will be a "disinterested person"
within the meaning of Rule 16b-3 of the Act. As to any award under the 1995 ECP
intended to qualify as "performance based compensation" for purposes of Section
162(m) of the Code, such award will be administered by persons who qualify as
"outside directors" within the meaning of Section 162(m) of the Code. Except as
described herein, the Committee has the full authority and discretion to
administer the 1995 ECP and to take any action that is necessary or advisable in
connection with the administration of the 1995 ECP, including without limitation
the authority and discretion to interpret and construe any provision of the 1995
ECP or of any agreement, notification or document evidencing the grant of an
award.
If a Participant's employment terminates before the end of a Performance
Period (hereinafter defined) or before a Stock Option or appreciation right is
fully exercisable, and such termination is caused by reason of a Participant's
death, disability or retirement at or after age 65, each Stock Option or
appreciation right held by such Participant will become fully exercisable for a
period of one year thereafter or, if earlier, until the Stock Option or
appreciation right expires by its terms. In addition, any restricted stock
awarded to such Participant will be delivered to such Participant or his
successor free of restrictions. In the event of a Participant's termination of
employment for other reasons, the Committee will have the sole discretion to
determine, under the circumstances, the extent to which a Stock Option or
appreciation right held by the Participant may be exercised and the extent to
which any restricted stock as to which restrictions (other than the achievement
of Management Objectives) have not lapsed will be delivered free of restrictions
following such termination of employment.
Notwithstanding the foregoing provisions, the Board has the full authority
and discretion to administer the provisions of the 1995 ECP relating to Stock
Options for Directors and to take any action that is necessary or advisable in
connection with the administration of said provisions, provided any such action
taken by the Board will not cause the provisions thereof to fail to satisfy the
requirements of Rule 16b-3 of the Act or to cause the Committee members to cease
to be disinterested administrators for purposes of Rule 16b-3.
The Company anticipates that the Committee will administer the 1995 ECP in
a manner substantially similar to the manner in which it currently administers
the 1989 ECP and the 1986 Plan. See "Board Compensation Committee Report on
Executive Compensation" on page 29.
13
<PAGE> 16
AWARDS UNDER THE 1995 ECP
Stock Options for Participants. The Committee in its discretion shall
determine the number of shares of Common Stock subject to Stock Options to be
granted to each Participant. The Committee may grant nonqualified stock options,
incentive stock options or a combination thereof to the Participants. Stock
Options granted under the 1995 ECP will provide for the purchase of Common Stock
at prices not less than 100% of the fair market value thereof on the date the
Stock Option is granted. No Stock Option granted shall be exercisable more than
ten years from the date of grant.
Stock Options granted under the 1995 ECP will be exercisable at such times
and subject to such restrictions and conditions as the Committee shall approve.
Each grant will specify that the exercise price is payable (1) in cash, (2) in
shares of Common Stock already owned by the Participant, (3) with the consent of
the Committee, by withholding a number of shares otherwise issuable to a
Participant having a fair market value equal to the exercise price, or (4) in a
combination of such methods of payment.
Each grant will also specify the required periods of continuous service by
the Participant with the Company or any subsidiary and/or the Management
Objectives to be achieved before the Stock Options or installments thereof will
become exercisable, and any grant may provide for the earlier exercise of the
Stock Options in the event of a Change in Control or other similar transaction
or event. "Change in Control" means the first to occur of the events described
in (1) through (4) below, unless the Board has adopted a resolution prior to or
promptly following the occurrence of any such event stipulating, conditionally,
temporarily or otherwise, that any such event will not result in a Change in
Control of the Company: (1) the commencement of, or first public announcement of
the intention of any person or group (within the meaning of Section 3(b) of and
Rule 13d-5(b) promulgated under the Act) to commence a tender offer or exchange
offer (other than an offer by the Company or any Subsidiary) for all, or any
part of, the Common Stock; (2) the public announcement by the Company or by any
group (as defined in clause (1) above), entity or person (other than the
Company, any Subsidiary, or any savings, pension or other benefit plan for the
benefit of employees of the Company or any Subsidiary) which, through a
transaction or series of transactions has acquired, directly or indirectly,
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of more than 30% of the total number of shares of Common Stock that such
group, entity or person has become such a beneficial owner; (3) the approval by
the Company's shareholders (or, if such approval is not required, the
consummation) of a merger in which the Company does not survive as an
independent publicly owned corporation, a consolidation, or a sale, exchange, or
other disposition of all or substantially all the Company's assets; or (4) a
change in the composition of the Board during any period of two consecutive
years such that individuals who at the beginning of such period were members of
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such period.
Stock Options for Nonemployee Directors. Each individual who first becomes
a nonemployee director on or after the date of the 1995 Annual Meeting will be
granted an option to purchase 10,000 shares of Common Stock on the date of
election to the Board. Each nonemployee director will also be granted an
additional option to purchase 2,500 shares of Common Stock on the date of each
annual meeting of shareholders following the annual meeting of the individual's
initial election to the Board, provided that such individual continues to be a
nonemployee director at the close of business of each such annual meeting. The
Company currently intends to continue to grant stock options to nonemployee
directors under the 1986 Plan, as provided under such plan, until shares are no
longer available under the 1986 Plan. To the extent that a nonemployee director
is granted an option to purchase shares of Common Stock under the 1986 Plan upon
initial election to the Board or on the date of an annual meeting of
shareholders, the option that otherwise would be granted pursuant to the 1995
ECP for the same event will be reduced by the number of shares of Common Stock
covered by the option granted pursuant to the 1986 Plan.
Options granted to nonemployee directors will provide for the purchase of
Common Stock at prices not less than 100% of the fair market value thereof on
the date the option is granted. Each grant will specify that the option may not
be exercised until the first anniversary of the date of grant and will be fully
exercisable
14
<PAGE> 17
thereafter, without regard to whether the nonemployee director continues to be a
member of the Board on such first anniversary, until the option expires by its
terms. Each grant will also specify that the option price is payable by the same
methods as described above for Participants.
Appreciation Rights. The Committee may from time to time authorize grants
to any Participant of appreciation rights upon such terms and conditions as it
may determine. Appreciation rights may be granted in tandem with Stock Options
or separate and apart from a grant of Stock Options. An appreciation right will
be a right of the Participant to receive from the Company upon exercise an
amount which will be determined by the Committee at the date of grant and will
be expressed as a percentage of the Spread (not exceeding 100%) at the time of
exercise. "Spread" means the excess of the fair market value of the Common Stock
on the date the Appreciation Right is exercised over (1) the option price in the
related Stock Option or (2) if there is no tandem Stock Option, the grant price
provided for in the appreciation right multiplied by the number of shares of
Common Stock in respect of which the appreciation right is exercised.
Each grant of an appreciation right made in tandem with Stock Options will
specify the option price and any grant not made in tandem with Stock Options
will specify the grant price, which in either case will not be less than 100% of
fair market value of the Common Stock on the date of grant.
Any grant may specify that the amount payable upon exercise of an
appreciation right may be paid by the Company in cash, shares of Common Stock or
any combination thereof, as determined by the Committee in its sole discretion
at the time of payment. Any grant may also specify that the amount payable on
exercise of an appreciation right may not exceed a maximum amount specified by
the Committee at the date of grant.
Each grant will specify the required periods of continuous service by the
Participant with the Company or any subsidiary and/or the Management Objectives
to be achieved before the appreciation rights or installments thereof will
become exercisable, and will provide that no appreciation right may be exercised
except at a time when the Spread is positive and, with respect to any grant made
in tandem with Stock Options, when the related Stock Option is also exercisable.
The Committee may also grant limited stock appreciation rights, which would
become exercisable in the event of a Change in Control or other similar
transaction or event.
Restricted Stock. The Committee may from time to time authorize grants or
sales to any Participant of restricted stock upon such terms and conditions as
it may determine in accordance with the provisions of the 1995 ECP. Each grant
or sale will constitute an immediate transfer of the ownership of shares of
Common Stock to the Participant in consideration of the performance of services,
entitling such Participant to voting and other ownership rights, but subject to
the restrictions hereinafter referred to. Each grant or sale may limit the
Participant's dividend rights during the period in which the shares of
restricted stock are subject to any such restrictions. Each such grant or sale
may be made without additional consideration or in consideration of a payment by
such Participant that is less than the fair market value of the Common Stock.
Each grant or sale will specify the Management Objectives, if any, that are
to be achieved in order for the ownership restrictions to lapse. Each such grant
or sale will establish restrictions, such as required periods of continuous
service, or other restrictions that constitute a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code and the regulations of
the Internal Revenue Service thereunder. Any grant or sale may provide for the
earlier termination of any such restrictions in the event of a Change in Control
or other similar transaction or event.
Each such grant or sale will provide that during the period for which such
restriction or restrictions are to continue, the transferability of the
restricted stock will be prohibited or restricted in a manner and to the extent
prescribed by the Committee at the date of grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the restricted stock to continuing restrictions
in the hands of any transferee).
Performance Units. The Committee may from time to time authorize grants to
any Participant of performance units, which will become payable upon achievement
of specified Management Objectives, upon such terms and conditions as it may
determine in accordance with the provisions of the 1995 ECP.
15
<PAGE> 18
Each grant will specify the time and manner of payment of performance units
which have become payable, which payment may be made in (1) cash, (2) shares of
Common Stock having a fair market value equal to the aggregate value of the
performance units which have become payable or (3) any combination thereof, as
determined by the Committee in its sole discretion at the time of payment.
Each grant of a performance unit may also contain such terms and
provisions, consistent with the 1995 ECP, as the Committee may approve,
including provisions relating to a Change in Control or other similar
transaction or event.
Executive Compensation Plan Bonuses. The Committee may from time to time
authorize payment of annual incentive compensation in the form of an Executive
Compensation Plan Bonus to a Participant, which will become payable upon
achievement of specified Management Objectives during a 12-month Performance
Period (hereinafter defined). Executive Compensation Plan Bonuses will be
payable upon such terms and conditions as the Committee may determine in
accordance with the provisions of the 1995 ECP.
The Committee will specify the time and manner of payment of an Executive
Compensation Plan Bonus which becomes payable, which payment may be made in
cash, shares of Common Stock or any combination thereof, as determined by the
Committee in its sole discretion at the time of payment. As soon as practicable
after the beginning of a Performance Period, the Committee will notify each
Participant of the terms of the Executive Compensation Plan Bonus program for
that Performance Period. Bonuses under the 1995 ECP are not subject to increase
by the Chief Executive Officer as is permitted in extraordinary circumstances
under the 1989 ECP.
Management Objectives for Performance-Based Compensation. For purposes of
the 1995 ECP, "Management Objectives" are the objectives, if any, established by
the Committee for a Performance Period that are to be achieved with respect to
an award granted to a Participant. Management Objectives may be described in
terms of Company-wide objectives or in terms of objectives that are related to
performance of the division, subsidiary, department or function within the
Company or a subsidiary in which the Participant receiving the award is employed
or on which the Participant's efforts have significant influence. The Management
Objectives established by the Committee for any Performance Period under the
1995 ECP will consist of one or more of the following: (1) earnings per share
and/or growth in earnings per share in relation to target objectives; (2) cash
flow and/or growth in cash flow in relation to target objectives; (3) net income
and/or growth in net income in relation to target objectives, excluding the
effect of extraordinary items; (4) total shareholder return (measured as the
total of the appreciation of and dividends declared on the Common Stock) in
relation to target objectives; (5) return on invested capital in relation to
target objectives; (6) return on shareholder equity in relation to target
objectives; and (7) return on assets in relation to target objectives.
Management Objectives may be established in absolute terms or relative to
the performance of a specified group of other companies. Any award under the
1995 ECP may be subject to a single Management Objective, a combination of
Management Objectives, or two or more alternative Management Objectives. The
Committee may adjust Management Objectives and any minimum acceptable level of
achievement with respect to any Management Objectives if, in the sole judgment
of the Committee, events or transactions have occurred after the establishment
of such objectives which are unrelated to performance and result in a distortion
of the Management Objectives or such minimum acceptable level of achievement.
The Committee will certify that Management Objectives have been met before any
payments to Participants may be made.
"Performance Period" means, with respect to an award, a period of time
established by the Committee within which the Management Objectives relating to
such award are to be measured. The Performance Period for an Executive
Compensation Plan Bonus will be a period of 12 months. The Performance Period
for all other awards will be a period of not less than three years.
