<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
GANNET COMPANY, INCORPORATED
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THOMAS L. CHAPPLE
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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 O-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 O-11:/1/
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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>
[LOGO OF GANNETT APPEARS HERE]
JOHN J. CURLEY
Chairman, CEO
and President
March 18, 1994
Dear Shareholder:
On behalf of your Board of Directors and management, I cordially invite you
to attend the Annual Meeting of Shareholders to be held on Tuesday, May 3,
1994, at 10:00 a.m., at the Company's headquarters, 1100 Wilson Boulevard,
Arlington, Virginia.
At this meeting you will be asked to vote for the election of four directors,
for the election of Price Waterhouse as the Company's independent auditors for
the 1994 fiscal year and on one shareholder proposal. These matters are
discussed in detail in the attached proxy statement.
Your Board of Directors believes the proposals regarding the election of
directors and Price Waterhouse are in the best interests of the Company and its
shareholders and recommends that you vote for them.
Your Board believes that the shareholder proposal is not in the best
interests of the Company and its shareholders and recommends that you vote
against it.
It is important that your shares be represented at the meeting whether or not
you plan to attend. Please sign, date and return the enclosed proxy card in the
envelope provided.
Thank you for your continued support.
Cordially,
/s/John J. Curley
John J. Curley
1100 Wilson Blvd., Arlington, VA 22234 (703) 284-6000
<PAGE>
[LOGO OF GANNETT APPEARS HERE]
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 1994
----------------
To Our Shareholders:
The Annual Meeting of Shareholders of Gannett Co., Inc. will be held at the
Company's headquarters, 1100 Wilson Boulevard, Arlington, Virginia, at 10:00
a.m. on May 3, 1994 for the following purposes:
(1) To elect four directors;
(2) To act upon a proposal to elect Price Waterhouse as the Company's
independent auditors for the fiscal year ending December 25, 1994;
(3) To act upon a shareholder proposal concerning executive compensation;
and
(4) To transact such other business, if any, as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 4, 1994 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU
DECIDE TO ATTEND THE MEETING.
By Action of the Board of Directors
/s/Thomas L. Chapple
Thomas L. Chapple
Secretary
Arlington, Virginia
March 18, 1994
<PAGE>
PROXY STATEMENT
1994 ANNUAL MEETING OF SHAREHOLDERS
OF
GANNETT CO., INC.
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Gannett Co., Inc. ("Gannett" or the
"Company") for the Annual Meeting of Shareholders to be held on May 3, 1994.
The close of business on March 4, 1994 has been fixed as the record date for
the determination of the shareholders entitled to notice of, and to vote at,
the Annual Meeting. On that date there were 147,163,142 shares of Common Stock
outstanding and entitled to vote at the meeting. Each share of Common Stock is
entitled to one vote.
Shares represented by proxies will be voted in accordance with the
specifications made on the proxy card by the shareholder. Any proxy not
specifying the contrary will be voted in the election of directors for the
Board of Directors' nominees, in favor of the proposal regarding the election
of auditors and against the shareholder proposal. A shareholder giving a proxy
has the right to revoke it by a duly executed proxy bearing a later date, by
attending the meeting and voting in person, or by otherwise notifying the
Company prior to the meeting.
The principal executive offices of the Company are located at 1100 Wilson
Boulevard, Arlington, Virginia 22234. This Proxy Statement and the enclosed
proxy card are being furnished to shareholders on or about March 18, 1994.
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and through activities of its committees. Among the committees of the Board are
the Management Continuity Committee, the Executive Compensation Committee and
the Audit Committee.
The Management Continuity Committee develops long-range management succession
plans and recommends to the Board candidates for nomination as directors and
for election as officers. In making recommendations for directors for the 1995
Annual Meeting, the Committee will consider any written suggestions of
shareholders received by the Secretary of the Company prior to February 1,
1995. The Committee consists of Meredith A. Brokaw, Chair, John J. Curley, John
J. Louis, Jr., and Carl T. Rowan. The Committee met four times during 1993.
The Executive Compensation Committee makes recommendations concerning the
compensation and benefits of elected officers and senior executives, grants
awards under and administers the Company's executive incentive plans, and
generally assumes responsibility for all matters related to the foregoing. The
Committee consists of Thomas A. Reynolds, Jr., Chair, Peter B. Clark, and
Dolores D. Wharton. None of the members of the Committee is an employee of the
Company. The Committee met six times during 1993.
The Audit Committee periodically reviews the Company's auditing practices and
procedures and recommends independent auditors to be elected by the
shareholders. The Audit Committee consists of Stuart T. K. Ho, Chair, Andrew F.
Brimmer, John J. Louis, Jr., and Thomas A. Reynolds, Jr. None of the members of
the Committee is an employee of the Company. The Committee met six times during
1993.
<PAGE>
The Board of Directors of the Company is currently composed of 12 directors.
The By-laws of the Company provide that each director, in order to be eligible
for election to the Board, must own at least one thousand shares of the Common
Stock of the Company. Under the Company's Certificate of Incorporation and By-
laws, the Board is divided into three classes, as nearly equal in number as
possible. At each Annual Meeting of Shareholders, directors constituting one
class are elected for a three-year term. The Board of Directors intends to
nominate the four persons named below for election to the Board of Directors.
