<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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):
/X/ $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:
- --------------------------------------------------------------------------------
/ / 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
[LOGO]
400 SOUTH RECORD STREET
DALLAS, TEXAS 75202
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 1996
------------------------
To the Shareholders of
A. H. BELO CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of A. H. Belo Corporation (the "Company"), a Delaware corporation,
will be held in the Dallas Museum of Art Auditorium, 1717 North Harwood Street,
Dallas, Texas, on Wednesday, May 8, 1996, at 10:00 a.m., Dallas, Texas time, for
the following purposes:
1. To elect four Class I directors to hold office for a term of three
years or until their respective successors are elected and qualified; and
2. To transact such other business as properly may come before the
Annual Meeting or any adjournment thereof.
The close of business on March 15, 1996 has been fixed by the Board of
Directors of the Company 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, 1995 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
April 12, 1996
<PAGE> 3
[LOGO]
400 SOUTH RECORD STREET
DALLAS, TEXAS 75202
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 1996
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
Dallas Museum of Art Auditorium, 1717 North Harwood Street, Dallas, Texas, on
Wednesday, May 8, 1996, 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 April 12, 1996. 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 four nominees listed under "Election of
Directors" as nominees of the Company for election as Class I directors,
for a three-year term; and
(2) At the discretion of the persons named in the enclosed form of
Proxy, on any other matter that may properly come before the Annual 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 $5,000 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 15, 1996. As of the record date, the
Company had issued and outstanding and entitled to vote at the Annual Meeting
29,080,307 shares of Series A Common Stock, par value $1.67 per share ("Series A
shares"), and 9,283,546 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.") On June 9, 1995, the Company effected
a two-for-one stock split in the form of a dividend on all Series A shares and
Series B shares. All share numbers contained in this Proxy Statement reflect
such split. (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, 1995,
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 either
series 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, 1995(2)
------------------------------------------
NAME AND ADDRESS OF PERCENT OF
INDIVIDUAL OR GROUP SERIES A SERIES B CLASS(3)
------------------ --------- --------- ----------
<S> <C> <C> <C>
Robert W. Decherd(1)*+................................. 1,039,713(4) 2,158,728(5) 8.3%
A. H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Ward L. Huey, Jr.*+.................................... 192,935(6) -0- ***
A. H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Burl Osborne**+........................................ 135,643(7) -0- ***
A. H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Michael J. McCarthy+................................... 59,506(8) -0- ***
A. H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Michael D. Perry+...................................... 54,916(9) -0- ***
A. H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
John W. Bassett, Jr.**................................. 23,700(10) 13,200(11) ***
400 N. Pennsylvania Avenue
Roswell, New Mexico 88201
Judith L. Craven, M.D., M.P.H.*........................ 18,900(12) -0- ***
2200 North Loop West
Houston, Texas 77018
Roger Enrico*.......................................... 1,000 -0- ***
14841 North Dallas Parkway
Dallas, Texas 75240
Dealey D. Herndon(1)*.................................. 1,058,646(13) 1,305,624(14) 6.2%
322 Congress Avenue
Austin, Texas 78701
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED
AND PERCENTAGE OF OUTSTANDING SHARES AS OF
DECEMBER 31, 1995(2)
------------------------------------------
NAME AND ADDRESS OF PERCENT OF
INDIVIDUAL OR GROUP SERIES A SERIES B CLASS(3)
------------------- --------- --------- ----------
<S> <C> <C> <C>
Lester A. Levy**....................................... 22,500(15) 12,000(16) ***
2727 Chemsearch Boulevard
Irving, Texas 75062
Arturo Madrid, Ph.D.*.................................. 14,200(17) -0- ***
Trinity University
715 Stadium Drive
San Antonio, Texas 78212
James M. Moroney, Jr.(1)*.............................. 515,310(18) 1,154,922(19) 4.4%
A. H. Belo Corporation
P.O. Box 655237
Dallas, Texas 75265
Hugh G. Robinson*...................................... 4,200(20) -0- ***
4140 Office Parkway
Dallas, Texas 75204
William T. Solomon*.................................... 20,500(21) 30,000(16) ***
3535 Travis
Suite 300
Dallas, Texas 75204
Thomas B. Walker, Jr.*................................. 26,500(22) 16,000(16) ***
100 Crescent Court
Suite 1000
Dallas, Texas 75201
J. McDonald Williams**................................. 26,500(21) 16,000(16) ***
3500 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Luther King Capital Management, Inc.++................. 1,737,596 -0- 4.5%
301 Commerce Street
Suite 1600
Fort Worth, Texas 76102
Neuberger & Berman++................................... 1,947,000(23) -0- 5.1%
650 Third Avenue
New York, New York 10158
All directors and executive officers as a group (17
persons)............................................. 6,904,799(24) 4,706,474(25) 29.8%(26)
</TABLE>
- ---------------
* Director
** Director and Nominee
*** Less than one percent
+ Executive Officer
++ Greater than 5% Shareholder
(1) The family relationships among the directors, executive officers, and
principal shareholders are as follows: James M. Moroney, Jr. is a cousin 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
3
<PAGE> 6
Series B shares owned are convertible. The numbers listed in the Series A
column, however, do not reflect these 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 --
10.2%; Mrs. Herndon -- 7.8%; Mr. Moroney -- 5.5%; Luther King Capital
Management, Inc. -- 6.0%; Neuberger & Berman L.P. -- 6.7%; and all
directors and executive officers as a group -- 33.8%. 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
shares and Series B shares beneficially owned by the individual or entity
listed and dividing that number by the total number of Series A shares and
Series B shares outstanding.