LIMITATION ON AWARDS
Awards under the 1995 ECP will be subject to the following limitations:
(a) No more than 2,000,000 shares reserved for issuance under the 1995
ECP will be issued under Stock Options.
16
<PAGE> 19
(b) Of the aggregate 2,000,000 shares reserved for issuance under the
1995 ECP, no more than 600,000 shares will be issued or transferred as
restricted stock.
(c) The maximum aggregate number of shares that may be subject to
Stock Options, appreciation rights and restricted stock granted to a
Participant during any calendar year will not exceed 100,000 shares. This
limitation will apply to the grant of appreciation rights whether the
Spread on exercise is paid in cash or shares of Common Stock.
(d) The maximum aggregate cash value of payments to any Participant
for any Performance Period pursuant to an award of performance units will
not exceed $3,000,000.
(e) The payment of an Executive Compensation Plan Bonus to any
Participant will not exceed the lesser of $1,000,000 or 100% of the
Participant's regular base salary as of the first day of the Performance
Period for which the Executive Compensation Plan Bonus is granted.
On February 22, 1995, the Company declared a two-for-one stock split
effected in the form of a dividend, to become effective June 9, 1995, for
shareholders of record on May 19, 1995. At the effective time, the Committee
currently intends to adjust the shares available for grant under the 1995 ECP to
4,000,000. In addition, the limitation on the number of shares reserved for
issuance as Stock Options will be increased to 4,000,000, the limitation on the
number of shares reserved for issuance as restricted shares will be increased to
1,200,000, and the limitation on the maximum aggregate number of shares that may
be subject to Stock Options, appreciation rights and restricted stock granted to
a Participant during any calendar year will be increased to 200,000 shares. No
shares subject to awards under the 1995 ECP will be outstanding at such time.
TRANSFERABILITY; AMENDMENTS
Except as otherwise provided in the agreement evidencing a Participant's
award, (1) no Stock Option, appreciation right, performance unit that has not
become payable or Executive Compensation Plan Bonus that has not become payable
will be transferable by the Participant other than by will or the laws of
descent and distribution and (2) no Stock Option or appreciation right granted
to a Participant will be exercisable during the Participant's lifetime by any
person other than the Participant or the Participant's guardian or legal
representative. Stock Options granted to nonemployee directors under the 1995
ECP will not be transferable other than by will or the laws of descent and
distribution.
The 1995 ECP may be amended from time to time by the Committee or the Board
but may not be amended without further approval by the shareholders of the
Company if such amendment would result in the 1995 ECP failing to satisfy the
requirements of Rule 16b-3. Notwithstanding the foregoing, the provisions of the
1995 ECP relating to Stock Options for nonemployee directors may be amended only
by the Board and may not be amended more than once every six months except to
comply with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules and regulations thereunder.
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<PAGE> 20
ESTIMATION OF BENEFITS
The amounts that will be paid pursuant to the 1995 ECP are not currently
determinable. Had the 1995 ECP been in effect during 1994, and assuming that the
Committee would have administered it in the same manner in which it currently
administers the 1989 ECP and the 1986 Plan, the stock-based awards reflected in
the following table would have been received by the individuals and groups
referred to below:
<TABLE>
<CAPTION>
1995 EXECUTIVE
COMPENSATION PLAN
--------------------------
STOCK RESTRICTED
NAME AND POSITION OPTIONS SHARES
------------------------------------------------------------- ------- ----------
<S> <C> <C>
Robert W. Decherd............................................ 26,225 8,712
Chairman of the Board, President and Chief Executive Officer
Ward L. Huey, Jr............................................. 18,225 6,056
Vice Chairman of the Board and President, Broadcast Division
Burl Osborne................................................. 16,995 5,648
Publisher and Editor of The Dallas Morning News, Inc.
Michael J. McCarthy.......................................... 7,090 2,352
Senior Vice President, General Counsel and Secretary
Michael D. Perry............................................. 6,925 2,304
Senior Vice President, Chief Financial Officer
Executive Group.............................................. 75,460 25,072
Non-Executive Director Group................................. 32,500 --
Non-Executive Officer Employee Group......................... 214,835 23,288
</TABLE>
Subject to approval of the 1995 ECP by shareholders of the Company, the
Committee has established Executive Compensation Plan Bonuses for 1995 which
will be paid if the Company's financial performance (or the performance of a
subsidiary, in certain cases) meets certain Management Objectives. These
Management Objectives consist of target levels of earnings per share in the case
of the Company, and of operating cash flow in the case of subsidiaries. If
financial performance is at or below threshold levels, Participants will earn no
bonuses. Financial performance at the target level earns Participants 100% of
their bonus amounts, performance at the maximum level earns Participants 150% of
their bonus amounts, and performance in between the threshold and maximum levels
earns a pro rata amount reflecting the performance level achieved. The following
table reflects the amount of the Executive Compensation Plan Bonus that will be
paid to the indicated individuals and groups if target or maximum performance
levels are achieved for 1995:
<TABLE>
<CAPTION>
1995 EXECUTIVE
COMPENSATION PROGRAM
-----------------------------
NAME AND POSITION TARGET MAXIMUM
--------------------------------------------------------- ---------- ----------
<S> <C> <C>
Robert W. Decherd........................................ $ 267,350 $ 401,025
Chairman of the Board, President and Chief Executive
Officer
Ward L. Huey, Jr......................................... $ 188,550 $ 282,825
Vice Chairman of the Board and President, Broadcast
Division
Burl Osborne............................................. $ 170,850 $ 256,275
Publisher and Editor of The Dallas Morning News, Inc.
Michael J. McCarthy...................................... $ 92,625 $ 138,938
Senior Vice President, General Counsel and Secretary
Michael D. Perry......................................... $ 91,500 $ 137,250
Senior Vice President, Chief Financial Officer
Executive Group.......................................... $ 810,875 $1,216,313
Non-Executive Officer Employee Group..................... $2,442,197 $3,663,296
</TABLE>
Under the 1995 ECP, the Committee may establish Management Objectives for
Participants in circumstances that merit one-time Executive Compensation Bonus
opportunities. In December, 1994, subject to shareholder approval of the 1995
ECP, the Committee approved a special one-time incentive bonus to
18
<PAGE> 21
Ward L. Huey, Jr., Vice Chairman of the Board and President, Broadcast Division,
relating to the Company's recent acquisitions of WWL-TV in New Orleans,
Louisiana, and KIRO-TV in Seattle, Washington. Under this special bonus
opportunity, Mr. Huey can earn up to a maximum of $250,000 based upon certain
targets for the contributions to earnings per share of the Company's Common
Stock by these two stations for fiscal 1996. If the 1995 ECP is approved by the
shareholders, Mr. Huey's bonus opportunity will qualify as "performance based
compensation" under Section 162(m) of the Code.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of the 1995
ECP is not comprehensive and is based on current income tax laws, regulations
and rulings.
Incentive Stock Options. An optionee does not recognize income on the grant
of an incentive stock option. Subject to the effect of the alternative minimum
tax, discussed below, if an optionee exercises an incentive stock option in
accordance with the terms of the option and does not dispose of the shares
acquired within two years from the date of the grant of the option nor within
one year from the date of exercise, the optionee will not realize any income by
reason of the exercise and the Company will be allowed no deduction by reason of
the grant or exercise. The optionee's basis in the shares acquired upon exercise
will be the amount paid upon exercise. Provided the optionee holds the shares as
a capital asset at the time of sale or other disposition of the shares, his gain
or loss, if any, recognized on the sale or other disposition will be capital
gain or loss. The amount of his gain or loss will be the difference between the
amount realized on the disposition of the shares and his basis in the shares.
If an optionee disposes of the shares within two years from the date of
grant of the option or within one year from the date of exercise (an "Early
Disposition"), the optionee will realize ordinary income at the time of such
Early Disposition which will equal the excess, if any, of the lesser of (1) the
amount realized on the Early Disposition, or (2) the fair market value of the
shares on the date of exercise, over the optionee's basis in the shares. The
Company will be entitled to a deduction in an amount equal to such income. The
excess, if any, of the amount realized on the Early Disposition of such shares
over the fair market value of the shares on the date of exercise will be
long-term or short-term capital gain, depending upon the holding period of the
shares, provided the optionee holds the shares as a capital asset at the time of
Early Disposition. If an optionee disposes of such shares for less than his
basis in the shares, the difference between the amount realized and his basis
will be a long-term or short-term capital loss, depending upon the holding
period of the shares, provided the optionee holds the shares as a capital asset
at the time of disposition.
The excess of the fair market value of the shares at the time the incentive
stock option is exercised over the exercise price for the shares is an item of
"tax preference" as such term is used in the Code (the "Stock Option
Preference").
Non-Qualified Stock Options. Non-qualified stock options do not qualify for
the special tax treatment accorded to incentive stock options under the Code.
Although an optionee does not recognize income at the time of the grant of the
option, he recognizes ordinary income upon the exercise of a non-qualified
option in an amount equal to the difference between the fair market value of the
stock on the date of exercise of the option and the amount of the exercise
price.
As a result of the Optionee's exercise of a non-qualified stock option, the
Company will be entitled to deduct as compensation an amount equal to the amount
included in the optionee's gross income. The Company's deduction will be taken
in the Company's taxable year in which the option is exercised.
The excess of the fair market value of the stock on the date of exercise of
a non-qualified stock option over the exercise price is not an item of tax
preference.
The Stock Options for nonemployee directors under the 1995 ECP will be
non-qualified stock options.
Appreciation Rights. Recipients of appreciation rights do not recognize
income upon the grant of such an award. When a participant elects to receive
payment under an appreciation right, he recognizes ordinary
19
<PAGE> 22
income in an amount equal to the cash and/or fair market value of shares
received, and the Company is entitled to a deduction equal to such amount.
Restricted Stock; Performance Units. Grantees of restricted stock and
performance units do not recognize income at the time of the grant of such stock
or units. However, when shares of restricted stock become free from any
restrictions or when performance units are paid, grantees recognize ordinary
income in an amount equal to the cash and the fair market value of the stock on
the date all restrictions are satisfied. Alternatively, the grantee of
restricted stock may elect to recognize income upon the grant of the stock and
not at the time the restrictions lapse.
Taxation of Preference Items. Section 55 of the Code imposes an alternative
minimum tax equal to the excess, if any, of (1) 21% of the optionee's
"alternative minimum taxable income" over (2) his "regular" federal income tax.
Alternative minimum taxable income is determined by adding the optionee's stock
option preference and any other items of tax preference to the optionee's
adjusted gross income and then subtracting certain allowable deductions and an
exemption amount. The exemption amount is $30,000 for single taxpayers, $40,000
for married taxpayers filing jointly and $20,000 for married taxpayers filing
separately. However, these exemption amounts are phased out beginning at certain
levels of alternative minimum taxable income.
Change of Control. If there is an acceleration of the vesting of benefits
and/or an acceleration of the exercisability of Stock Options upon a Change of
Control, all or a portion of the accelerated benefits may constitute "excess
parachute payments" under Section 280G of the Code. The employee receiving an
excess parachute payment incurs an excise tax of 20% of the amount of the
payment in excess of the employee's average annual compensation over the five
calendar years preceding the year of the Change of Control, and the company is
not entitled to a deduction for such payment.