All of the nominees are currently directors. If elected, all nominees will
serve until the Annual Meeting of Shareholders to be held in 1997 or until
such time as their respective successors are elected. The Board of Directors
held six meetings during 1993. All of the directors attended at least 75% of
the total meetings of the Board and any committee on which they served.
The Board believes that all the nominees will be available and able to serve
as directors. If any nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute as the Board
may recommend, the Board may reduce the number of directors to eliminate the
vacancy consistent with the requirement to maintain nearly equal classes, or
the Board may fill the vacancy at a later date after selecting an appropriate
nominee. A plurality of the votes cast at this meeting by the holders of stock
entitled to vote in the election is required for election of the directors.
The four nominees with the highest number of votes will be elected. If a
shareholder, present in person or by proxy, withholds a vote from one or more
directors, the shareholder's shares will not be counted in determining the
votes for those directors. If a shareholder holds his shares in a broker's
account and has given specific voting instructions, the shares will be voted
in accordance with those instructions. If no voting instructions are given,
under the New York Stock Exchange rules the broker may exercise its
discretionary authority to vote for the Board of Directors' nominees.
The following sets forth information concerning the principal occupations
and business experience of the nominees and of those directors whose terms of
office will continue following the Annual Meeting.
THE FOLLOWING PERSONS HAVE BEEN NOMINATED FOR ELECTION AT THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON MAY 3, 1994:
ROSALYNN CARTER
Mrs. Carter, 66, the former First Lady, is the author of "First Lady from
Plains" and is coauthor, with President Jimmy Carter, of "Everything to Gain:
Making the Most of the Rest of Your Life." She is also a Fellow of the Women's
Studies Institute at Emory University in Atlanta. She serves as a member of
the Board of Directors of the Carter Presidential Center and Friendship Force
International, the Board of Advisors of Habitat for Humanity, Inc., and the
Board of Trustees of The Menninger Foundation. She has been a director of
Gannett since 1983.
THOMAS A. REYNOLDS, JR.
Mr. Reynolds, 65, is Chairman Emeritus of the law firm of Winston & Strawn,
Chicago, Illinois. He has been a director of Gannett since 1979. He is also a
director of Jefferson Smurfit Group and Union Pacific Corporation. Winston &
Strawn performed legal services for Gannett in 1993.
CARL T. ROWAN
Mr. Rowan, 68, is President of CTR Productions. He is also an author,
lecturer and commentator. His most recent book, "Dream Makers, Dream Breakers:
The World of Justice Thurgood Marshall," was released in January, 1993. He is
a columnist for King Features and the Chicago Sun-Times, a television
commentator for Post-Newsweek Broadcasting, and a radio commentator for CTR
Productions. He has been a director since June, 1990.
DOLORES D. WHARTON
Mrs. Wharton, 66, is Chairman and Chief Executive Officer of the Fund for
Corporate Initiatives, Inc., a non-profit organization devoted to
strengthening the role of women and minorities in the corporate world through
professional development and upward mobility programs for younger executives.
She is also a director of the Kellogg Company and COMSAT Corporation. She has
been a director of Gannett since 1979.
2
<PAGE>
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT THE
1995 ANNUAL MEETING:
ANDREW F. BRIMMER
Dr. Brimmer, 67, is a former member of the Federal Reserve Board and now
heads his own economic and financial consulting firm in Washington, D.C. Dr.
Brimmer served as a visiting professor at the Harvard Business School from 1974
to 1976 and as a governor of the Federal Reserve System from 1966 to 1974. He
is president and a director of Brimmer & Company, Inc., and a director of
BankAmerica Corporation, BellSouth Corporation, BlackRock Investment Income
Trust, Inc., Connecticut Mutual Life Insurance Company, E.I. duPont de Nemours
& Company, Navistar International Corporation, UAL Corporation, and PHH
Corporation. He is also a Public Governor and Vice Chairman of the Commodity
Exchange, Inc. and a Trustee of the College Retirement Equities Fund. He has
been a director of Gannett since 1980.
STUART T. K. HO
Mr. Ho, 58, is Chairman of the Board and President of Capital Investment of
Hawaii, Inc. Mr. Ho is also Chairman of the Board of Gannett Pacific
Corporation, which publishes the Company's Honolulu Advertiser and the Pacific
Daily News in Guam. Mr. Ho is also a director of Bancorp Hawaii, Inc., Aloha
Airgroup, Inc., and Capital Investment of Hawaii, Inc. He is also a Trustee of
the College Retirement Equities Fund. He has been a director of the Company
since 1984.
DOUGLAS H. MCCORKINDALE
Mr. McCorkindale, 54, is Vice Chairman and Chief Financial and Administrative
Officer of Gannett and has served the Company in various other executive
capacities since 1971. He is also a director of Rochester Telephone Corporation
and Continental Airlines, Inc. and a director of seven funds which are part of
the Prudential complex of mutual funds. He has been a director of Gannett since
1977.
ROLLAN D. MELTON
Mr. Melton, 61, is Chairman and Chief Executive Officer of Speidel Newspapers
Inc., a Gannett subsidiary, and serves as a columnist for the Reno Gazette-
Journal. He is also a director of the National Judicial College and the John
Ben Snow Trust and Foundation. Mr. Melton has served as President or Chairman
and as Chief Executive Officer of Speidel since 1972. He has been a director of
Gannett since 1977.