(4) Includes 243,440 Series A shares subject to presently exercisable options
and 46,229 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan. Does not include 600 Series A shares owned by Mr.
Decherd's wife, 2,320 Series A shares owned by Mr. Decherd's son, 41,410
Series A shares held in trusts for which Mr. Decherd serves as trustee, and
71,964 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 600 Series B shares owned by Mr. Decherd's wife, 2,320
Series B shares owned by Mr. Decherd's son, 73,090 Series B shares held in
trusts for which Mr. Decherd serves as trustee, and 65,104 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 104,860 Series A shares subject to presently exercisable options
and 64,099 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(7) Includes 65,863 Series A shares subject to presently exercisable options
and 57,286 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(8) Includes 27,779 Series A shares subject to presently exercisable options
and 11,466 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(9) Includes 26,835 Series A shares subject to presently exercisable options
and 11,152 Series A restricted shares issued under the Company's 1986 Long
Term Incentive Plan.
(10) Includes 20,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
129,246 Series A shares owned by the estate of Mr. Bassett's late wife,
19,300 Series A shares owned by Mr. Bassett's adult children, as to which
Mr. Bassett shares dispositive power, and 35,200 Series A shares held in
trusts for the benefit of Mr. Bassett's children for which Mr. Bassett
serves as trustee, as to all of which shares Mr. Bassett disclaims
beneficial ownership.
(11) Includes 10,000 Series B shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
159,160 Series B shares owned by the estate of Mr. Bassett's late wife,
34,730 Series B shares owned by Mr. Bassett's adult children, as to which
Mr. Bassett shares dispositive power, and 66,682 Series B shares held in
trusts for the benefit of Mr. Bassett's children for which Mr. Bassett
serves as trustee, as to all of which shares Mr. Bassett disclaims
beneficial ownership.
(12) Includes 17,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(13) Includes 10,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
48,670 Series A shares owned by Mrs. Herndon's husband, 23,370 Series A
shares held in trust for the benefit of one of Mrs. Herndon's sons, and
49,228
4
<PAGE> 7
Series A shares held in trusts for which Mrs. Herndon serves as trustee, as
to all of which shares Mrs. Herndon disclaims beneficial ownership.
(14) Does not include 7,090 Series B shares held in trust for the benefit of one
of Mrs. Herndon's sons, and 49,228 Series B shares held in trusts for which
Mrs. Herndon serves as trustee, as to all of which shares Mrs. Herndon
disclaims beneficial ownership.
(15) Includes 10,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
4,000 Series A shares owned by Mr. Levy's wife, 1,200 Series A shares owned
by Mr. Levy's stepson and 1,200 Series A shares held in trusts for which
Mr. Levy serves as co-trustee and Mr. Levy's son is beneficiary, as to all
of which shares Mr. Levy disclaims beneficial ownership. In May 1995 an
initial report on Form 3 was filed for each of the two family trusts for
which Mr. Levy is co-trustee and Mr. Levy's son is beneficiary. Each Form 3
was filed four days after the due date, although the transactions by the
trusts were timely reported by Mr. Levy in his individual Form 4 filing.
(16) Includes 10,000 Series B shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(17) Includes 14,000 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(18) Includes 20,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
21,000 Series A shares owned by Mr. Moroney's wife, as to which shares Mr.
Moroney disclaims beneficial ownership.
(19) Includes 10,000 Series B shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
21,000 Series B shares owned by Mr. Moroney's wife, as to which shares Mr.
Moroney disclaims beneficial ownership.
(20) Includes 2,000 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(21) Includes 20,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan.
(22) Includes 20,500 Series A shares subject to presently exercisable options
issued under the Company's 1986 Long Term Incentive Plan. Does not include
10,000 Series A shares owned by Mr. Walker's wife, as to which shares Mr.
Walker disclaims beneficial ownership.
(23) Shares are beneficially held, to the Company's knowledge, by Neuberger &
Berman L.P. as investment advisor to one or more of its advisory clients.
(24) Includes 629,771 Series A shares subject to presently exercisable options.