Limitation on Deduction. For taxable years beginning after 1993, Section
162(m) of the Code provides that no deduction will be allowed for certain
remuneration with respect to a covered employee to the extent such remuneration
exceeds $1 million. Under proposed regulations issued by the Internal Revenue
Service, an employee is a covered employee if his compensation is required to be
reported in the Summary Compensation Table of a company's proxy statement and he
is employed as of the last day of the taxable year. Code Section 162(m) does not
apply to: (a) compensation payable solely on account of the attainment of one or
more performance goals if (1) the goals are determined by a committee of two or
more outside directors, (2) the material terms under which the remuneration will
be paid, including the goals, are disclosed to shareholders and approved by a
majority of the shareholders, and (3), except in the case of appreciation rights
and eligible options, the Committee certifies that the goals have been met; (b)
compensation payable under a binding contract in effect on February 17, 1993
which is not thereafter modified in any material respect; and (c), until the
plan or agreement is materially modified or the date of the 1997 shareholders
meeting, compensation payable under any plan or agreement approved by the
shareholders (in a manner consistent with Rule 16b-3) before December 20, 1993,
if the directors establishing and administering the plan or agreement are
"disinterested". Compensation arising from appreciation rights and Stock Options
where the exercise price is no less than fair market value on the date of grant
constitute compensation on account of attainment of a performance goal as long
as the shareholders approve the maximum number of shares per participant over a
specific time period. The $1 million limitation is reduced by any remuneration
subject to such limitation for which a deduction is disallowed under the change
of control provisions set forth above. Subject to approval of the 1995 ECP by
the shareholders of the Company, compensation arising from appreciation rights
and Stock Options, and compensation arising from restricted stock that vests, or
performance units and Executive Compensation Plan Bonuses that become payable
upon satisfaction of Management Objectives, may qualify as compensation payable
solely on account of the attainment of performance goals.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares of Common Stock entitled
to vote on this proposal and represented in person or by proxy is required for
approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1995 ECP.
20
<PAGE> 23
PROPOSAL THREE
PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION
GENERAL
On March 9, 1995 the Company's Board of Directors approved a proposal to
amend the Company's Certificate of Incorporation (1) to remove from the
Certificate of Incorporation the express denomination of a specific number of
shares of Series A Common Stock (the "Series A Stock") constituting such series
and (2) to permit the issuance of additional shares of Series B Common Stock
(the "Series B Stock") provided any such issuance would not result in the Series
A Stock being excluded from trading on the NYSE and other alternative securities
markets. The Company is also authorized to issue Series C Common Stock (the
"Series C Stock"), which would entitle the holder thereof to not less than
one-tenth of a vote, nor more than one vote on all matters submitted to a vote
of the shareholders. No shares of Series C Stock are outstanding and the Company
currently has no plans to issue shares of Series C Stock.
The proposed amendment to the Company's Certificate of Incorporation is set
forth in the attached Exhibit B.
BACKGROUND AND PURPOSE OF THE PROPOSAL
At the Annual Meeting of Shareholders of the Company on May 4, 1988, the
shareholders approved an amendment to the Company's Certificate of Incorporation
which, among other things, empowered the Board of Directors to authorize the
issuance of Common Stock in series with differing rights. Following the 1988
Annual Meeting, the Board authorized the issuance of the Series A Stock and the
Series B Stock and all shares of Common Stock outstanding at that time were
redenominated as Series A Stock. Under the Certificate of Incorporation,
50,000,000 shares of the total 150,000,000 authorized shares of Common Stock
were expressly denominated Series A Stock.
Because of subsequent increases in the number of shares of Series A Stock
issued or reserved for issuance and to accommodate the Company's recently
announced two-for-one stock split effected in the form of a dividend, the
Company deems it advisable to remove the express denomination of a specific
number of Series A Stock from the Certificate of Incorporation to avoid any
inadvertent overissuance of Series A Stock in the future.
In addition, the 1988 amendment to the Company's Certificate of
Incorporation provided that after completion of the initial distribution of
Series B Stock, the Company would not issue any additional Series B Stock except
for shares issued in connection with (1) stock splits, stock dividends and other
similar distributions, (2) the exercise of stock options outstanding as of
January 1, 1988, (3) the grant of restricted shares and the exercise of stock
options granted under the Company's 1986 Long Term Incentive Plan, (4) the
Company's Employee Stock Purchase Plan, and (5) any employee benefit plan
created pursuant to Section 401(k) of the Internal Revenue Code of 1986, as
amended, or any successor provision.
The limitations on the issuance of additional Series B Stock were
originally included in the 1988 amendment in part because of the uncertainty
surrounding the application of the then-proposed SEC Rule 19c-4, commonly
referred to as the "one share-one vote" rule. After the adoption of the 1988
amendment, Rule 19c-4 was adopted by the SEC and subsequently invalidated by a
federal court. As a result of this uncertain situation, the NYSE and the other
securities exchanges collectively determined to develop a uniform policy
governing the issuance of shares with differential voting rights. On December
19, 1994, a new policy was adopted by the NYSE and the other major securities
exchanges which mirrors, in part, the SEC's original Rule 19c-4 and liberalizes
its application to companies such as Belo which are grandfathered from its
overall application. As a result, it is now clear that Belo could, if it chose
to, consistent with its Certificate of Incorporation, issue additional Series B
Stock without jeopardizing the NYSE listing of its Series A Stock.
Since the adoption of the 1988 amendment to the Company's Certificate of
Incorporation, the Company has established certain new employee benefit plans
which have superseded or replaced or will supersede or
21
<PAGE> 24
replace several of the employee benefit plans expressly referenced in the
Certificate of Incorporation. See "Proposal Two -- Approval of the A.H. Belo
Corporation 1995 Executive Compensation Plan" on page 12 for a discussion of the
proposed 1995 ECP. As discussed therein, the 1995 ECP provides that shares
issued under that plan, like the current 1986 Long Term Incentive Plan, may be
Series A Stock or Series B Stock, as determined by the Compensation Committee of
the Board in its discretion. Since the 1988 amendment, no options for Series B
Stock or restricted shares of Series B Stock have been issued under any Company
employee benefit plan.
In light of the recent clarification of the "one share-one vote" rule, the
Company would like to have the flexibility to issue additional Series B Stock in
connection with any of its employee benefit plans and otherwise, provided that
any such issuance would not result in the Series A Stock being excluded from
trading on the NYSE and other alternative securities markets. Except for the
possibility of granting Series B Stock options or restricted shares under the
1995 ECP, provided it is approved by the shareholders at the Annual Meeting, the
Company has no present intention to issue any additional shares of Series B
Stock. If Proposal Three is adopted by the shareholders at the Annual Meeting,
the Company does not anticipate seeking shareholder approval of additional
issuances of Series A or Series B Stock.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the voting power of the outstanding
shares of Common Stock is required for approval of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S CERTIFICATE OF INCORPORATION.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME OFFICE CURRENTLY HELD OFFICE HELD SINCE
----------------------- ------------------------------------------ -----------------
<S> <C> <C>
Robert W. Decherd...... Chairman of the Board, President and Chief 1987(1)
Executive Officer
Ward L. Huey, Jr....... Vice Chairman of the Board and President, 1987(1)
Broadcast Division
Burl Osborne........... Publisher and Editor of The Dallas Morning 1991(1)
News, Inc.
Michael J. McCarthy.... Senior Vice President, General Counsel and 1987(2)
Secretary
Michael D. Perry....... Senior Vice President, Chief 1987(3)
Financial Officer
</TABLE>
---------------
(1) Member of the Board of Directors. (See "Proposal One -- Election of
Directors" on page 8 for additional information.)
(2) Mr. McCarthy, age 50, has been Senior Vice President of the Company since
January 1987 and has been Secretary and General Counsel since October 1985.
He served as Vice President of the Company from 1985 to 1987. From 1973 to
September 1985, Mr. McCarthy was an associate and then partner in the law
firm of Dow, Lohnes & Albertson in Washington, D.C.
(3) Mr. Perry, age 48, has been Senior Vice President, Chief Financial Officer
of the Company since November 1987. From January 1989 through December
1991, Mr. Perry was also Treasurer. He served as Vice President, Controller
of the Company from January 1984 to November 1987.
22
<PAGE> 25
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following information summarizes annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1994, 1993, and 1992 of the Chief Executive Officer and the other four most
highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------- ----------------------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND COMPENSATION AWARD(S) SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) ($)(2) ($)(3)(4) (#) ($)(5)
------------------------------ ---- ------------ -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Decherd 1994 $556,200 $400,275 -- $ 465,003 26,225 $ 75,540
Chairman of the Board, 1993 $547,500 $393,750 -- $ 354,510 26,100 $ 60,430
President and Chief 1992 $522,500 $375,000 -- $ 397,290 29,010 $ 58,153
Executive Officer
Ward L. Huey, Jr. 1994 $441,200 $353,278 -- $ 323,239 18,225 $121,779
Vice Chairman of the Board 1993 $399,200 $131,381 -- $ 245,700 18,100 $ 81,058
and President, Broadcast 1992 $370,700 $235,035 -- $ 206,720 15,080 $ 76,574
Division
Burl Osborne 1994 $423,984 $255,946 -- $ 301,462 16,995 $152,309
Publisher and Editor of 1993 $385,500 $171,878 -- $ 228,150 16,805 $133,428
The Dallas Morning News, Inc. 1992 $352,500 $410,375 -- $ 197,030 14,370 $160,111
Michael J. McCarthy 1994 $246,700 $129,518 -- $ 125,538 7,090 $ 44,491
Senior Vice President, 1993 $215,300 $104,958 -- $ 103,350 7,605 $ 20,491
General Counsel and 1992 $205,000 $ 99,937 -- $ 77,520 5,730 $ 19,534
Secretary
Michael D. Perry 1994 $243,700 $127,943 -- $ 122,976 6,925 $ 36,353
Senior Vice President, 1993 $210,000 $102,375 -- $ 101,010 7,425 $ 11,366
Chief Financial Officer 1992 $200,000 $ 97,500 -- $ 74,290 5,450 $ 10,791
</TABLE>
---------------
(1) These amounts include annual director fees of $22,500 for each of Mr.
Decherd, Mr. Huey, and Mr. Osborne.
(2) The total value of executive perquisites and benefits did not exceed the
lesser of (1) $50,000 or (2) 10% of the total annual salary and bonuses for
any executive listed above.
(3) The unrealized value of the Company's restricted Series A shares reflected
in this column is based upon the date of grant closing market price of
unrestricted Series A shares. No restricted Series B shares are currently
outstanding. As of December 31, 1994, the total number and value of the
Company's Series A shares subject to restrictions held by the executive
officers listed in the Summary Compensation Table above were as follows:
<TABLE>
<CAPTION>
RESTRICTED SERIES A VALUE
SHARES (#) ($)
------------------- ----------
<S> <C> <C>
Robert W. Decherd.................................................. 50,260 $2,839,690
Ward L. Huey, Jr................................................... 45,586 $2,575,609
Burl Osborne....................................................... 41,078 $2,320,907
Michael J. McCarthy................................................ 16,282 $ 919,933
Michael D. Perry................................................... 16,036 $ 906,034
</TABLE>
(4) Dividends are paid on the restricted shares denoted in this column. One-half
of the restricted shares awarded are subject to possible forfeiture in
equal increments over a four-year period unless the Company meets specified
annual performance goals. All of the restricted shares are subject to a
restriction on disposition until approximately six weeks following the
fourth anniversary of the date of grant.
23
<PAGE> 26
(5) Amounts in this column consist of the following dollar values of premiums
for life insurance purchased on behalf of the named individuals under the
Company's Management Security Plan, amounts contributed by the Company to
the Company's Employee Savings and Investment Plan (a non-discriminatory
retirement plan established pursuant to Section 401(k) of the Internal
Revenue Code), and amounts contributed to the Company's Supplemental
Executive Retirement Plan (the "SERP") for 1994:
<TABLE>
<CAPTION>
EMPLOYEE
MANAGEMENT SAVINGS AND
SECURITY INVESTMENT SERP
PLAN PLAN CONTRIBUTION
($) ($) ($)
---------- ----------- ------------
<S> <C> <C> <C>
Robert W. Decherd....................................... $ 15,724 $ 4,500 $ 55,316
Ward L. Huey, Jr........................................ $ 19,861 $ 3,750 $ 98,168
Burl Osborne............................................ $ 20,087 $ 3,750 $128,472
Michael J. McCarthy..................................... $ 9,465 $ 3,000 $ 32,026
Michael D. Perry........................................ $ 6,546 $ 3,000 $ 26,807
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Since 1989 the Company has made annual grants of stock options to executive
officers and other key employees under its 1989 ECP pursuant to the Company's
1986 Plan. (For a description of the 1989 ECP, see "Board Compensation Committee
Report on Executive Compensation" on page 29.) The following table provides
additional information regarding options and limited stock appreciation rights
granted during 1994 to the named executive officers:
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE GRANT DATE
SARS EMPLOYEES OR BASE PRESENT
GRANTED IN FISCAL PRICE EXPIRATION VALUE
NAME (#)(1) YEAR ($/SH) DATE ($)(2)
------------------------------------- --------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Robert W. Decherd.................... 26,225 9.03% $ 53.375 12/14/04 $589,014
Ward L. Huey, Jr..................... 18,225 6.28% $ 53.375 12/14/04 $409,334
Burl Osborne......................... 16,995 5.85% $ 53.375 12/14/04 $381,708
Michael J. McCarthy.................. 7,090 2.44% $ 53.375 12/14/04 $159,241
Michael D. Perry..................... 6,925 2.39% $ 53.375 12/14/04 $155,536
</TABLE>
---------------
(1) All options were granted on December 14, 1994 and become exercisable in
increments of 40% after one year and 30% after years two and three. Options
are granted in tandem with limited stock appreciation rights, which become
exercisable upon an Acceleration Date. See the definition of Acceleration
Date in "Compensation Pursuant to Certain Retirement Plans -- Pension Plan"
below. These rights provide an opportunity for the holder to receive an
amount in cash equal to the difference between the exercise price of the
options and the greater of the highest fair market value of the underlying
shares for the 90 days prior to the exercise date or the highest per share
price paid in certain takeover-related events. Upon the occurrence of an
Acceleration Date, all of the options and limited stock appreciation rights
would become immediately exercisable, unless the Board of Directors has
adopted resolutions making the acceleration provisions inoperative. The
Committee also may accelerate the exercisability of any option at any time.