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT THE
1996 ANNUAL MEETING:
MEREDITH A. BROKAW
Mrs. Brokaw, 53, owns and operates Penny Whistle Toys, Inc., in New York
City, and is the author of six Penny Whistle books. She is a trustee of the
National Home Library Board, and a director of Conservation International and
the Coro Foundation in New York City, which provides public service training to
recent college graduates. She has been a director of Gannett since 1983.
PETER B. CLARK
Mr. Clark, 65, was Chairman, President and Chief Executive Officer of The
Evening News Association, which merged with Gannett in 1986. He was Publisher
of The Detroit News from 1963 to 1981. He was President of The Evening News
Association from 1963 until his retirement in 1986. In 1987, he was Regents
Professor at the Graduate School of Management, University of California at Los
Angeles. He is also a trustee of Harper-Grace Hospital, Detroit, Michigan. He
has been a director of Gannett since 1986.
JOHN J. CURLEY
Mr. Curley, 55, is Chairman, President and Chief Executive Officer of
Gannett. He was President and Chief Executive Officer of the Company from 1986
to 1989 and President and Chief Operating Officer of Gannett from 1984 to 1986.
He has served the Company in various other executive capacities since 1983 and
has
3
<PAGE>
been a director since 1983. Mr. Curley is a member of the Dickinson College and
Columbia University Boards of Trustees.
JOHN J. LOUIS, JR.
Mr. Louis, 68, founder of Combined Communications Corporation in 1968, served
as its Chairman from 1968 until 1981. Mr. Louis served as a director of Gannett
from 1979, when Combined merged with Gannett, until 1981, when he resigned to
become the U.S. Ambassador to the United Kingdom. He was re-elected to the
Company's Board in 1985. He is a director of S.C. Johnson & Son, Inc.
SECURITIES OWNED BY GANNETT MANAGEMENT
The following table shows the number of shares of Gannett Common Stock
beneficially owned by all directors, including the nominees listed above and
the named executive officers, on March 4, 1994:
<TABLE>
<CAPTION>
NAME OF OFFICER OR DIRECTOR TITLE SHARES OWNED
- --------------------------- ----- ------------
<S> <C> <C>
John J. Curley............... Chairman, President & CEO 453,211
Douglas H. McCorkindale...... Vice Chairman, Chief Fin. & Admin.
Officer 313,067
Gary L. Watson............... President/Newspaper Division 69,849
Cecil L. Walker.............. President/Broadcasting Division 29,358
Thomas Curley................ President and Publisher, USA TODAY 44,173
Andrew F. Brimmer............ Director 1,172
Meredith A. Brokaw........... Director 1,000
Rosalynn Carter.............. Director 1,000
Peter B. Clark............... Director 1,836
Stuart T. K. Ho.............. Director 1,410
John J. Louis, Jr............ Director 1,364,704
Rollan D. Melton............. Director 54,900
Thomas A. Reynolds, Jr....... Director 7,153
Carl T. Rowan................ Director 4,253
Dolores D. Wharton........... Director 4,000
All Directors and Executive
Officers as a Group (36 per-
sons including those named
above)...................... 2,729,569
</TABLE>
The number of shares shown for the persons named above represents in each
instance less than 1% of the outstanding shares. All directors and executive
officers as a group beneficially owned 2,729,569 shares of the Company's Common
Stock on March 4, 1994, which represents 1.85% of the outstanding shares. Of
the shares reported, the following shares are included because they may be
purchased pursuant to stock options that were exercisable on March 4, 1994 or
will become exercisable by May 3, 1994: John J. Curley--277,500; Mr.
McCorkindale--148,750; Mr. Watson--44,750; Mr. Walker--17,600; Thomas Curley--
28,335; all executive officers as a group--769,999. For all shares presently
owned, the director or executive officer possesses sole voting power and sole
investment power, except for Mr. Louis, who has shared voting and investment
power with respect to 826,281 shares held in trust and shared voting and sole
investment power with respect to 36,129 shares held in trust; Mr. Rowan, who
shares investment and voting power with respect to 1,000 shares held jointly
with his spouse; and three executive officers who share investment and voting
power with respect to 21,329 shares held jointly with their spouses.
Certain shares have not been reported above because, in each case, the
director or executive officer has disclaimed beneficial ownership. Ownership of
the following shares is disclaimed because they are held in the names of family
members of directors or executive officers or in trust: Mr. Clark--300; Mr.
Ho--19,412; Mr. Louis--57,888; Mr. Rowan--300; Mr. McCorkindale--437; all
directors and executive officers as a group--21,958.
4
<PAGE>
The shares reported above do not include 590,700 shares of the Company's
Common Stock owned as of March 4, 1994 by the Gannett Retirement Plan Trust.
The following officers of the Company serve on the Retirement Plan Committee,
which has the power to direct the voting of those shares: John Curley, Douglas
McCorkindale, Richard L. Clapp (Vice President, Compensation and Benefits),
Madelyn P. Jennings (Senior Vice President, Personnel), and Jimmy L. Thomas
(Senior Vice President, Financial Services and Treasurer).
SECTION 16 REPORTS
On June 15, 1993, Ms. Wharton purchased 1,000 shares of Gannett Common Stock.
Due to her travel schedule, Ms. Wharton filed a Form 4 report reflecting the
purchase approximately six weeks after the due date.