(25) Includes 60,000 Series B shares subject to presently exercisable options.
(26) Represents approximately 43.9% of the voting power of all outstanding
shares of Common Stock.
5
<PAGE> 8
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.
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, if applicable, 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 matters requiring majority approval, 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 matters.
6
<PAGE> 9
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. Class I consists of four directors and Classes II and III
consist of five directors each. Three of the four nominees designated by the
Board of Directors for election as Class I directors at the 1996 Annual Meeting
of Shareholders will serve a three-year term if elected. The bylaws of the
Company provide 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. As a
result, Lester A. Levy will retire on the date of the 1998 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 I Directors (Term expires in 1999)
<TABLE>
<S> <C>
[PICTURE] JOHN W. BASSETT, JR., age 58, has served as a director of the Company
since March 1979. He is a practicing attorney and is a partner in the
law firm of Bassett & Copple, LLP in Roswell, New Mexico. Prior to
forming Bassett & Copple, LLP in October 1995, Mr. Bassett was a
stockholder in the law firm of Atwood, Malone, Mann & Turner, P.A.,
Roswell, New Mexico, for ten years.
[PICTURE] LESTER A. LEVY, age 73, 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.
[PICTURE] BURL OSBORNE, age 58, has served as a director of the Company since
January 1987. He has been President, Publishing Division of the Company
since November 1995. 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.
</TABLE>
7
<PAGE> 10
<TABLE>
<S> <C>
[PICTURE] J. MCDONALD WILLIAMS, age 54, 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>
In the event that a nominee is unable to serve or for good cause will not
serve, the proxies will be voted at the Annual Meeting for such other person as
the Board of Directors of the Company may recommend.
DIRECTORS CONTINUING IN OFFICE
Class II Directors (Term expires in 1997)
<TABLE>
<S> <C>
[PICTURE] ROBERT W. DECHERD, age 44, 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
January 1985 through December 1986. From January 1984 through December
1986, he served as Chief Operating Officer. Mr. Decherd is a member of
the Board of Directors of CCBG Corporation and became a member of the
Board of Directors of Kimberly-Clark Corporation in February 1996.
[PICTURE] ROGER A. ENRICO, age 51, has served as a director of the Company since
July 1995. In April 1996 he became Chief Executive Officer of PepsiCo
Inc. He served as Chairman and Chief Executive Officer of PepsiCo
Worldwide Restaurants from the end of 1994 and Vice Chairman of PepsiCo
Inc. from 1993 until March 1996. Mr. Enrico was Chairman and Chief
Executive Officer of PepsiCo Worldwide Foods from 1992 to 1993 and
President and Chief Executive Officer of Frito-Lay, Inc. from 1991 to
1992. Mr. Enrico is a member of the Boards of Directors of PepsiCo,
Inc., Dayton Hudson Corporation, The Prudential Insurance Company of
America, Inc. and the United Negro College Fund.
[PICTURE] ARTURO MADRID, PH.D., age 57, 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.
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C>
[PICTURE] WILLIAM T. SOLOMON, age 53, 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.
[PICTURE] THOMAS B. WALKER, JR., age 72, 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>
Class III Directors (Term expires in 1998)
<TABLE>
<S> <C>
[PICTURE] JUDITH L. CRAVEN, M.D., M.P.H., age 50, 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.
[PICTURE] DEALEY D. HERNDON, age 49, has served as a director of the Company since
May 1986. Since November 1995, Mrs. Herndon has been president of
Herndon, Stauch & Associates, a project and construction management
firm. Mrs. Herndon served from 1991 to September 1995 as the Executive
Director of the State Preservation Board of the State of Texas. She
serves on the Boards of Directors of the Friends of the Governor's
Mansion, Capital Area United Way, 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.
[PICTURE] WARD L. HUEY, JR., age 57, 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>
9
<PAGE> 12
<TABLE>
<S> <C>
[PICTURE] JAMES M. MORONEY, JR., age 74, 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. Mr.
Moroney currently serves as Chairman of the Board of Trustees for the
University of Dallas.
[PICTURE] HUGH G. ROBINSON, age 63, has served as a director of the Company since
May 1989. Mr. Robinson is Chairman and Chief Executive Officer of The
Tetra Group, Inc., 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, Smith Environmental
Services, Inc. and Circuit City Stores, Inc., and is a Trustee of
Columbus Realty Trust, a real estate investment trust.
</TABLE>
MEETINGS AND COMMITTEES OF BOARD OF DIRECTORS
The Board of Directors held a total of seven meetings in 1995. 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, Roger A.
Enrico, Dealey D. Herndon, Arturo Madrid and Hugh G. Robinson. 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 1995.
Compensation Committee. The Compensation Committee consists of John W.