The 1986 Plan further provides for the payment of the exercise price of an
option with shares of Common Stock, upon the approval of the Committee. In
addition, the 1986 Plan permits an optionee under certain circumstances to
cause the Company to withhold shares issued upon the exercise of an option
granted under that plan in payment of the taxes due upon the exercise of
such option.
(2) These values are determined using the Black-Scholes Option Pricing Model.
The Black-Scholes Option Pricing Model is one of the methods permitted by
the Securities and Exchange Commission for estimating the present value of
options. The actual value of the stock options that an executive officer may
realize, if any, will depend on the excess of the market price on the date
of exercise over the exercise price. The Black-Scholes Option Pricing Model
is based on assumptions as to certain variables as
24
<PAGE> 27
described in the following sentence, so there is no assurance that an
individual will actually realize the option values presented in this table.
The values listed above were based on the following assumptions: volatility
(measured as the annualized standard deviation of the sample, as determined
from the past 20 quarters, ending with the third quarter of 1994) -- .2030;
risk free rate of return -- 7.98%; dividend yield -- 1.2%; time of
exercise -- 10 years; and discount for risk of forfeiture -- 3%.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
The following table shows information concerning the exercise of stock
options during 1994 by the named executive officers and the estimated value of
unexercised options held by such individuals at year-end:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END
SHARES ACQUIRED (#) ($)(3)
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#)(1) ($)(2) UNEXERCISABLE UNEXERCISABLE
------------------------------------------ --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Robert W. Decherd......................... 0 0 94,697/ $5,350,381/
50,588 $2,858,222
Ward L. Huey, Jr.......................... 7,710 $230,336 88,186/ $4,982,509/
33,609 $1,898,909
Burl Osborne.............................. 0 0 38,951/ $2,200,732/
31,389 $1,773,479
Michael J. McCarthy....................... 6,009 $122,844 15,573/ $ 879,875/
13,372 $ 755,518
Michael D. Perry.......................... 0 0 15,587/ $ 880,666/
13,015 $ 735,348
</TABLE>
---------------
(1) All of these shares of the Company's Common Stock that were acquired upon
the exercise of stock options were Series A shares.
(2) Based on the closing price of the Company's Series A shares on the
NYSE -- Composite Transactions on the respective exercise dates, less the
exercise price of the options.
(3) Based on the closing price of $56.50 of the Company's Series A shares on the
NYSE -- Composite Transactions on December 31, 1994.
25
<PAGE> 28
COMPENSATION PURSUANT TO CERTAIN RETIREMENT PLANS
Pension Plan. The Company maintains a non-contributory pension plan
available to substantially all of its employees who have completed one year of
service and have reached 21 years of age. The following table reflects the
expected annual benefits, computed on a 10-year certain and life annuity basis,
payable under the plan to a fully vested executive officer of the Company upon
retirement at age 65 after the credited years of service and at the annual
remuneration levels set forth in the table.
<TABLE>
<CAPTION>
AVERAGE ANNUAL YEARS OF SERVICE(1)(2)
COMPENSATION DURING --------------------------------------------------------------------------
FINAL FIVE YEARS 10 15 20 25 30 35 40
------------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000............... $ 20,843 $ 31,264 $ 41,686 $ 52,107 $ 62,528 $ 72,950 $ 81,200
$250,000............... $ 35,343 $ 53,014 $ 70,686 $ 88,357 $106,028 $112,724 $112,724
$350,000............... $ 49,843 $ 74,764 $ 99,686 $112,724 $112,724 $112,724 $112,724
$450,000............... $ 64,343 $ 96,514 $112,724 $112,724 $112,724 $112,724 $112,724
$550,000............... $ 78,843 $112,724 $112,724 $112,724 $112,724 $112,724 $112,724
$650,000............... $ 93,343 $112,724 $112,724 $112,724 $112,724 $112,724 $112,724
$750,000............... $107,843 $112,724 $112,724 $112,724 $112,724 $112,724 $112,724
$850,000 or above...... $112,724 $112,724 $112,724 $112,724 $112,724 $112,724 $112,724
</TABLE>
---------------
(1) Benefits listed in the table above are not subject to reduction for Social
Security amounts.
(2) The table above does not reflect all of the limitations on accrued benefits
imposed by Section 415 of the Code, which currently limits such benefits to
$120,000. Prior to January 1, 1983, actual benefits were accrued subject to
a maximum limitation of $136,425. The table also does not reflect the
limitations imposed by Section 401(a)(17) of the Code on annual
compensation to be taken into account in determining pension benefits,
which amount currently is limited to $150,000.
The Company's pension plan provides for the payment of a monthly retirement
benefit based on credited years of service and average of five consecutive years
of highest annual compensation out of the ten most recent calendar years of
employment. Compensation covered under the plan is regular pay plus overtime,
bonuses, commissions and any contribution made by the Company on behalf of an
employee pursuant to a deferral election under any benefit plan containing a
cash or deferred arrangement. Covered compensation excludes any non-cash
earnings and any Company matching contributions to the Employee Savings and
Investment Plan. A participant's interest in the plan becomes fully vested upon
completion of five credited years of service, or upon attainment of age 62,
whichever first occurs. Retirement benefits under the plan are paid to
participants upon normal retirement at the age of 65 or later, or upon early
retirement, which may occur at age 55, provided the participant has completed
five years of credited service. The plan also provides for the payment of death
benefits. The five executive officers named in the Summary Compensation Table
above have credited years of service under the plan as follows: Mr.
Decherd -- 22 years; Mr. Huey -- 35 years; Mr. Osborne -- 15 years; Mr.
McCarthy -- 10 years; and Mr. Perry -- 16 years. The covered compensation of
such persons under the pension plan is substantially the same as the annual
compensation indicated in the Summary Compensation Table on page 23, except that
such covered compensation was capped at $150,000 for all participants in 1994.
Upon the occurrence of certain events, (1) the benefits of all active
participants in the pension plan become fully vested and nonforfeitable, and (2)
the excess of plan assets over the present value of accrued benefits, if any,
are applied to provide active participants with an additional vested benefit
equivalent to the benefit such participants should have received under
Department of Labor Regulations Section 2618.32(a) if the plan had then
terminated. The events giving rise to (1) and (2) above are generally identical
to those giving rise to an "Acceleration Date," as defined in the Company's 1986
Plan, except that the first purchase of shares of Common Stock pursuant to a
tender offer or exchange offer does not constitute such an event. An
"Acceleration Date" is generally defined in the 1986 Plan as the commencement of
a tender offer or exchange offer, a change in control (which is deemed to occur
when any group, entity, or other person that theretofore beneficially owned less
than 30% of the total number of outstanding shares of Common Stock acquires
shares, which acquisition results in such group, entity, or person having more
than 30% beneficial ownership),
26
<PAGE> 29
approval or consummation of certain mergers, sales, exchanges, or dispositions
of the Company's assets, or certain changes in the composition of the Board of
Directors of the Company during any period of two consecutive years.
Management Security Plan. The Management Security Plan was instituted as of
January 1, 1980 to provide retirement and death benefits at a reduced cost
through group rates to a select group of management and highly compensated
employees, including the five executive officers listed in the Summary
Compensation Table above, who contribute materially to the growth, development,
and success of the Company. The Management Security Plan, other than the amounts
of benefits awarded thereunder, is administered by a committee that serves at
the discretion of the Board of Directors, the members of which committee may be
participants in the plan. The Management Security Plan is currently administered
by the Compensation Committee, none of whose members is a participant in the
plan. The Management Security Plan provides for a death benefit equal to 50% of
the participant's salary at death payable for 10 years thereafter or until the
participant would have reached age 65 (whichever is longer), plus an additional
payment equal to the participant's full salary for the first year after death.
If the participant survives to year 65, then such amounts will be paid out over
10 years after retirement. Under the terms of the plan, additional insurance is
purchased upon a participant entering into the plan and upon each salary
increase for any plan participant. However, in 1988 the Company determined to
freeze the level of benefits under the Management Security Plan and no
additional participants have been added to the plan since such time. The
estimated annual benefits under the Management Security Plan payable upon
retirement at age 65 to each of the executive officers named in the Summary
Compensation Table are as follows: Mr. Decherd -- $384,588; Mr.
Huey -- $120,012; Mr. Osborne -- $74,232; Mr. McCarthy -- $104,256; and Mr.
Perry -- $86,640. Amounts contributed to the Management Security Plan by the
Company on behalf of the five executive officers named in the Summary
Compensation Table for 1992, 1993 and 1994 are set forth in footnote (5) to the
Summary Compensation Table on page 24 above.
Supplemental Executive Retirement Plan. The Supplemental Executive
Retirement Plan (the "SERP") was recommended by the Committee and implemented in
December 1992 for senior corporate officers and other key executives selected by
the Committee. This group includes the four senior executives named in the
Summary Compensation Table on page 23 (the "Senior Executives") and the Chief
Executive Officer. The SERP's purpose is to help offset the Code limits on the
Company's qualified retirement plans. The SERP's specific objective, when
combined with the Company's Pension Plan, Employee Savings and Investment Plan,
and Management Security Plan, is to provide a benefit at age 65 of 60% of final
average pay (the average of the total salary and bonus during the last five
completed calendar years of employment) to the senior corporate officers and the
Publisher and Editor of The Dallas Morning News, Inc. and a benefit of 55% of
final average pay to all other participants. However, since the SERP is a
defined contribution plan, the actual benefit to be received by any participant
will be dependent on the participant's account balance at the time of
retirement. As the contributions to the SERP are based on a participant's salary
and bonus, the actual amount of the contributions made on behalf of a
participant will vary based on a number of factors, of which Company performance
is a primary factor. (See "1989 Executive Compensation Program" under "Board
Compensation Committee Report on Executive Compensation" on page 29 for a
discussion of Company performance and its effect on the amount of salary and
bonus paid to executives.) The payment of benefits under the SERP will be
subject to the same terms and conditions described above for the payment of
benefits under the Company's Pension Plan. (See the description of the Company's
Pension Plan on pages 26-27 above. See also footnote (5) to the Summary
Compensation Table on page 24 above for the amounts contributed to the SERP by
the Company on behalf of the Senior Executives and the Chief Executive Officer
for 1994.) The Company has established a trust to hold the contributions to the
SERP, which contributions will be protected from the claims of the Company's
creditors unless the Company becomes insolvent. As a result of the establishment
of the trust, benefits payable under the SERP will also be protected in the
event of a change of control of the Company.
27
<PAGE> 30
COMPENSATION OF DIRECTORS
In 1994, directors received an annual retainer of $22,500 for serving on
the Company's Board of Directors, and nonemployee directors also received $1,000
for each meeting of the Board of Directors attended. Directors who are committee
chairmen (all of whom are nonemployee directors) received $2,000 for each
committee meeting attended. Nonemployee directors received $1,000 for each
committee meeting attended. In December 1994 the Board of Directors approved,
effective January 1, 1995, an increase in the annual retainer to $25,000, an
increase in the fee for each board meeting and committee meeting attended to
$1,250 and an increase in the fee for committee chairmen to $2,500 for each
committee meeting attended.