COMPENSATION OF DIRECTORS
The Company compensates its directors through the payment of annual fees and
meeting fees. The annual fee is $42,500. Each director also receives a fee of
$1,250 for each Board meeting attended. Each committee chair also receives an
annual fee of $5,000 and each committee member, including the chair, receives a
fee of $1,000 for each committee meeting attended. Directors who are employees
of the Company or its subsidiaries receive no director fees. Directors may
elect to defer payment of their fees to future years under the Company's Plan
for the Deferral of Director Fees, which provides for interest on deferred fees
at the annual rate of 10%, or under the 1987 Deferred Compensation Plan, which
provides for seven investment options, including mutual funds and a Gannett
Common Stock fund.
The Company has established a Retirement Plan for Directors in which non-
employee members of the Board of Directors are eligible to participate. The
annual benefit under the Plan is equal to a percentage of the highest annual
director's compensation during the five years of service preceding the
director's retirement from the Board as set forth in the following table:
<TABLE>
<CAPTION>
YEARS OF SERVICE PERCENTAGE
---------------- ----------
<S> <C>
10 or more............................. 100%
9...................................... 90%
8...................................... 80%
7...................................... 70%
6...................................... 60%
5...................................... 50%
Less than 5............................ 0%
</TABLE>
The annual benefit will be paid each quarter for 10 years except in the case
of lump sum payments in the event of death.
5
<PAGE>
COMPENSATION OF GANNETT MANAGEMENT
The Executive Compensation Committee (the "Committee") of the Board of
Directors is responsible for establishing and administering Gannett's
compensation and stock ownership programs for executive officers. The Committee
is composed entirely of independent outside directors. The following is the
Committee's report on its decisions concerning compensation of executives
during 1993:
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
HIGHLIGHTS OF THE 1993 FISCAL YEAR:
In 1993, the Committee continued to emphasize the important link between the
Company's performance, which benefits its shareholders, and the compensation of
its executive officers.
In making its compensation decisions, the Committee first considered the
Company's performance, as evidenced by increases in earnings per share,
operating income as a percentage of sales, return on equity, year-end stock
price and overall market value, together with management's recommendations and
the Committee's subjective judgment. The Committee also compared the Company's
performance to that of its competitors and concluded that the Company's
performance was superior. The Committee believes that the Company should
compensate its executives better than its competitors in order to continue to
attract and retain the most talented people. When we refer to "competitors" in
this report we mean the companies that constitute the S&P Publishing/Newspaper
Index used in the performance graph on p. 12.
When it made its decisions about compensation, in order to continue its
policy of tying the interests of its senior executives closely with those of
the Company's shareholders, the Committee placed great emphasis on increasing
key executives' ownership of Gannett Common Stock as a component of their
compensation. The Committee believes that ownership of stock creates a greater
incentive for key executives to manage the Company so as to increase
shareholder value. Accordingly, the Committee took these steps:
(1) The Committee adopted an executive share ownership policy which
encourages the five highest-paid officers to own Gannett Common Stock equal
to three times their salary range midpoint and other key executives to own
Gannett Common Stock equal to their salary range midpoint. Except for one
new executive officer, all of the executives affected by this policy have
either met or exceeded these share ownership levels.
(2) Since the top two officers of the Company again this year refused to
accept salary and bonus increases, the Committee awarded them an increased
number of stock options as the only potential increase in their
compensation.
(3) The Committee decided that 25% of the bonuses for 33 officers and
other key executives in 1993 should be paid in Gannett Common Stock.
(4) The Committee discontinued awards of stock incentive rights to 18
officers and other key executives and transferred the value of those awards
to stock options.
COMPENSATION POLICY: PAY FOR PERFORMANCE.
The Company's compensation policy is based on the principle of pay for
performance.
The compensation program for executive officers is composed of three
elements: salaries, annual bonuses under the Company's Executive Incentive
Plan, and long-term incentive stock awards under the Company's 1978 Long-Term
Incentive Plan (the "1978 Plan"). These elements of compensation are designed
to provide incentives to achieve both short-term and long-term objectives and
to reward exceptional performance. Salaries and bonuses result in immediate
payout for performance, while the
6
<PAGE>
value of incentive stock awards under the 1978 Plan depend upon long-term
results. The individual elements of compensation provided by the Company are
discussed in detail below.
It is important to note that, while the Committee considers a number of
performance factors relating to the Company and to individual performance in
making individual compensation decisions, the Committee applies its own
subjective good judgment in making final determinations.
In 1992, the Committee adopted the following Compensation Policy, which
continues to guide the Committee in making its compensation decisions:
Compensation Policy
The Gannett Board of Directors' Executive Compensation Committee has in
place a compensation program which it believes to be fair to employees and
shareholders and externally competitive and reasonable.
The program is designed to attract, motivate, reward and retain the broad-
based management talent required to achieve corporate objectives and
increase shareholder value. It consists of cash compensation, including
salary and bonus, to reward short term performance, and long term stock
awards, including stock incentive rights and stock options, to promote long
term results.
The Executive Compensation Committee believes that management should
benefit together with shareholders as the Company's stock increases in
value.
To encourage growth in shareholder value, stock options and, except for
certain officers and key executives, stock incentive rights are granted to
key management personnel who are in a position to make a substantial
contribution to the long-term success of the Company. These stock awards
mature and grow in value over time and for that reason represent
compensation which is attributable to service over a period of years. This
focuses attention on managing the Company from the perspective of an owner
with an equity stake in the business.