Bassett, Jr., Lester A. Levy, Thomas B. Walker, Jr. 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 1995 Executive Compensation Plan, 1986
Long Term Incentive Plan, The G. B. Dealey Retirement Pension Plan, Employee
Savings and Investment (401(k)) Plan, Employee Thrift (401(k)) Plan,
Supplemental Executive Retirement Plan, and Management Security Plan. The
Compensation Committee met four times during 1995.
Directors Planning Committee. The Directors Planning Committee consists of
Dealey D. Herndon, Lester A. Levy, James M. Moroney, Jr., Hugh G. Robinson,
Thomas B. Walker, Jr., J. McDonald Williams and William T. Solomon. Mr. Solomon
serves as Chairman of the Directors Planning Committee. The Directors Planning
Committee reviews possible nominees for positions 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 1995.
10
<PAGE> 13
EXECUTIVE OFFICERS OF THE COMPANY
The five most senior 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........... President, Publishing Division 1995(1)
Michael J. McCarthy.... Senior Vice President, General Counsel and 1987(2)
Secretary
Michael D. Perry....... Senior Vice President, Chief Financial 1987(3)
Officer
</TABLE>
- ---------------
(1) Member of the Board of Directors. (See "Election of Directors" above for
additional information.)
(2) Mr. McCarthy, age 51, 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.
(3) Mr. Perry, age 49, 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.
11
<PAGE> 14
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, 1995, 1994, and 1993 of the Chief Executive Officer and the other four most
highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
----------------------
ANNUAL COMPENSATION 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 1995 $559,700 $146,294 -- $ -- 79,000 $ 75,540
Chairman of the Board, 1994 $556,200 $400,275 -- $ 465,003 26,225 $ 75,540
President and Chief 1993 $547,500 $393,750 -- $ 354,510 26,100 $ 60,430
Executive Officer
Ward L. Huey, Jr. 1995 $444,000 $103,175 -- $ -- 59,000 $122,529
Vice Chairman of the Board 1994 $441,200 $353,278 -- $ 323,239 18,225 $121,779
and President, Broadcast 1993 $399,200 $131,381 -- $ 245,700 18,100 $ 81,058
Division
Burl Osborne 1995 $427,000 $ 93,489 -- $ -- 49,000 $153,059
President, Publishing 1994 $423,984 $255,946 -- $ 301,462 16,995 $152,309
Division and 1993 $385,500 $171,878 -- $ 228,150 16,805 $133,428
Publisher and Editor of The
Dallas Morning News, Inc.
Michael J. McCarthy 1995 $247,000 $ 50,684 -- $ -- 19,000 $ 45,991
Senior Vice President, 1994 $246,700 $129,518 -- $ 125,538 7,090 $ 44,491
General Counsel and 1993 $215,300 $104,958 -- $ 103,350 7,605 $ 20,491
Secretary
Michael D. Perry 1995 $244,000 $ 50,069 -- $ -- 19,000 $ 37,853
Senior Vice President, 1994 $243,700 $127,943 -- $ 122,976 6,925 $ 36,353
Chief Financial Officer 1993 $210,000 $102,375 -- $ 101,010 7,425 $ 11,366
</TABLE>
- ---------------
(1) These amounts include annual director fees of $25,000 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) $50,000 or (2) 10% of the total annual salary and bonuses for
any executive listed above.
(3) The unrealized value of the Company's restricted Series A shares reflected
in this column is based upon the date of grant closing market price of
unrestricted Series A shares. No restricted Series B shares are currently
outstanding. As of December 31, 1995, the total number and value of the
Company's Series A shares subject to restrictions held by the executive
officers listed in the Summary Compensation Table above were as follows:
<TABLE>
<CAPTION>
RESTRICTED SERIES A VALUE
SHARES (#) ($)
------------------- ----------
<S> <C> <C>
Robert W. Decherd...................................................... 46,229 $1,606,458
Ward L. Huey, Jr....................................................... 64,099 $2,227,440
Burl Osborne........................................................... 57,286 $1,990,689
Michael J. McCarthy.................................................... 11,466 $ 398,444
Michael D. Perry....................................................... 11,152 $ 387,532
</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
12
<PAGE> 15
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. As a result of the
Company's financial performance in 1995, the following number of
performance-oriented restricted shares were forfeited by the named executive
officers: Mr. Decherd -- 5,419 shares; Mr. Huey -- 3,333 shares; Mr.
Osborne -- 3,130 shares; Mr. McCarthy -- 1,318 shares; and Mr.
Perry -- 1,280 shares. No restricted shares were awarded in 1995. (See
"Board Compensation Committee Report on Executive Compensation--Long-Term
Awards" on page 19.)