Since May 1988, nonemployee directors of the Company have automatically
received upon their first election to the Board a one-time grant of options to
purchase 10,000 shares of the Company's Series A Common Stock. Pursuant to an
amendment to the 1986 Plan adopted at the 1992 Annual Meeting of Shareholders,
each nonemployee director serving on May 6, 1992 received non-qualified options
to purchase 2,500 Series A shares and thereafter, on each annual meeting date,
automatically receives additional non-qualified options to purchase 2,500 Series
A shares during each of the four following years (as long as such director
continues to serve as a nonemployee director of the Company). Nonemployee
directors elected after May 6, 1992 and before the Company's 1997 Annual Meeting
of Shareholders will receive upon their first election the one-time grant of
options to purchase 10,000 Series A shares and thereafter will automatically
receive additional non-qualified options to purchase 2,500 Series A shares for
each of the five following years (as long as such director continues to serve as
a nonemployee director of the Company).
If the 1995 ECP is approved, nonemployee directors will continue to receive
upon their first election a one-time grant of options to purchase 10,000 Series
A shares and thereafter will automatically receive additional non-qualified
options to purchase 2,500 Series A shares each year they serve as directors;
provided, however, if a director is granted an option to purchase shares of
Common Stock under the Company's 1986 Plan upon initial election to the Board or
on a date of an annual meeting of shareholders, the option to be granted
pursuant to the 1995 ECP for the same event will be reduced by the number of
shares of Common Stock covered by the option granted pursuant to the 1986 Plan.
CERTAIN TRANSACTIONS
In June 1992, the Company entered into a construction contract with a
subsidiary of Austin Industries, Inc. relating to the expansion of certain
printing facilities of The Dallas Morning News, Inc. The contract provides for
total payments by the Company of approximately $19 million of which
approximately $90,000 was paid during the year ended December 31, 1994. In
October, 1994, the Company entered into a construction contract with a
subsidiary of Austin Industries, Inc. relating to the renovation of certain
office facilities. The contract provides for total payments of approximately
$14.5 million of which approximately $500,000 was paid during the year ended
December 31, 1994. William T. Solomon, a director of the Company, is Chairman,
President, and Chief Executive Officer of Austin Industries, Inc.
During 1994 the Company made total payments for automobile leases of
approximately $500,000 to Trans-National Leasing, Inc., which is owned by an
affiliate of Associates Corporation of North America. Also during 1994, a
subsidiary of Associates Corporation of North America provided relocation
services to the Company and its subsidiaries for which the Company paid
approximately $125,000. Reece A. Overcash, Jr., who served as a director of the
Company until his death in January 1995, was Chairman of the Board of Directors
and Chief Executive Officer of Associates Corporation of North America.
28
<PAGE> 31
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The Committee is composed entirely of independent outside directors. Under
the 1989 Executive Compensation Program (the "1989 ECP"), the Committee makes
recommendations to the Board of Directors regarding salary levels and annual
bonus opportunities for executive officers, and in accordance with Rule 16b-3 of
the Act, makes the final determination regarding awards of restricted shares,
stock options and other stock-based awards to such persons under the 1986 Long
Term Incentive Plan (the "1986 Plan").
If the 1995 Executive Compensation Plan (the "1995 ECP") is approved,
annual bonus opportunities and stock-based awards currently awarded under the
1989 ECP and the 1986 Plan will be awarded under the 1995 ECP. The Committee
expects to administer the 1995 ECP in a manner substantially similar to its
administration of the 1989 ECP and the 1986 Plan.
1989 EXECUTIVE COMPENSATION PROGRAM
Awards of compensation during 1994 were made under the 1989 ECP. The 1989
ECP was implemented January 1, 1989, replacing the Company's previously existing
management incentive plans. The key elements of the 1989 ECP are an annual base
salary, an annual target bonus opportunity, and long-term compensation
consisting of stock options and, in certain limited cases, restricted shares
issued under the 1986 Plan. The 1989 ECP has been administered by the Committee,
the members of which are not eligible to participate in the 1989 ECP. Officers
of the Company and its subsidiaries, including the four senior executives named
in the Summary Compensation Table on page 23 (the "Senior Executives") and the
Chief Executive Officer, are automatically eligible to participate in the 1989
ECP. The Committee selects additional participants according to their ability to
affect significantly the profitability of the Company. Levels of compensation
for participants other than the Chief Executive Officer and the Senior
Executives are determined in a manner similar to that described below for the
Senior Executives.
The 1989 ECP is designed to provide a competitive level of compensation to
key executives, managers and professionals, through annual compensation as well
as long-term awards. The goals of the 1989 ECP are: (1) to establish a
competitive compensation program to attract, retain and motivate employees in
those positions that most directly affect the Company's overall performance; (2)
to encourage coordinated and sustained effort toward enhancing the Company's
performance and maximizing the Company's value to its shareholders; and (3) to
recognize and reward outstanding individual achievement. The receipt by
participants of bonus amounts and up to one-half of restricted share awards is
entirely dependent upon the achievement of Company financial performance
targets.
Long-term incentive awards are made in December of each year. Base salary
levels and bonus opportunities are established each December for the following
year. The Committee considers the total value of a 1989 ECP participant's
compensation package to be the value of long-term incentive awards made in
December of the previous year, plus base salary and bonus opportunity as
determined for the current fiscal year. However, the rules of the Securities and
Exchange Commission require the reporting of compensation on a calendar year
basis.
The Committee works closely with the Chief Executive Officer and the Chief
Financial Officer in formulating its recommendations. In recent years, it has
been the policy of the Company to strive to establish a level for each element
of a participant's compensation that is approximately equal to the seventy-fifth
percentile for comparable media companies participating in a special cut survey.
The target percentile was established at a level that the Committee believes is
necessary to attract and retain outstanding executives. Because only eight peer
media companies participated in the special cut survey in 1994 and because few
of these companies have long-term incentive programs involving publicly traded
stock, the Committee expanded the survey for the purposes of considering
long-term incentive awards to include approximately 270 commercial and
industrial companies. Until such time as more comparable media companies
participate in the survey, the Company believes the full survey offers a more
meaningful comparison for purposes of long-term awards. The companies included
in both the general compensation survey and the special cut survey vary
29
<PAGE> 32
somewhat from those included in the performance graph on page 33 because certain
companies included in the peer group do not participate in the compensation
survey and some companies that participate in the compensation survey are not
public companies. The survey is conducted by a nationally recognized
compensation consultant.
Base Salary. The base salaries of the Senior Executives for 1994 were set
at levels approximating the target percentile of the special cut survey aimed
for by the Committee.
Annual Performance Bonus Opportunity. Each 1989 ECP participant has an
opportunity to earn an annual bonus based entirely upon the financial
performance of the participant's organizational entity. The Committee uses a
percent of the base salary of each 1989 ECP participant to establish the
participant's bonus opportunity range, based on survey comparisons.
The Committee also reviews minimum, target and maximum levels of
performance for each organizational entity, based on business plans developed by
Company management. Prior to 1994, each Senior Executive's bonus opportunity had
been based on the performance of the entity that the executive had the most
ability to influence. However, in September 1994, the Committee approved a
recommendation by Mr. Decherd that the annual bonus opportunities for Mr. Huey
and Mr. Osborne be solely dependent on the financial performance of the Company
as a whole. The Committee believes that this change will facilitate a
fully-integrated approach to managing the Company that will encourage Senior
Executives to act within the context of overall corporate objectives, rather
than within the narrower objectives of their particular divisions.
Corporate performance for purposes of the bonus opportunity is measured by
growth in earnings per share and performance of subsidiaries is measured by
increases in operating cash flow. The minimum level for Company performance each
year typically is established at the earnings per share or, in the case of
subsidiaries, operating cash flow, level achieved during the previous fiscal
year. In addition, the Board of Directors or the Committee may exclude the
effect of unusual items from the calculation of the Company's or its
subsidiaries' performance measurements; however, such an exception has been made
only once in the past five years. The Committee views growth in earnings per
share as being an appropriate measurement for the bonus opportunity for certain
participants because this measurement is a widely followed indicator of the
Company's performance and serves to align the interests of management with those
of shareholders. The Committee believes that operating cash flow is an
appropriate performance measure at the subsidiary level because it is the most
accurate indicator of an individual subsidiary's profitability and value.
Bonus amounts for 1989 ECP participants are determined at the end of each
calendar year. If minimum performance levels have not been achieved,
participants earn no bonuses. Performance at the target level earns participants
100% of their bonus amounts, and performance at the maximum level earns
participants 150% of their bonus amounts. If performance falls between the
minimum level and the target level, participants receive a prorated amount up to
the target bonus reflecting performance in excess of the minimum level. If
performance falls between the target and maximum performance levels,
participants receive 100% of their bonus amounts, plus an additional pro rata
amount reflecting performance in excess of the target level. In extraordinary
circumstances, the calculated bonus (other than that of the Chief Executive
Officer) is subject to adjustment up or down by a maximum of 25% by the Chief
Executive Officer in recognition of outstanding achievements that are not part
of an entity's operating plan, or to ensure equitable payments that reflect the
relative contribution of each participant. This prerogative was exercised in
1994 by Mr. Decherd and approved by the Committee in the award to Ward L. Huey,
Jr., Vice Chairman of the Board and President, Broadcast Division, of an
increase in his bonus of 25% or $70,706 to reflect a record year for the
Broadcast Division, Mr. Huey's outstanding contribution to the Company's overall
performance in 1994, and his key role in strategic acquisitions and new business
ventures during 1994.
The Committee believes that linking the bonus opportunity directly to
financial performance gives participants an incentive to focus on management
objectives. As a result of the increase in earnings per share of the Company for
the 1994 fiscal year, each of the Senior Executives received 150% of his
respective target bonus amount.
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<PAGE> 33
Long-Term Awards. The long-term incentive components of the 1989 ECP, which
are awarded pursuant to the 1986 Plan, are designed to encourage the retention
of key executives, and the ultimate value of long-term awards is determined by
the Company's performance as reflected in the market price of its stock. The
Committee assigns to each 1989 ECP participant a long-term incentive factor,
expressed as a percent of base salary. The Committee strives to set long-term
incentive levels for participants that would place them at approximately the
seventy-fifth percentile of the special cut survey considered by the Committee.
In recommending levels of long-term incentive awards for participants, the
Committee attempts to estimate the present value of these awards, assuming that
the Company's growth approximates media industry norms, and making use of the
Black-Scholes Option Pricing Model (a method permitted by the Securities and
Exchange Commission for estimating the present value of options). The
participant's long-term incentive factor times annual compensation reflects the
estimated present value of the awards.
Participants may be awarded a combination of stock options and/or
restricted shares. However, restricted share awards are generally made only to
senior executives of the Company and its subsidiaries. The proportionate amounts
of stock options and restricted shares awarded are based upon recommendations by
the Company's compensation consultants as to competitive practices of surveyed
companies. Awards under the 1986 Plan, and the terms of the awards, are
determined by the Committee.
While the value realizable from exercisable options and vested restricted
shares is dependent upon the extent to which the Company's performance is
reflected in the market price of its Common Stock at any particular point in
time, the decision as to whether this value will be realized in any particular
year is primarily determined by each individual executive. Accordingly, in
analyzing annual compensation levels, the Committee does not consider gains
realized during any particular year by any of the Senior Executives as a result
of individual decisions to exercise stock options or to sell restricted shares
received in previous years. (See the Aggregated Option/SAR Exercises in Last
Fiscal Year and Fiscal Year-End Options/SAR Values Table on page 25 for the
amounts realized by the Senior Executives from option exercises in 1994 and the
estimated unrealized value of unexercised options held by such persons as of
December 31, 1994. See also footnote (3) to the Summary Compensation Table on
page 23 for information regarding the estimated unrealized value of unvested
restricted shares held by such persons as of December 31, 1994.)
Stock Options. A total of 49,235 options for the Company's Series A shares
were granted to Senior Executives in 1994. No options for the Company's Series B
shares were granted in 1994. The Committee established an exercise price for
such options equal to the market price of the Series A shares on the date of
grant. (See the Option/SAR Grants in Last Fiscal Year Table on page 24, which
reflects estimated present values of such options, based on the indicated
assumptions.) The Committee has never granted options at exercise prices other
than the market price on the date of grant and has never adjusted such prices
retroactively (except pursuant to the Plan's antidilution provisions upon the
Company's distribution by dividend of Series B shares in May 1988).