In making its compensation decisions, compensation comparisons are made
with companies Gannett's size and with companies in news, information and
communications. The Executive Compensation Committee reviews the Company's
and its competitors' earnings to determine where Gannett falls with regard
to the group. The comparison spans one to four years, the same length of
time as stock incentive rights and stock options vest. How the company
stock has performed over a similar period of time is also reviewed and
taken into account in the overall compensation plan.
A job grading system is used to make equitable grants. At the lower end of
the management ranks more emphasis is placed on cash and stock incentive
rights with the bonus target increasing through the ranks. Options are
given in larger amounts as the job rank increases because these performers
can more directly influence long term results.
In 1993, in establishing the compensation of executive officers, the
Committee reviewed and applied this Compensation Policy and considered the
performance of executive officers relative to the Company's business objectives
and its competitors' performance. The Company's material business objectives
are performance against budget, product quality and employee development.
The Committee has reviewed the 1993 executive compensation in light of the $1
million ceiling on tax deductions for compensation that was enacted in the
Omnibus Budget Reconciliation Act of 1993 (the "1993 Tax Bill"). The Committee
has concluded that all of the Company's 1993 compensation expense will be
deductible for federal income tax purposes. The Committee is continuing to
review the
7
<PAGE>
1993 Tax Bill and the proposed implementing regulations. Once the regulations
become final, the Committee will consider them in making the Company's 1994
compensation awards.
BASE SALARIES: TO ATTRACT AND RETAIN MANAGEMENT TALENT.
Base salaries are designed to help attract and retain key management talent.
They are derived in part from salary range guidelines developed for each
position in accordance with the Company's Compensation Policy.
The salary ranges are periodically reviewed and compared to the salaries paid
for comparable positions by competitors in the S&P Publishing/Newspaper Index
(which is one of the indexes used for comparative purposes in the graph under
the caption "Comparison of Shareholder Return" on p. 12). Companies with
comparable revenues in other industries are also surveyed to ensure that salary
ranges are competitive in the overall marketplace.
Other factors used to establish competitive salary ranges include internal
job values as determined by senior management and the state of the economy in
the Company's markets. Since the Company is both larger than and has
outperformed its competitors and because of general compensation practices in
the media industry, the Company has sought to place its salaries generally
above the median for the comparative companies. The salaries for Company
executive officers are primarily in the third quartile of the competitive
companies.
In establishing salaries for executive officers, the Committee considered the
Company's performance, individual performance and experience and the chief
executive's recommendations without assigning relative weight to them, though
the most important factor was the committee members' subjective judgments about
the appropriate level of salary to motivate and reward individual executives.
The salaries for the five highest paid officers of the Company, including the
chief executive officer, are as follows:
<TABLE>
<CAPTION>
NAME 1992 SALARY 1993 SALARY
---- ----------- -----------
<S> <C> <C>
John J. Curley..................................... $800,000 $800,000
Douglas H. McCorkindale............................ 650,000 650,000
Gary L. Watson..................................... 400,000 420,000
Cecil L. Walker.................................... 305,000 320,000
Thomas Curley...................................... 290,000 305,000
</TABLE>
Although it is the Committee's view that salary increases were merited for
Mr. Curley and Mr. McCorkindale, again in 1993 they refused to accept
increases, as a way to signal fiscal conservatism and cost containment, and the
Committee reluctantly honored their request. Mr. Curley and Mr. McCorkindale
have employment contracts described more fully on pp. 15 and 16. The contracts
provide for minimum salary levels listed above but had no other impact on the
Committee's deliberations.
EXECUTIVE INCENTIVE BONUS PLAN: TO MOTIVATE YEAR-TO-YEAR.
Annual bonuses paid under the Executive Incentive Plan serve to drive
performance, motivate executive officers and reward them for good performance.
Similar to the base salary, the goal of the Executive Incentive Plan is to
reward higher performing operating units and individuals with a greater
percentage of the total bonus fund available. Bonus amounts can be and are
quite volatile. Bonuses are determined by an individual performance rating that
is applied to a potential bonus range, established as a percentage of salary.
The bonuses paid to executive officers for services in 1993 were determined
on the basis of individual performance in the areas of profit, product and
people and, depending on the executive's responsibilities, on the performance
of the executive's business unit or the overall performance of the Company.
First, an evaluation of division and operating unit performance was made and
the available bonus fund was allocated among the divisions and operating units.
Then, individual bonus amounts were determined based on performance evaluations
conducted by senior management. The Committee's review of the bonuses was
subjective, based on their knowledge of the Company, their regular contact with
the executives throughout the year and a review of performance, but no relative
ranking of various factors was applied.
8
<PAGE>
In furtherance of the Committee's goal of increasing the ownership of Gannett
Common Stock by key executives, 25% of the bonuses for 1993 were paid to them
in the form of Gannett Common Stock. The pre-tax value of the bonuses awarded
to the five highest paid officers of the Company are as follows:
<TABLE>
<CAPTION>
1992 BONUS 1993 BONUS
------------------- -------------------
CASH GCI SHARES CASH GCI SHARES
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
John J. Curley..................... $500,000 0 $375,000 2,294
Douglas H. McCorkindale............ 450,000 0 337,500 2,064
Gary L. Watson..................... 210,000 0 187,500 1,147
Cecil L. Walker.................... 150,000 0 135,000 825
Thomas Curley...................... 140,000 0 131,250 803
</TABLE>
As noted under Base Salaries, above, although it is the Committee's view that
increased bonuses were earned by Mr. Curley and Mr. McCorkindale, again this
year they refused to accept increases, and the Committee reluctantly honored
their request.