(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 of 1986, as amended (the "Code")), and amounts contributed to
the Company's Supplemental Executive Retirement Plan (the "SERP") for 1995:
<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 $ 4,500 $ 98,168
Burl Osborne................................................ $ 20,087 $ 4,500 $128,472
Michael J. McCarthy......................................... $ 9,465 $ 4,500 $ 32,026
Michael D. Perry............................................ $ 6,546 $ 4,500 $ 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 Executive Compensation Plan pursuant
to the Company's 1986 Long Term Incentive Plan (the "1986 Plan"). Awards under
the 1986 Plan were exhausted during 1995; accordingly, certain of the stock
options described below were awarded under the 1995 Executive Compensation Plan
(the "1995 Plan") which was approved by the shareholders of the Company in 1995.
The material terms of the options granted under the 1986 Plan and the 1995 Plan
are identical, except as noted below. Additionally, the Compensation Committee
of the Board of Directors (the "Compensation Committee") adopted a policy that,
beginning in December 1995, all awards of options will be made in Series B
shares. (See "Board Compensation Committee Report on Executive
Compensation -- Long-Term Awards" on page 19.) The following table provides
additional information regarding options and limited stock appreciation rights
granted during 1995 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................... 79,000 12.07% $34.75 12/13/05 $1,036,480
Ward L. Huey, Jr.................... 59,000 9.02% $34.75 12/13/05 $ 774,080
Burl Osborne........................ 49,000 7.49% $34.75 12/13/05 $ 642,880
Michael J. McCarthy................. 19,000 2.90% $34.75 12/13/05 $ 249,280
Michael D. Perry.................... 19,000 2.90% $34.75 12/13/05 $ 249,280
</TABLE>
- ---------------
(1) All options were granted on December 13, 1995 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 in the case of options granted under
the 1986 Plan. (See the definition of Acceleration Date in "Compensation
Pursuant to Certain Retirement Plans -- Pension Plan" below.) In the case of
options granted under the 1995 Plan, the rights become
13
<PAGE> 16
exercisable upon a Change in Control, the definition of which is
substantially similar to the definition of an Acceleration Date. The limited
stock appreciation 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 or a Change in Control, 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 (or does so promptly following such occurrence, in
the case of a Change in Control). The Compensation Committee also may
accelerate the exercisability of any option granted under the 1986 Plan 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
Compensation Committee. Under the 1995 Plan, the approval of the
Compensation Committee is not required if the stock has been held for at
least six months. In addition, both the 1986 and 1995 Plans permit 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 Black-Scholes Option Pricing Model is based on assumptions as
to certain variables as described below, and it is not intended to
estimate, and has no direct correlation to, the amount that an individual
will actually realize upon exercise 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 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
1995) -- .1957; risk free rate of return -- 6.10%; 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 1995 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) ($)(4)
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#)(1) ($)(2) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Robert W. Decherd...................... 0 0 243,440/ $3,740,983/
126,130 $ 416,199
Ward L. Huey, Jr....................... 106,000 $2,091,875 104,860/ $1,384,834/
91,730 $ 288,999
Burl Osborne........................... 44,340 $ 717,266 65,863/ $ 772,237/
79,477 $ 269,038
Michael J. McCarthy.................... 17,040 $ 222,570 27,779/ $ 323,079/
32,071 $ 115,937
Michael D. Perry....................... 17,604 $ 289,778 26,835/ $ 311,246/
31,765 $ 113,220
</TABLE>
- ---------------
(1) All of the shares of the Company's Common Stock that were acquired upon the
exercise of stock options were Series A shares.
14
<PAGE> 17
(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) All of the securities underlying the exercisable options are Series A
shares. Of the unexercisable options, the following numbers of shares
underlying options are Series B shares for each executive: Mr.
Decherd -- 79,000 shares; Mr. Huey -- 59,000 shares; Mr. Osborne -- 49,000
shares; Mr. McCarthy -- 19,000 shares; and Mr. Perry -- 19,000 shares. The
remainder of the unexercisable options are in Series A shares.
(4) Based on the closing price of $34.75 of the Company's Series A shares on
the NYSE -- Composite Transactions on December 31, 1995.
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............... $ 20,785 $ 31,177 $ 41,570 $ 51,962 $ 62,355 $ 72,747 $ 80,997
$250,000............... $ 35,285 $ 52,927 $ 70,570 $ 88,212 $105,855 $114,486 $114,486
$350,000............... $ 49,785 $ 74,677 $ 99,570 $114,486 $114,486 $114,486 $114,486
$450,000............... $ 64,285 $ 96,427 $114,486 $114,486 $114,486 $114,486 $114,486
$550,000............... $ 78,785 $114,486 $114,486 $114,486 $114,486 $114,486 $114,486
$650,000............... $ 93,285 $114,486 $114,486 $114,486 $114,486 $114,486 $114,486
$750,000............... $107,785 $114,486 $114,486 $114,486 $114,486 $114,486 $114,486
$850,000 or above...... $114,486 $114,486 $114,486 $114,486 $114,486 $114,486 $114,486
</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 the 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 -- 23 years; Mr. Huey -- 36 years; Mr. Osborne -- 16 years; Mr.