Restricted Shares. A total of 16,360 restricted Series A shares were
awarded to Senior Executives in 1994 under the 1989 ECP and the 1986 Plan. All
of such restricted shares are subject to a restriction on disposition until
approximately six weeks following the fourth anniversary of the date of the
award. (See the Summary Compensation Table on page 23 for information regarding
the estimated value of such awards.) One-half of the shares awarded to each
individual is subject to forfeiture, depending upon the Company's financial
performance, as measured by growth in earnings per share. With respect to the
one-half of the shares subject to forfeiture, up to one-fourth of such shares is
subject to possible forfeiture in each of the four years following the award
date, depending upon the Company's earnings per share growth relative to minimum
and maximum targets, as determined by the Committee based on media industry
norms. If the minimum level of growth is not attained for any particular year,
then all of the shares that are subject to possible forfeiture in such year will
be cancelled. If only the minimum level of growth is achieved, then two-thirds
of the shares that are subject to possible forfeiture in that year will be
cancelled. If the maximum level of growth is achieved or exceeded, then none of
the shares subject to possible forfeiture in that year will be cancelled. If
growth between the minimum and maximum levels is achieved, then such shares
subject to possible forfeiture in that year will be cancelled on a pro-rata
basis, reflecting performance in excess of the minimum growth level and less
than the maximum growth level. Thus, according to the terms of the awards, an
aggregate of one-half of
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<PAGE> 34
the total shares awarded is subject to forfeiture over a period of four years.
Because the maximum earnings per share growth level established for 1994 was
achieved, the restrictions on all performance-oriented shares due to vest in
1994 were terminated.
CEO COMPENSATION
Mr. Decherd is a participant in the 1989 ECP. In December 1994, the
Committee awarded Mr. Decherd stock options for 26,225 Series A shares and 8,712
Series A restricted shares. These amounts correspond to target percentiles
indicated by the compensation surveys considered by the Committee.
The Committee established Mr. Decherd's base salary at a level generally
corresponding to the compensation level aimed for by the Committee. Mr.
Decherd's bonus amount under the 1989 ECP was determined solely in relation to
the consolidated financial performance of the Company and its subsidiaries.
Because the increase in earnings per share of the Company exceeded the maximum
level established with respect to Mr. Decherd's annual bonus opportunity, Mr.
Decherd received 150% of the applicable target bonus amount.
ONE MILLION DOLLAR LIMIT ON THE DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Omnibus Budget Reconciliation Act of 1993 placed a one million dollar
limit on the deductibility of certain compensation paid to the Chief Executive
Officer and the Senior Executives for tax years beginning on or after January 1,
1994. Certain compensation, including performance-based compensation meeting
specified requirements, is exempt from the limit. The 1995 ECP, if approved by
shareholders, will permit the Company to grant awards that are not subject to
the deduction limit established by Section 162(m) of the Code. The Committee
intends to grant awards that are not subject to the deduction limit to the
extent that the structure of such awards is consistent with corporate
performance objectives.
Respectfully submitted,
COMPENSATION COMMITTEE
John W. Bassett, Jr.
Lester A. Levy
William H. Seay
J. McDonald Williams, Chairman
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<PAGE> 35
PERFORMANCE GRAPH
The following graph compares the annual cumulative total shareholder return
on an investment of $100 on December 31, 1989 in the Company's Series A shares,
based on the market price of the Series A shares and assuming reinvestment of
dividends, with the cumulative total return of a similar investment in companies
on the Standard & Poor's 500 Stock Index and in a group of peer companies
selected by the Company on a line-of-business basis and weighted for market
capitalization. Peer companies included are: Central Newspapers, Inc.; Dow Jones
& Company, Inc.; Knight-Ridder, Inc.; Lee Enterprises; McClatchy Newspapers;
Media General, Inc.; Multimedia, Inc.; The New York Times Company; Park
Communications, Inc.; Pulitzer Publishing Company; The E. W. Scripps Company;
Gannett Company, Inc.; The Times Mirror Company; Tribune Company; and The
Washington Post Company. The Company is also included in the calculations of
peer group cumulative total shareholder return on investment.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
A. H. Belo Corporation . . . . . . . . . . . . . . . 100 85 86 116 150 159
S & P 500 Index . . . . . . . . . . . . . . . . . . 100 97 126 136 148 152
Peer Group . . . . . . . . . . . . . . . . . . . . . 100 78 92 104 122 115
</TABLE>
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST OF ANY BENEFICIAL SHAREHOLDER OR SHAREHOLDER OF
RECORD, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994 (INCLUDING THE EXHIBITS, FINANCIAL STATEMENTS, AND THE
SCHEDULES THERETO) REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934, MAY
BE OBTAINED, WITHOUT CHARGE, FROM MICHAEL J. McCARTHY, SECRETARY, COMMUNICATIONS
CENTER, 400 SOUTH RECORD STREET, DALLAS, TEXAS 75202.
33
<PAGE> 36
INDEPENDENT AUDITORS
Ernst & Young, independent auditors, served as independent auditors for the
Company for the fiscal year ended December 31, 1994, and will serve in such
capacity for the current fiscal year. Representatives of Ernst & Young will be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions
presented at the Annual Meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the 1996 Annual Meeting of
Shareholders, for inclusion in the Company's Proxy Statement and form of Proxy
relating to that meeting, must be received by the Company at its offices in
Dallas, Texas, addressed to the Secretary of the Company, not later than
December 1, 1995. Such proposals must comply with the bylaws of the Company and
the requirements of Regulation 14A of the Securities Exchange Act of 1934.
OTHER MATTERS
At the date of this Proxy Statement, management was not aware that any
matters not referred to in this Proxy Statement would be presented for action at
the meeting. If any other matters should come before the meeting, the persons
named in the accompanying form of Proxy will have discretionary authority to
vote all proxies in accordance with their best judgment, unless otherwise
restricted by law.
By Order of the Board of Directors
MICHAEL J. McCARTHY
Secretary
Dated: March 30, 1995
34
<PAGE> 37
EXHIBIT A
A. H. BELO CORPORATION
1995 EXECUTIVE COMPENSATION PLAN
A. H. Belo Corporation, a Delaware corporation (the "Company"), hereby
establishes the A. H. Belo Corporation 1995 Executive Compensation Plan (the
"Plan"), effective as of January 1, 1995, subject to shareholder approval.
1. Purpose. The purpose of the Plan is to attract and retain the best
available talent and encourage the highest level of performance by directors,
executive officers and selected employees, and to provide them incentives to put
forth maximum efforts for the success of the Company's business, in order to
serve the best interests of the Company and its shareholders.
2. Definitions. The following terms, when used in the Plan with initial
capital letters, will have the following meanings:
(a) "Appreciation Right" means a right granted pursuant to Paragraph
7.
(b) "Award" means an Executive Compensation Plan Bonus, an
Appreciation Right, a Stock Option, a Performance Unit or a grant or sale
of Restricted Stock.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means the first to occur of the events
described in (i) through (iv) below, unless the Board has adopted a
resolution prior to or promptly following the occurrence of any such event
stipulating, conditionally, temporarily or otherwise, that any such event
will not result in a change in control of the Company:
(i) the commencement of, or first public announcement of the
intention of any person or group (within the meaning of Section 3(b)
of and Rule 13d-5(b) promulgated under the Securities Exchange Act of
1934, as amended, respectively) to commence, a tender offer or
exchange offer (other than an offer by the Company or any Subsidiary)
for all, or any part of, the Common Stock;
(ii) the public announcement by the Company or by any group (as
defined in clause (i) above), entity or person (other than the
Company, any Subsidiary, or any savings, pension or other benefit
plan for the benefit of employees of the Company or any Subsidiary)
which, through a transaction or series of transactions has acquired,
directly or indirectly, beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of more than 30% of the total number of shares of Common
Stock that such group, entity or person has become such a beneficial
owner;
(iii) the approval by the Company's shareholders (or, if such
approval is not required, the consummation) of a merger in which the
Company does not survive as an independent publicly owned
corporation, a consolidation, or a sale, exchange, or other
disposition of all or substantially all the Company's assets; or
(iv) a change in the composition of the Board during any period of
two consecutive years such that individuals who at the beginning of
such period were members of the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period.
(e) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
(f) "Committee" means the Compensation Committee of the Board and, to
the extent the administration of the Plan has been assumed by the Board
pursuant to Paragraph 15, the Board.
A-1
<PAGE> 38
(g) "Common Stock" means the Series A Common Stock, par value $1.67
per share, and the Series B Common Stock, par value $1.67 per share, of the
Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 12.
Shares of Common Stock issued or transferred pursuant to the Plan will be
shares of Series A Common Stock or Series B Common Stock, as determined by
the Committee in its discretion. Notwithstanding the foregoing, the
Committee will not authorize the issuance or transfer of Series B Common
Stock if the Committee determines that such issuance or transfer would
cause the Series A Common Stock to be excluded from trading in the
principal market in which the Common Stock is then traded.
(h) "Date of Grant" means (i) with respect to Participants, the date
specified by the Committee on which a grant of Stock Options, Appreciation
Rights or Performance Units or a grant or sale of Restricted Stock will
become effective (which date will not be earlier than the date on which the
Committee takes action with respect thereto) and (ii) with respect to
Directors, the date of the applicable annual meeting of shareholders of the
Company as specified in Paragraph 6.
(i) "Director" means a member of the Board who is not a regular
full-time employee of the Company or any Subsidiary.
(j) "Executive Compensation Plan Bonus" means the right to receive an
annual incentive compensation payment made pursuant to and subject to the
conditions set forth in Paragraph 10.
(k) "Grant Price" means the price per share of Common Stock at which
an Appreciation Right not granted in tandem with a Stock Option is granted.
(l) "Management Objectives" means the objectives, if any, established
by the Committee for a Performance Period that are to be achieved with
respect to an Award granted to a Participant under the Plan. Management
Objectives may be described in terms of Company-wide objectives or in terms
of objectives that are related to performance of the division, Subsidiary,
department or function within the Company or a Subsidiary in which the
Participant receiving the Award is employed or on which the Participant's
efforts have the most influence. The Management Objectives established by
the Committee for any Performance Period under the Plan will consist of one
or more of the following:
(i) earnings per share and/or growth in earnings per share in
relation to target objectives;
(ii) cash flow and/or growth in cash flow in relation to target
objectives;
(iii) net income and/or growth in net income in relation to target
objectives, excluding the effect of extraordinary items;
(iv) total shareholder return (measured as the total of the
appreciation of and dividends declared on the Common Stock) in
relation to target objectives;
(v) return on invested capital in relation to target objectives;
(vi) return on shareholder equity in relation to target objectives;
and
(vii) return on assets in relation to target objectives.
Management Objectives may be established in absolute terms or relative to
the performance of a specified group of other companies. The Committee may
adjust Management Objectives and any minimum acceptable level of
achievement with respect to any Management Objectives if, in the sole
judgment of the Committee, events or transactions have occurred after the
establishment of the Management Objectives (including without limitation
any change in accounting standards by the Financial Accounting Standards
Board) which are unrelated to performance and result in a distortion of the
Management Objectives or such minimum acceptable level of achievement.
(m) "Market Value per Share" means, at any date, the closing sale
price of the Common Stock on that date (or, if there are no sales on that
date, the last preceding date on which there was a sale) in the principal
market in which the Common Stock is traded.
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(n) "Option Price" means the purchase price per share payable on
exercise of a Stock Option.
(o) "Participant" means a person who is selected by the Committee to
receive benefits under the Plan and who is at that time an executive
officer or other key employee of the Company or any Subsidiary. Except for
Stock Options granted to Directors pursuant to Paragraph 6, a Director will
not receive benefits under the Plan.
(p) "Performance Period" means, with respect to an Award, a period of
time established by the Committee within which the Management Objectives
relating to such Award are to be measured. The Performance Period for an
Executive Compensation Plan Bonus will be a period of 12 months. The
Performance Period for all other Awards will be a period of not less than
three years.
(q) "Performance Unit" means a unit equivalent to $100 (or such other
value as the Committee determines) granted pursuant to Paragraph 9.