LONG-TERM STOCK INCENTIVE PLAN: TO PROMOTE LONG-TERM GROWTH.
Long-term stock awards under the 1978 Plan are based upon the performance of
Gannett Common Stock and are designed to align stockholders' and executives'
interests. They are granted to key executives who are in a position to make a
substantial contribution to the long-term success of the Company, in order to
promote the long-term objectives of the Company. These stock awards may grow in
value over time and for that reason represent compensation which is attributed
to service over a period of years.
It is the Committee's view that executive officers should benefit together
with shareholders as the Company's stock increases in value. Stock awards
successfully focus the executives' attention on managing the Company from the
perspective of an owner with an equity stake in the business.
There are two kinds of long-term stock awards: non-qualified stock options
and stock incentive rights ("SIRs"). A non-qualified stock option is the right
to purchase shares of Common Stock of the Company within a fixed period of time
(typically eight years) at the fair market value on the date of grant. Stock
incentive rights are the right to receive shares of Common Stock of the Company
conditioned only on continued employment throughout a specified period
(typically four years).
The Committee decides whether to grant individual long-term stock awards, and
the amount of the awards. Long-term stock awards are based on the grade level
of the executive, after an annual examination of the competitive marketplace.
The Company evaluated the competitive marketplace by examining the companies
included in the performance graph and a Towers Perrin Media Survey compiled
from data for 20 media companies. As is the case with annual bonuses, the
Committee relies in large part on the recommendations of senior management as
to the appropriate level of individual awards to lower level executives.
Long-term awards are not automatically awarded to each executive each year.
Awards are based on past and expected performance as subjectively evaluated by
management in making recommendations and by the Committee in approving them.
Executives who can more directly influence the overall performance of the
Company are the principal recipients of long-term awards.
In 1993, the Company discontinued awards of stock incentive rights to 18
officers and other key executives, including the Company's two senior officers,
and transferred the value of those awards to options. The Committee believes
that stock option awards create a greater incentive for key executives because
any value achieved from the awards reflects an increase both in shareholder
value and in executive compensation.
9
<PAGE>
The following chart shows the number of stock options and stock incentive
rights awarded to the five highest paid officers of the Company, including the
chief executive officer:
<TABLE>
<CAPTION>
1992 1993
-------------- ------------
NAME OPTIONS SIRS OPTIONS SIRS
---- ------- ------ ------- ----
<S> <C> <C> <C> <C>
John J. Curley................................. 100,000 12,000 125,000 0
Douglas H. McCorkindale........................ 75,000 8,000 100,000 0
Gary L. Watson................................. 21,000 3,000 30,490 0
Cecil L. Walker................................ 8,000 1,500 13,300 0
Thomas Curley.................................. 5,500 1,200 13,300 0
</TABLE>
CHIEF EXECUTIVE OFFICER COMPENSATION:
As it does each year, the Committee thoroughly reviewed the compensation of
John J. Curley, Chairman, President and Chief Executive Officer of the Company
and its highest compensated officer. In determining Mr. Curley's compensation,
the Committee reviewed the performance of the Company and noted increases in
earnings per share, stock price, operating income as a percent of sales, return
on equity and market value. For the 1993 fiscal year, earnings per share
increased 13.3%, from $2.40 to $2.72 (excluding the impact of non-recurring
accounting adjustments). Operating income as a percent of sales increased from
17.8% to 19.6%, and return on equity increased from 22.1% to 22.8%. In
addition, the Company's stock price, excluding dividends, increased 12.8%, from
$50.75 to $57.25, the S&P Publishing/Newspaper Index increased 13% and the S&P
500 Index increased 7%. Cumulatively over the last five years, the Company's
stock price, excluding dividends, increased 85%, the S&P Publishing/Newspaper
Index increased 49% and the S&P 500 increased 97%. In 1993, the Company's total
market value increased 15%, from $7.3 billion to $8.4 billion. Also, in 1993,
the Company increased its quarterly dividend from $.32 per share to $.33 per
share. Each of these factors was subjectively evaluated by the Committee
members without giving particular weight to any one or more factors.
To assess the competitiveness of Mr. Curley's compensation, the Committee
surveyed the compensation levels of chief executive officers of five
competitors, all of which are included in the S&P Publishing/Newspaper Index,
and of 15 companies with revenues comparable to that of the Company. Mr.
Curley's compensation was above the median for the chief executive officers
surveyed; the Committee decided that the level of Mr. Curley's compensation is
appropriate given the Company's size, its performance and the industries in
which it operates. As a general matter, media industry companies, particularly
broadcasting companies, tend to compensate executives at a higher level than
industrial or commercial enterprises. In particular, the Committee noted that
the Company's revenue is significantly larger than four of the five competitors
surveyed and its net income and earnings per share set new records.
Since becoming Chairman in 1989, Mr. Curley has asked that his cash
compensation (salary and bonus) not be increased, notwithstanding a strong
comparative performance record for the Company. As reported previously, the
Committee believed that Mr. Curley's performance during a difficult economy
warranted an increase in salary and bonus, but the Committee deferred to his
request and did not increase his salary or bonus during that time.