McCarthy -- 11 years; and Mr. Perry -- 17 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 12, except that
such covered compensation was capped at $150,000 for all participants in 1995.
15
<PAGE> 18
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), 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 the date the participant elected to participate in
the plan 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 1995 are set forth in footnote (5)
to the Summary Compensation Table on page 13 above.
Supplemental Executive Retirement Plan. The Supplemental Executive
Retirement Plan (the "SERP") was adopted by the Compensation Committee in
December 1992 for senior corporate officers and other key executives selected by
the Compensation Committee. This group includes the four senior executives named
in the Summary Compensation Table on page 12 (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 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 "Executive Compensation Plan" under "Board
Compensation Committee Report on Executive Compensation" on page 17 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
16
<PAGE> 19
Company's Pension Plan on pages 15-16 above. See also footnote (5) to the
Summary Compensation Table on page 13 above for the amounts contributed to the
SERP by the Company on behalf of the Senior Executives and the Chief Executive
Officer for 1995.) 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.
COMPENSATION OF DIRECTORS
In 1995, directors received an annual retainer of $25,000 for serving on
the Company's Board of Directors, and nonemployee directors also received $1,250
for each meeting of the Board of Directors attended. Directors who are committee
chairmen (all of whom are nonemployee directors) received $2,500 for each
committee meeting attended. Nonemployee directors received $1,250 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 20,000 shares of the Company's Series A Common Stock. Thereafter, on
each annual meeting date, each nonemployee director automatically receives
additional non-qualified options to purchase 5,000 shares of Common Stock. In
December 1995, the Compensation Committee authorized the use of Series B Common
Stock for both purposes.
CERTAIN TRANSACTIONS
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 $8.2 million was paid during the year ended
December 31, 1995. In June 1995, the Company entered into a construction
contract with a subsidiary of Austin Industries, Inc. relating to the
installation of additional printing presses for The Dallas Morning News, Inc.
The contract provided for total payments of approximately $131,000. The entire
balance of this contract was paid off during the year ended December 31, 1995.
William T. Solomon, a director of the Company, is Chairman, President, and Chief
Executive Officer of Austin Industries, Inc.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The Compensation Committee is composed entirely of independent outside
directors. Under the Company's Executive Compensation Plan (the "ECP"), the
Compensation 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 Securities Exchange Act of 1934, makes the
final determination regarding awards of restricted shares, stock options and
other stock-based awards to such persons under the 1986 Plan or the 1995 Plan,
which was approved by the Company's shareholders at the 1995 Annual Meeting.
EXECUTIVE COMPENSATION PLAN
The ECP was implemented January 1, 1989, replacing the Company's previously
existing management incentive plans. The key elements of the ECP are an annual
base salary, an annual target bonus opportunity, and long-term compensation
issued under the 1986 Plan or the 1995 Plan. The ECP is administered by the
Compensation Committee, the members of which are not eligible to participate in
the ECP. Officers of the Company and its subsidiaries, including the Senior
Executives and the Chief Executive Officer, are automatically eligible to
participate in the ECP. The Compensation 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.
17
<PAGE> 20
The 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 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 and (2) to
encourage coordinated and sustained effort toward enhancing the Company's
performance and maximizing the Company's value to its shareholders. The receipt
by participants of bonus amounts 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 Compensation Committee considers the total value of an 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. As a result, base salary and bonus opportunities for 1995 were
established under the ECP in December 1994 and option awards were granted in
December 1995.
The Compensation Committee works closely with the Chief Executive Officer
and the Chief Financial Officer in formulating its recommendations. It is 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 companies. This target percentile was established at a
level that the Compensation Committee believes is necessary to attract and
retain outstanding executives. For comparative purposes, the Compensation
Committee reviews a special cut survey of peer media companies in determining
base salaries and bonus opportunities and a survey of over 250 companies in
determining long-term incentive awards. The survey is conducted by a nationally
recognized compensation consultant. The companies included in both the general
compensation survey and the special cut survey vary somewhat from those included
in the group of peer companies indicated in the Performance Graph on page 21
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.
Base Salary. For 1995, the base salaries of the Senior Executives remained
at approximately their 1994 levels and approximate the target percentile of the
special cut survey aimed for by the Compensation Committee.
Annual Performance Bonus Opportunity. Each ECP participant has an
opportunity to earn an annual bonus based upon the financial performance of the
participant's organizational entity. The Compensation Committee uses a percent
of the base salary of each ECP participant to establish the participant's bonus
opportunity range, based on survey comparisons. The Compensation Committee
annually reviews minimum, target and maximum levels of performance for each
organizational entity, based on business plans developed by Company management.
The bonus opportunity of the Chief Executive Officer and each Senior Executive
is based on the financial performance of the Company as a whole.