(r) "Restricted Stock" means shares of Common Stock granted or sold
pursuant to Paragraph 8 as to which neither the ownership restrictions nor
the restrictions on transfer referred to therein has expired.
(s) "Rule 16b-3" means Rule 16b-3 under the Section 16 of the
Securities Exchange Act of 1934, as amended, as such Rule is in effect from
time to time.
(t) "Spread" means the excess of the Market Value per Share on the
date an Appreciation Right is exercised over (i) the Option Price provided
for in the related Stock Option or (ii) if there is no tandem Stock Option,
the Grant Price provided for in the Appreciation Right, multiplied by the
number of shares of Common Stock in respect of which the Appreciation Right
is exercised.
(u) "Stock Option" means the right to purchase a share of Common Stock
upon exercise of an option granted pursuant to Paragraph 5 or Paragraph 6.
(v) "Subsidiary" means any corporation, partnership, joint venture or
other entity in which the Company owns or controls, directly or indirectly,
not less than 50% of the total combined voting power or equity interests
represented by all classes of stock issued by such corporation,
partnership, joint venture or other entity.
3. Shares Available Under Plan. Subject to adjustment as provided in
Paragraph 12, the shares of Common Stock which may be issued or transferred and
covered by outstanding Awards granted under the Plan will not exceed in the
aggregate 2,000,000 shares. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. Upon exercise of any
Appreciation Rights that are paid in shares of Common Stock, there will be
deemed to have been delivered under the Plan for purposes of this Paragraph 3
only the number of shares of Common Stock paid to the Participant, and the
balance (if any) of the shares of Common Stock covered by the Appreciation
Rights or the related Stock Options will remain available for issuance under the
Plan. Upon exercise of any Appreciation Rights that are paid in cash, the total
number of shares of Common Stock covered by the Appreciation Rights or the
related Stock Options will remain available for issuance under the Plan. Subject
to the provisions of the preceding sentences, any shares of Common Stock which
are subject to Stock Options or Appreciation Rights or are granted or sold as
Restricted Stock that are terminated, unexercised, forfeited or surrendered or
which expire for any reason will again be available for issuance under the Plan.
4. Limitations on Awards. Subject to adjustment as provided in Paragraph
12, awards under the Plan will be subject to the following limitations:
(a) Of the aggregate 2,000,000 shares reserved for issuance under the
Plan, no more than 600,000 shares of Common Stock will be issued or
transferred as Restricted Stock.
(b) No more than 2,000,000 shares of Common Stock reserved for
issuance under the Plan will be issued under Stock Options.
(c) The maximum aggregate number of shares of Common Stock that may be
subject to Stock Options, Appreciation Rights and Restricted Stock granted
to a Participant during any calendar year will
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not exceed 100,000 shares. The foregoing limitation will apply to the grant
of Appreciation Rights whether the Spread on exercise is paid in cash or in
shares of Common Stock.
(d) The maximum aggregate cash value of payments to any Participant
for any Performance Period pursuant to an award of Performance Units will
not exceed $3,000,000.
(e) The payment of an Executive Compensation Plan Bonus to any
Participant will not exceed 100% of the Participant's regular base salary
as of the first day of the Performance Period for which the Executive
Compensation Plan Bonus is granted, or if less, $1,000,000.
5. Stock Options for Participants. The Committee may from time to time
authorize grants to any Participant of options to purchase shares of Common
Stock upon such terms and conditions as it may determine in accordance with the
following provisions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i)
in cash or by check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock owned by the Participant for at least six
months (or, with the consent of the Committee, for less than six months)
having an aggregate Market Value per Share at the date of exercise equal to
the aggregate Option Price, (iii) with the consent of the Committee, by
authorizing the Company to withhold a number of shares of Common Stock
otherwise issuable to the Participant having an aggregate Market Value per
Share on the date of exercise equal to the aggregate Option Price or (iv)
by a combination of such methods of payment; provided, however, that the
payment methods described in clauses (ii) and (iii) will not be available
at any time that the Company is prohibited from purchasing or acquiring
such shares of Common Stock. Any grant may provide for deferred payment of
the Option Price from the proceeds of sale through a broker of some or all
of the shares to which such exercise relates.
(d) Successive grants may be made to the same Participant whether or
not any Stock Options previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company or any Subsidiary
and/or the Management Objectives to be achieved before the Stock Options or
installments thereof will become exercisable, and any grant may provide for
the earlier exercise of the Stock Options in the event of a Change in
Control or other similar transaction or event.
(f) Stock Options granted under this Paragraph 5 may be (i) options
which are intended to qualify under particular provisions of the Code, (ii)
options which are not intended to so qualify or (iii) combinations of the
foregoing.
(g) No Stock Option will be exercisable more than ten years from the
Date of Grant.
(h) Each grant of Stock Options will be evidenced by an agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Committee) and delivered to the
Participant and containing such terms and provisions, consistent with the
Plan, as the Committee may approve.
6. Stock Options for Directors. Each individual who first becomes a
Director on or after the date of the 1995 annual meeting of shareholders of the
Company will be granted an option to purchase 10,000 shares of Common Stock on
the date of election to the Board. Each Director will also be granted an
additional option to purchase 2,500 shares of Common Stock on the date of each
annual meeting of shareholders following the annual meeting of the individual's
initial election to the Board, provided that such individual continues to be a
Director at the close of business of each such annual meeting. If a Director is
granted an option to purchase shares of Common Stock under the Company's 1986
Long Term Incentive Plan upon initial election to the Board or on the date of an
annual meeting of shareholders, the option to be granted pursuant to this
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Paragraph 6 for the same event will be reduced by the number of shares of Common
Stock covered by the option granted pursuant to the 1986 Long Term Incentive
Compensation Plan. For purposes of this Paragraph 6, the date of an annual
meeting of shareholders of the Company is the date on which the meeting is
convened or, if later, the date of the last adjournment thereof. Each Stock
Option granted to a Director will contain the following terms and conditions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will be 100% of
the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i)
in cash or by check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock owned by the Director for at least six
months having an aggregate Market Value per Share at the date of exercise
equal to the aggregate Option Price, (iii) by authorizing the Company to
withhold a number of shares of Common Stock otherwise issuable to the
Director having an aggregate Market Value per Share on the date of exercise
equal to the aggregate Option Price or (iv) by a combination of such
methods of payment; provided, however, that the payment methods described
in clauses (ii) and (iii) will not be available at any time that the
Company is prohibited from purchasing or acquiring such shares of Common
Stock. Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a broker of some or all of the shares to which
such exercise relates.
(d) Each grant will specify that the Stock Option may not be exercised
until the first anniversary of the Date of Grant and will be fully
exercisable thereafter, without regard to whether the Director continues to
be a member of the Board on such first anniversary, until the Stock Option
expires by its terms.
(e) Each grant of Stock Options will be evidenced by an agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Committee) and delivered to the Director
and containing such terms and provisions, consistent with the Plan, as the
Committee may approve.
7. Appreciation Rights. The Committee may also from time to time authorize
grants to any Participant of Appreciation Rights upon such terms and conditions
as it may determine in accordance with this Paragraph 7. Appreciation Rights may
be granted in tandem with Stock Options or separate and apart from a grant of
Stock Options. An Appreciation Right will be a right of the Participant to
receive from the Company upon exercise an amount which will be determined by the
Committee at the Date of Grant and will be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. An Appreciation Right
granted in tandem with a Stock Option may be exercised only by surrender of the
related Stock Option. Each grant of an Appreciation Right may utilize any or all
of the authorizations, and will be subject to all of the limitations, contained
in the following provisions:
(a) Each grant will state whether it is made in tandem with Stock
Options and, if not made in tandem with any Stock Options, will specify the
number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Stock Options will specify the
Option Price and each grant not made in tandem with Stock Options will
specify the Grant Price, which in either case will not be less than 100% of
the Market Value per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash, (ii) shares of
Common Stock having an aggregate Market Value per Share equal to the
percentage of the Spread to be paid to the Participant or (iii) any
combination thereof, as determined by the Committee in its sole discretion
at the time of payment.
(d) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum amount specified by the
Committee at the Date of Grant (valuing shares of Common Stock for this
purpose at their Market Value per Share at the date of exercise).
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(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company or any Subsidiary
and/or Management Objectives to be achieved before the Appreciation Rights
or installments thereof will become exercisable, and will provide that no
Appreciation Right may be exercised except at a time when the Spread is
positive and, with respect to any grant made in tandem with Stock Options,
when the related Stock Option is also exercisable. Any grant may provide
for the earlier exercise of the Appreciation Rights in the event of a
Change in Control or other similar transaction or event.
(f) Each grant of an Appreciation Right will be evidenced by an
agreement executed on behalf of the Company by the Chief Executive Officer
(or another officer designated by the Committee) and delivered to and
accepted by the Participant receiving the grant, which agreement will
describe such Appreciation Right, identify any Stock Option granted in
tandem with such Appreciation Right, state that such Appreciation Right is
subject to all the terms and conditions of the Plan and contain such other
terms and provisions, consistent with the Plan, as the Committee may
approve.
8. Restricted Stock. The Committee may also from time to time authorize
grants or sales to any Participant of Restricted Stock upon such terms and
conditions as it may determine in accordance with the following provisions:
(a) Each grant or sale will constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of
the performance of services, entitling such Participant to voting and other
ownership rights, but subject to the restrictions hereinafter referred to.
Each grant or sale may limit the Participant's dividend rights during the
period in which the shares of Restricted Stock are subject to any such
restrictions.
(b) Each grant or sale will specify the Management Objectives, if any,
that are to be achieved in order for the ownership restrictions to lapse.
(c) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(d) Each such grant or sale will provide that the shares of Restricted
Stock covered by such grant or sale will be subject, for a period to be
determined by the Committee at the Date of Grant, to one or more
restrictions, including, without limitation, a restriction that constitutes
a "substantial risk of forfeiture" within the meaning of Section 83 of the
Code and the regulations of the Internal Revenue Service thereunder, and
any grant or sale may provide for the earlier termination of any such
restrictions in the event of a Change in Control or other similar
transaction or event.
(e) Each such grant or sale will provide that during the period for
which such restriction or restrictions are to continue, the transferability
of the Restricted Stock will be prohibited or restricted in a manner and to
the extent prescribed by the Committee at the Date of Grant (which
restrictions may include, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Stock to
continuing restrictions in the hands of any transferee).
(f) Each grant or sale of Restricted Stock will be evidenced by an
agreement executed on behalf of the Company by the Chief Executive Officer
(or another officer designated by the Committee) and delivered to and
accepted by the Participant and containing such terms and provisions,
consistent with the Plan, as the Committee may approve.
9. Performance Units. The Committee may also from time to time authorize
grants to any Participant of Performance Units, which will become payable upon
achievement of specified Management Objectives, upon such terms and conditions
as it may determine in accordance with the following provisions:
(a) Each grant will specify the number of Performance Units to which
it pertains.
(b) Each grant will specify the Management Objectives that are to be
achieved.
(c) Each grant will specify the time and manner of payment of
Performance Units which have become payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an
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aggregate Market Value per Share equal to the aggregate value of the
Performance Units which have become payable or (iii) any combination
thereof, as determined by the Committee in its sole discretion at the time
of payment.
(d) Each grant of a Performance Unit will be evidenced by an agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Committee) and delivered to and accepted
by the Participant and containing such terms and provisions, consistent
with the Plan, as the Committee may approve, including provisions relating
to a Change in Control or other similar transaction or event.
10. Executive Compensation Plan Bonuses. The Committee may from time to
time authorize payment of annual incentive compensation in the form of an
Executive Compensation Plan Bonus to a Participant, which will become payable
upon achievement of specified Management Objectives. Executive Compensation Plan
Bonuses will be payable upon such terms and conditions as the Committee may
determine in accordance with the following provisions:
(a) The Committee will specify the Management Objectives that are to
be achieved by the Participant in order for the Participant to receive
payment of the Executive Compensation Plan Bonus.
(b) The Committee will specify the time and manner of payment of an
Executive Compensation Plan Bonus which becomes payable, which payment may
be made in (i) cash, (ii) shares of Common Stock having an aggregate Market
Value per Share equal to the aggregate value of the Executive Compensation
Plan Bonus which has become payable or (iii) any combination thereof, as
determined by the Committee in its sole discretion at the time of payment.