As noted above, Mr. Curley made the same request in December 1993 and the
Committee reluctantly agreed.
In recognition of Mr. Curley's superior performance and consistent with the
Committee's goal of increasing the ownership of Gannett Common Stock by key
officers as discussed above, the Committee awarded Mr. Curley 125,000 stock
options in December 1993. It is the Committee's view that the award of these
stock options is an effective way of compensating Mr. Curley for continued
superior performance, since the value of any future compensation from these
stock options will be directly linked to increases in shareholder value. Unless
the price of the Company's stock increases, his stock options will be
valueless.
10
<PAGE>
In short, the Committee believes that the Company's performance, Mr. Curley's
performance and the competitive market warrant the compensation package
approved for him.
Executive Compensation Committee
Thomas A. Reynolds, Jr., Chair
Peter B. Clark
Dolores D. Wharton
11
<PAGE>
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the performance of the Company's Common Stock
during the period January 1, 1989 to December 31, 1993 with the S&P 500 Index
and the S&P Publishing/Newspaper Index.
The S&P 500 Index includes 500 U.S. companies in the industrial,
transportation, utilities and financial sectors and is weighted by market
capitalization. The S&P Publishing/Newspaper Index, which also is weighted by
market capitalization, includes Gannett Co., Inc., Dow Jones & Company, Inc.,
Knight-Ridder, Inc., The New York Times Company, The Times Mirror Company, and
Tribune Company.
The graph depicts the results of investing $100 in the Company's Common
Stock, the S&P 500 Index and the S&P Publishing/Newspaper Index at closing
prices on December 31, 1988. It assumes that dividends were reinvested
quarterly with respect to the Company's Common Stock and monthly with respect
to the S&P 500 Index and the S&P Publishing/Newspaper Index.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gannett Co. Inc. 100 125.31 107.64 139.67 160.05 185.15
- ---------------------------------------------------------------------------------------------
S&P Publishing/Newspaper
Index 100 118.87 95.26 115.35 128.99 149.39
- ---------------------------------------------------------------------------------------------
S&P 500 Index 100 131.67 127.60 166.47 179.15 197.21
- ---------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation paid to the CEO and
the four most highly compensated executive officers of the Company, for
services rendered to the Company and its subsidiaries over the past three
fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(3)
------------------------------- ---------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
COMPEN- STOCK OPTIONS/ ALL OTHER
NAME AND SALARY BONUS(1) SATION(2) AWARDS(4) SARS COMPENSATION(5)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
------------------ ---- ------- -------- --------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Curley.............. 1993 800,000 500,000 8,866 0 125,000 42,586
(Chairman, President &
CEO) 1992 800,000 500,000 9,980 616,500 100,000 42,014
537,000 75,000
1991 800,000 500,000 11,401 541,875 60,000 41,228
Douglas H. McCorkindale..... 1993 650,000 450,000 8,828 0 100,000 44,066
(Vice Chairman & Chief 1992 650,000 450,000 15,083 411,000 75,000 41,509
Fin. & Admin. Officer) 358,000 50,000
1991 650,000 450,000 3,702 180,625 30,000 38,751
Gary L. Watson.............. 1993 420,000 250,000 8,179 0 30,490 29,627
(President/Newspaper 1992 400,000 210,000 7,542 154,125 21,000 27,261
Division) 134,250 17,500
1991 375,000 190,000 5,496 137,275 21,000 24,111
Cecil L. Walker............. 1993 320,000 180,000 4,817 0 13,300 21,740
(President/Broadcasting 1992 305,000 150,000 4,824 77,063 8,000 20,136
Division) 67,125 7,500
1991 290,000 130,000 3,824 65,025 9,000 17,889
Thomas Curley(/6/).......... 1993 305,000 175,000 3,600 0 13,300 13,476
(President & Publisher 1992 290,000 140,000 3,600 61,650 5,500 12,385
USA TODAY) 53,700 5,000
1991 275,000 130,000 3,849 57,800 7,000 10,969
</TABLE>
- --------
(1) Bonus awards may be in the form of cash, deferred cash or shares of
Gannett Common Stock. In 1993, bonuses to executive officers were paid 25%
in Gannett Common Stock and 75% in cash.
(2) This column includes (a) amounts paid by the Company under the Medical
Reimbursement Plan and (b) amounts paid in cash to reimburse the five
named officers for the tax impact of certain perquisites.
(3) Under the Company's 1978 Executive Long-Term Incentive Plan, stock awards
in the form of stock options, performance bonus units, option surrender
rights and stock incentive rights ("SIRs") may be granted to key
management personnel who are in a position to make a substantial
contribution to the long-term success of the Company. Prior to December
1992, the Company's Executive Compensation Committee made annual awards of
SIRs and stock options effective at the beginning of the fiscal year. In
December 1992, the Committee changed that practice and began making annual
awards effective at the end of the fiscal year for the succeeding year.
This change resulted in two awards in fiscal 1992, one made at the
beginning of the year, for 1992, and one made at the end of the year, for
1993. This represented a timing matter only and did not result in the
payment of double long-term awards. Consistent with that practice, the
annual long-term award for 1994 was made at the end of the 1993 fiscal
year. The annual long-term award for 1995 will be made at the end of the
1994 fiscal year.