Corporate performance for purposes of the bonus opportunity is measured by
growth in earnings per share. The minimum level for Company performance each
year typically is established at the earnings per share level achieved during
the previous fiscal year. In addition, the Board of Directors or the
Compensation Committee may exclude the effect of unusual items from the
calculation of the Company's performance measurements; however, such an
exception has been made only once in the past five years. The Compensation
Committee views growth in earnings per share as being an appropriate measurement
for the bonus opportunity for the Chief Executive Officer and the Senior
Executives 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.
Bonus amounts for 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 amount reflecting performance in excess of the minimum level.
If
18
<PAGE> 21
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 amount (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 has been
exercised a total of eight times since the inception of the ECP and was not
exercised during 1995.
As a result of the Company's financial performance during 1995, the bonuses
of the Senior Executives set forth in the Summary Compensation Table on page 12
represent approximately 55% of their respective target bonus amounts.
Long-Term Awards. The long-term incentive component of the ECP is 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 Compensation Committee assigns to each ECP
participant a long-term incentive factor, expressed as a percent of base salary.
The Compensation Committee strives to set long-term incentive levels for
participants that would place them at approximately the seventy-fifth percentile
of the survey considered by the Compensation Committee. In recommending levels
of long-term incentive awards for participants, the Compensation 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 approved 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.
In May 1995, shareholders approved an amendment to the Company's
Certificate of Incorporation which permits the Company to issue Series B shares
so long as such issuances will not cause the Series A shares to be delisted from
the NYSE. In December 1995, the Compensation Committee adopted a policy under
which all awards of options and restricted shares to ECP participants, including
the Chief Executive Officer and Senior Executives, will be made in Series B
shares and, beginning in January 1996, all future shares issued as employer
contributions under the 401(k) Plan will be Series B shares. In reaching this
decision, the Compensation Committee determined that the policy is consistent
with the Company's stated objectives in instituting a differential voting
structure in 1988. The shareholders also affirmed the issuance of Series B share
awards in their approval of the 1986 Plan and more recently, the 1995 Plan, both
of which include the ability to issue awards of Series B shares. The
Compensation Committee believes that the issuance of Series B shares to ECP
participants and directors and to participants in the 401(k) Plan will further
identify the interests of employees, directors and officers with the long-term
interests of the Company.
In previous years, all ECP participants were awarded stock options and
certain key executives also received awards of restricted shares. In December
1995, the Compensation Committee determined that awards for all ECP participants
would consist only of stock options for the foreseeable future. This
determination was based on several factors including (1) the Compensation
Committee's preference for long-term incentive programs that reward management
at the same time that shareholders are being rewarded; (2) the difficulty in
establishing suitable four-year earnings growth objectives in an acquisition
environment where short-term earnings dilution is accepted in order to build
long-term value in the Company; (3) the result of an analysis of restricted
shares which showed that stock option only awards would generally deliver more
of the intended value to ECP participants; and (4) the more advantageous
accounting treatment for stock option awards which, unlike restricted share
awards, do not require a charge to earnings.
Stock Options. A total of 146,000 options for the Company's Series B shares
were granted to Senior Executives in 1995 under the 1986 Plan and the 1995 Plan.
The material terms of the stock options granted under both plans are
substantially identical. The Compensation 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 13,
which reflects estimated present values of such options, based on the indicated
assumptions.) The Compensation Committee has never granted options at exercise
prices other than the market price of the Series A shares on the date of grant
and has never adjusted such prices
19
<PAGE> 22
retroactively (except pursuant to the 1986 Plan's antidilution provisions upon
the Company's distribution by dividend of Series B shares in May 1988 and
pursuant to a two-for-one stock split in the form of a dividend on each
outstanding share of the Company's Common Stock that was paid in June 1995).
Because the 1986 Plan expires May 8, 1996, all future stock-based awards will be
made under the 1995 Plan.
While the value realizable from exercisable options 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 Compensation 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 Option/SAR Values Table on page 14 for the amounts realized by
the Senior Executives from option exercises in 1995 and the estimated unrealized
value of unexercised options held by such persons as of December 31, 1995. See
also footnote (3) to the Summary Compensation Table on page 12 for information
regarding the estimated unrealized value of unvested restricted shares held by
such persons as of December 31, 1995.)
CEO COMPENSATION
Mr. Decherd is a participant in the ECP. In December 1995, the Compensation
Committee awarded Mr. Decherd stock options for 79,000 Series B shares. This
amount corresponds to the target percentile indicated by the compensation survey
considered by the Compensation Committee.