(c) As soon as practicable after the beginning of a Performance
Period, the Committee will notify each Participant of the terms of the
Executive Compensation Plan Bonus program for that Performance Period,
which notification will state that such Executive Compensation Plan Bonus
is subject to all the terms and conditions of the Plan, and contain such
other terms and provisions, consistent with the Plan, as the Committee may
approve.
11. Transferability. Except as otherwise provided in the agreement
evidencing a Participant's Award, (i) no Stock Option, Appreciation Right,
Performance Unit that has not become payable or Executive Compensation Plan
Bonus that has not become payable will be transferable by the Participant other
than by will or the laws of descent and distribution and (ii) no Stock Option or
Appreciation Right granted to the Participant will be exercisable during the
Participant's lifetime by any person other than the Participant, the
Participant's guardian or legal representative. Stock Options granted to
Directors under Paragraph 6 will not be transferable other than by will or the
laws of descent and distribution.
12. Adjustments. The Committee may make or provide for such adjustments in
the maximum number of shares specified in Paragraphs 3 and 4, in the numbers of
shares of Common Stock covered by outstanding Stock Options and Appreciation
Rights granted hereunder, in the Option Price or Grant Price applicable to any
such Stock Options and Appreciation Rights, and/or in the kind of shares covered
thereby (including shares of another issuer), as the Committee in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
13. Fractional Shares. The Company will not be required to issue any
fractional share of Common Stock pursuant to the Plan. The Committee may provide
for the elimination of fractions or for the settlement of fractions in cash.
14. Withholding Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under
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<PAGE> 44
the Plan, or is requested by a Participant to withhold additional amounts with
respect to such taxes, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such
payment or the realization of such benefit that the Participant or such other
person make arrangements satisfactory to the Company for payment of the balance
of such taxes required or requested to be withheld. In addition, if permitted by
the Committee, a Participant may elect to have any withholding obligation of the
Company satisfied with shares of Common Stock that would otherwise be
transferred to the Participant in payment of the Participant's Award.
15. Administration of the Plan.
(a) Unless the administration of the Plan has been expressly assumed by the
Board pursuant to a resolution of the Board, the Plan (other than the provisions
of Paragraph 6) will be administered by the Committee, which at all times will
consist of nonemployee directors appointed by the Board, each of whom will be a
"disinterested person" within the meaning of Rule 16b-3. A majority of the
Committee will constitute a quorum, and the action of the members of the
Committee present at any meeting at which a quorum is present, or acts
unanimously approved in writing, will be the acts of the Committee.
(b) Except as set forth in Paragraphs 15(c) and (d), the Committee has the
full authority and discretion to administer the Plan and to take any action that
is necessary or advisable in connection with the administration of the Plan,
including without limitation the authority and discretion to interpret and
construe any provision of the Plan or of any agreement, notification or document
evidencing the grant of an Award. The interpretation and construction by the
Committee of any such provision and any determination by the Committee pursuant
to any provision of the Plan or of any such agreement, notification or document
will be final and conclusive. No member of the Committee will be liable for any
such action or determination made in good faith.
(c) If a Participant's employment terminates before the end of a
Performance Period or before a Stock Option or Appreciation Right is fully
exercisable, and the Participant's termination of employment is by reason of
death, disability or retirement at or after age 65, each Stock Option or
Appreciation Right held by the Participant will be fully exercisable by the
Participant or his personal representative for a period of one year following
such termination of employment, or if earlier, until the Stock Option or
Appreciation Right expires by its terms, and any shares of Restricted Stock
previously issued to the Participant as to which ownership or transfer
restrictions have not lapsed will be delivered to the Participant or his
personal representative free of such restrictions. If a Participant's employment
terminates before the end of a Performance Period or before a Stock Option or
Appreciation Right is fully exercisable for any reason other than death,
disability or retirement at or after age 65, the Committee will have the sole
discretion to determine, under the circumstances, the extent to which a Stock
Option or Appreciation Right held by the Participant may be exercised following
such termination of employment and the extent to which any Restricted Stock as
to which ownership or transfer restrictions that relate solely to the
Participant's continued employment (but not to the attainment of one or more
Management Objectives) have not lapsed will be delivered to the Participant free
of such restrictions.
(d) Notwithstanding the foregoing provisions, the Board has the full
authority and discretion to administer the provisions of Paragraph 6 and to take
any action that is necessary or advisable in connection with the administration
of the provisions of Paragraph 6, including without limitation the authority and
discretion to interpret and construe any provision of Paragraph 6 or of any
agreement, notification or document evidencing the grant of a Stock Option
pursuant to Paragraph 6, provided any such action taken by the Board will not
cause the provisions of Paragraph 6 to fail to satisfy the requirements of Rule
16b-3 or to cause the Committee members to cease to be disinterested
administrators for purposes of Rule 16b-3. The interpretation and construction
by the Board of any such provision and any determination by the Board pursuant
to any provision of Paragraph 6 or of any such agreement, notification or
document will be final and conclusive. No member of the Board will be liable for
any such action or determination made in good faith.
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16. Amendments, Etc.
(a) The Plan may be amended from time to time by the Committee or the Board
but may not be amended without further approval by the shareholders of the
Company if such amendment would result in the Plan no longer satisfying the
requirements of Rule 16b-3. Notwithstanding the foregoing, the provisions of
Paragraph 6 that designate Directors eligible to receive Stock Options and
specify the amount, Option Price and timing of Stock Option awards may be
amended only by the Board and may be amended not more than once every six months
except to comply with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations thereunder.
(b) The Plan will not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant's employment or other service
at any time.
(c) If the Committee determines, with the advice of legal counsel, that any
provision of the Plan would prevent the payment of any Award intended to qualify
as performance-based compensation within the meaning of Section 162(m) of the
Code from so qualifying, such Plan provisions will be invalid and cease to have
any effect without affecting the validity or effectiveness of any other
provisions of the Plan.
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EXHIBIT B
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
OF A. H. BELO CORPORATION
1. The third paragraph of Article Four, Section 1, shall be deleted and
replaced with the following:
If the shares are issued in two or more series, the remaining shares
of Common Stock may be issued as shares of Series A Common Stock (herein
called "Series A Stock"), and/or designated and issued as shares of Series
B Common Stock (herein called "Series B Stock"), and/or as shares of Series
C Common Stock (herein called "Series C Stock"). After completion of the
initial distribution of Series B Stock, the corporation shall not issue any
additional shares of Series B Stock if such issuance would result in the
Series A Stock being excluded from trading on the New York Stock Exchange,
the American Stock Exchange, and other national stock exchanges and also
being excluded from quotation on the NASDAQ (as defined herein) or any
other national quotation system then in use. Subject to the foregoing, the
Board of Directors shall have the authority to fix the number of shares
constituting any such series, and to increase or decrease the number of
shares of any series prior to or after the issuance of shares of that
series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the
shares constituting such decrease shall resume the status of authorized but
unissued shares of Common Stock.
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<PAGE> 47
A. H. BELO CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF A. H. BELO CORPORATION
The undersigned hereby appoints Robert W. Decherd and Ward L. Huey,
Jr., or any one or both of them, as Proxies, each with the power to appoint
his substitute, and hereby authorizes each of them to represent and to vote as
designated below all the shares of Common Stock of A. H. Belo Corporation held
of record by the undersigned on March 17, 1995, at the Annual Meeting of
Shareholders to be held on May 3, 1995, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2
AND 3.
Please sign exactly as name appears. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
(continued and to be signed on the reverse side)
<PAGE> 48
<TABLE>
<S> <C> <C> <C> <C>
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted for all Nominees listed in Proposal 1 and for Proposals 2 and 3.
[X] Please mark
your votes
------------- ------------- like this
Series A Series B
Item 1 -- ELECTION OF THE FOLLOWING Item 2 -- Proposal to approve the Company's FOR AGAINST ABSTAIN
NOMINEES AS CLASS III DIRECTORS 1995 Executive Compensation Plan. [ ] [ ] [ ]
(Term expires in 1998). Judith
L. Craven, M.D., M.P.H., Dealey
D. Herndon, Ward L. Huey, Jr., Item 3 -- Proposal to amend the Company's [ ] [ ] [ ]
James M. Moroney, Jr., and Hugh Certificate of Incorporation to (a) remove from
G. Robinson the Certificate of Incorporation the express
denomination of a specific number of shares of
WITHHOLD Series A Common Stock constituting such series
FOR AUTHORITY and (b) permit the issuance of additional shares
[ ] [ ] of Series B Common Stock, provided that any such
issuance would not result in the Series A Common
INSTRUCTIONS: To withhold authority Stock being excluded from trading on the NYSE and
to vote for any individual nominee, other alternative securities markets.
write the nominee's name in the
space provided below. Item 4 -- At the discretion of such Proxies, on any
other matter that properly may come before the
___________________________________ meeting or any adjournment thereof.
Please sign exactly as name appears. When shares
are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.
Dated ________________________________________, 1995
____________________________________________________
Signature
____________________________________________________
Signature if Held Jointly
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE ENVELOPE.
</TABLE>
<PAGE> 49
TO PARTICIPANTS IN THE A. H. BELO CORPORATION EMPLOYEE SAVINGS AND INVESTMENT
PLAN:
As a participant in the Plan with full shares of the Company's Common
Stock allocated to your account as of March 17, 1995, you may instruct the
Trustee how to vote such shares at the Annual Meeting of Shareholders to be
held May 3, 1995.
Your instructions to the Trustee will be held in strict confidence
and will be made available only to the inspectors of election at the Annual
Meeting, none of whom is an employee of the Company. Under the terms of the
Plan, you have the right to give voting instructions for all shares allocated
to your account. Please use the other side of this form in giving your
instructions.
Any shares held by the Trustee as to which it has not received voting
instructions by May 1, 1995, will be voted in the same manner, proportionately,
as the shares as to which voting instructions have been received. Any shares
held by the Trustee as to which it has been instructed to sign the Board of
Directors proxy, with no additional instructions to the contrary indicated,
will be voted FOR Item 1, the election of Class III Directors, FOR Item 2, the
approval of the 1995 Executive Compensation Plan and FOR Item 3, the amendment
of the Company's Certificate of Incorporation.
MELLON BANK, N.A.
Trustee
(continued and to be signed on the reverse side)
<PAGE> 50
To Mellon Bank, N.A.: You are hereby instructed to sign the Board of Directors
Proxy. You are further instructed to direct the proxy holders to vote as
follows: [X] Please mark
your votes
like this
<TABLE>
<S> <C> <C> <C> <C>
Item 1 -- ELECTION OF THE FOLLOWING NOMINEES
AS CLASS III DIRECTORS (Term expires in 1998). FOR AGAINST ABSTAIN
Judith L. Craven, M.D., M.P.H., Dealey D. Item 2 -- Proposal to approve the Company's 1995 [ ] [ ] [ ]
Herndon, Ward L. Huey, Jr., James M. Moroney, Executive Compensation Plan.
Jr., and Hugh G. Robinson
WITHHOLD
FOR AUTHORITY
[ ] [ ] Item 3 -- Proposal to amend the Company's [ ] [ ] [ ]
Certificate of Incorporation to (a) remove from
INSTRUCTIONS: To withhold authority to vote the Certificate of Incorporation the express
for any individual nominee, write the denomination of a specific number of shares of
nominee's name in the space provided below. Series A Common Stock constituting such series
and (b) permit the issuance of additional shares
of Series B Common Stock, provided that any such
____________________________________________ issuance would not result in the Series A Common
Stock being excluded from trading on the NYSE and
other alternative securities markets.
Item 4 -- At the discretion of such Proxies, on
any other matter that properly may come before the
meeting or any adjournment thereof.
I hereby authorize Mellon Bank, N.A., as Trustee under the
Employee Savings and Investment Plan, to vote the shares of
Common Stock held for my account under the Plan at the
Annual Meeting in accordance with the instructions given
above. Mellon Bank, N.A., has appointed Chemical Bank as
Agent to tally the votes.
Dated ______________________________________________, 1995
__________________________________________________________
Signature
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE ENVELOPE.
</TABLE>
<PAGE> 51
APPENDIX
Graphic and Image Material
Pages 8-11 of the Proxy Statement contain biographical descriptions of each of
the current directors and nominees. There is a picture of each of these
individuals in the left-hand margin adjacent to the biographical description of
that individual.