Mr. Decherd's base salary was not adjusted in 1995 and remains at a level
generally corresponding to the compensation level aimed for by the Compensation
Committee. Mr. Decherd's 1995 bonus amount under the ECP was determined solely
in relation to the consolidated financial performance of the Company and its
subsidiaries. As a result of the Company's performance in 1995, Mr. Decherd
received approximately 55% 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 1986 Plan and the 1995
Plan permit the Company to grant awards that are not subject to the deduction
limit established by Section 162(m) of the Code. The Compensation 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
J. McDonald Williams, Chairman
20
<PAGE> 23
PERFORMANCE GRAPH
The following graph compares the annual cumulative total shareholder return
on an investment of $100 on December 31, 1990 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. In previous years, the Company's peer group has been composed of
the following companies: Central Newspapers, Inc.; Dow Jones & Company, Inc.;
Knight-Ridder, Inc.; Lee Enterprises, Inc.; McClatchy Newspapers, Inc.; 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 "Pre-1996 Peer Group"). The current peer group (the
"1996 Peer Group") differs from the Pre-1996 Peer Group in two respects. First,
it no longer includes Multimedia, Inc. and Park Communications, Inc. as these
companies were acquired by or merged with other companies in the industry and
separate information with respect to them is no longer available. Second, the
1996 Peer Group has been expanded to include the following companies in the
television broadcasting business, which is increasing in importance as one of
the Company's two primary lines of business: BHC Communications, Inc.; Lin
Television Corporation; New World Communications Group, Inc.; Granite
Broadcasting Corporation; and Young Broadcasting Corporation. For comparison
purposes, the graph shows the results of both the Pre-1996 Peer Group and the
1996 Peer Group. The Company is not included in the calculations of peer group
cumulative total shareholder return on investment.
[GRAPH]
<TABLE>
<CAPTION>
Measurement Period A.H. Belo S & P 500 Pre-1996 Peer 1996 Peer
(Fiscal Year Covered) Corporation Index Group Group
<S> <C> <C> <C> <C>
1990 100 100 100 100
1991 100 130 119 119
1992 135 140 134 134
1993 173 154 157 158
1994 187 156 148 150
1995 232 215 186 189
</TABLE>
21
<PAGE> 24
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, 1995 (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, 400 SOUTH
RECORD STREET, DALLAS, TEXAS 75202.
INDEPENDENT AUDITORS
Ernst & Young, independent auditors, served as independent auditors for the
Company for the fiscal year ended December 31, 1995, 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 1997 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
November 23, 1996. Such proposals, and any nomination of candidates for election
as directors, 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 Annual Meeting. If any other matters should come before the Annual 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: April 12, 1996
22
<PAGE> 25
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 15, 1996, at the Annual Meeting of
Shareholders to be held on May 8, 1996, 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.
Please sign exactly as name appears. When shares are held by joint
tenants, both sould 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> 26
[X] Please mark
your votes
like this
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.
Item 1 -- ELECTION OF THE FOLLOWING NOMINEES AS CLASS 1 DIRECTORS (Term expires
in 1999).
John W. Bassett, Jr., Lester A. Levy, Burl Osborne, and J. McDonald Williams
WITHHOLD
FOR AUTHORITY
[ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
- ------------------------------------------
Item 2 -- 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, adminstrator, 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 , 1996
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Signature if Held Jointly
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS
ABOVE AND RETURN IN THE ENVELOPE.
<PAGE> 27
TO PARTICIPANTS IN THE A. H. BELO CORPORATION EMPLOYEE SAVINGS AND INVESTMENT
PLAN AND THE A. H. BELO CORPORATION EMPLOYEE THRIFT PLAN;
As a participant in either the Employee Savings and Investment Plan or the
Employee Thrift Plan with full shares of the Company's Common Stock allocated
to your account as of March 15, 1996, you may instruct the Trustee how to vote
such shares at the Annual Meeting of Shareholders to be held May 8, 1996.
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
Plans, 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 6, 1996, will be voted in the same manner, proportionately,
as the shares in the applicable Plan 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 I
Directors.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
TRUSTEE
(continued and to be signed on the reverse side)
<PAGE> 28
Please mark [X]
your vote
like this
U.S. Trust Company of California, 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:
Item 1 -- ELECTION OF THE FOLLOWING NOMINEES AS CLASS 1 DIRECTORS (Term
expires in 1999).
John W. Bassett, Jr., Lester A. Levy, Burl Osborne, and J. McDonald Williams
WITHHOLD
FOR AUTHORITY
[ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.
------------------------------------------
Item 2 -- At the discretion of such Proxies, on any other matter that
properly may come before the meeting or any adjournment thereof.
I hereby authorize U.S. Trust Company of California, N.A., as Trustee under
the Employee Savings and Investment Plan and the Employee Thrift Plan, to
vote the shares of Common Stock held for my account under the applicable
Plan at the Annual Meeting in accordance with the instructions given above,
U.S. Trust Company of California, N.A., has appointed Chemical Mellon
Shareholders Services, L.L.C. as Agent to tally the votes.
Dated , 1996
-----------------------------------------------------------------
----------------------------------------------------------------------
Signature
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS
ABOVE AND RETURN IN THE ENVELOPE.