(4) Reported in this column are SIRs awarded to the five named officers and
valued at the market price of the underlying stock on the date of grant.
SIRs are rights to receive shares of Common Stock, without any payment to
the Company, conditioned only on continued employment throughout a
specified period, typically four years. During the incentive period, the
holder of SIRs is entitled to receive from the Company cash payments equal
to the cash dividend the Company would have paid to such holder had he or
she owned the shares of Common Stock issuable under the SIRs. In 1993, the
Company discontinued the award of SIRs to the named officers and adjusted
the award of stock options. The five named officers respectively held in
the aggregate the following SIRs which were valued at the end of the 1993
fiscal year as follows: John Curley--39,000 shares valued at $2,213,250;
Mr. McCorkindale--21,000 shares valued at $1,191,750; Mr. Watson--9,800
shares valued at $556,150; Mr. Walker--4,800 shares valued at $272,400;
and Thomas Curley--4,000 shares valued at $227,000.
13
<PAGE>
(5) This column includes the full amount of the annual premiums paid by the
Company on life insurance policies which are individually owned by the five
named officers, as follows: John Curley--$39,847; Mr. McCorkindale--
$41,329; Mr. Watson-- $26,923; Mr. Walker--$19,321; and Thomas Curley--
$10,735. The column also includes the fair market value of Gannett Common
Stock received by each of the five named officers as matching contributions
from the Company under its 401(k) plan. The individual values of these
matching contributions are as follows: John Curley--$2,739; Mr.
McCorkindale--$2,737; Mr. Watson--$2,704; Mr. Walker--$2,419; and Thomas
Curley--$2,741.
(6) Thomas Curley and John Curley are brothers.
The following companion tables to the Summary Compensation Table list the
grants of stock options made during the 1993 fiscal year to the named executive
officers, their stock option exercises in 1993 and the aggregate options they
held at the end of 1993.
OPTION GRANT TABLE
The following Option Grant Table includes columns designated "Potential
Realizable Gain." The calculations in those columns are based on hypothetical
5% and 10% growth assumptions proposed by the Securities and Exchange
Commission. There is no way to anticipate what the actual growth rate of the
Company's stock will be.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(/1/)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
NUMBER OF
SECURITIES POTENTIAL REALIZABLE VALUE
UNDERLYING % OF TOTAL AT ASSUMED ANNUAL RATES
OPTIONS/ OPTIONS/ EXERCISE OF STOCK PRICE APPRECIATION
SARS SARS GRANTED TO OR BASE FOR OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10%($)
---- ---------- --------------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Curley.......... 125,000 16.41 $55.50 12/14/01 3,312,347 7,933,647
Douglas H. McCorkindale. 100,000 13.12 $55.50 12/14/01 2,649,878 6,346,918
Gary L. Watson.......... 30,490 4.00 $55.50 12/14/01 807,948 1,935,175
Cecil L. Walker......... 13,300 1.75 $55.50 12/14/01 352,434 844,140
Thomas Curley........... 13,300 1.75 $55.50 12/14/01 352,434 844,140
</TABLE>
The total potential gain for all five named executives over the eight-year
term of the stock options would be 19/100 of one percent of the total gain in
the Company's stock value. If the stock value were to appreciate 5% over the
eight-year term of the options, the value of all shares owned by the Company's
shareholders would grow from $8.2 billion to $12.1 billion, a gain of $3.9
billion. If it were to appreciate 10%, the value of all outstanding shares
would grow from $8.2 billion to $17.5 billion, a gain of $9.3 billion.
(1) Reported in this table are stock options awarded to the five named
officers. The Company does not award Stock Appreciation Rights ("SARs"),
which typically allow the recipient to share in any increase in value of a
specified amount of a company's stock without acquiring ownership of such
stock nor the rights associated with stock ownership. Pursuant to the 1978
Executive Long-Term Incentive Plan, stock options vest in 25% increments
each year after the date of grant. Accordingly, 25% of an award of stock
options made in the last fiscal year may be exercised on December 14, 1994,
50% on December 14, 1995, and 75% on December 14, 1996. On December 14,
1997, the stock options awarded last year become exercisable in full. For
each stock option granted last year, an option surrender right ("OSR") was
granted in tandem. In the event of a change in control of the Company, the
holder of an OSR has the right to receive the difference between the
exercise price of the accompanying stock option and the fair market value
of the underlying stock at the time of the exercise of the OSR. Upon the
exercise of an OSR or a stock option, the accompanying stock option or OSR
(as the case may be) is automatically cancelled.
14
<PAGE>
As of December 26, 1993, 2,805,985 shares of Gannett Common Stock were
available for grants under the 1978 Executive Long-Term Incentive Plan. As of
that date, there were 3,041,392 options outstanding with an average exercise
price of $45.37. The expiration dates range from January 10, 1994 to December
14, 2001.
STOCK OPTION TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
SHARES (#) ($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Curley.......... 30,000 737,910 231,250 298,750 3,966,875 2,015,625
Douglas H. McCorkindale. 0 0 122,500 215,000 1,999,843 1,267,968
Gary L. Watson.......... 16,850 388,781 31,375 73,615 443,530 545,580
Cecil L. Walker......... 10,970 180,447 11,600 31,300 149,687 233,562
Thomas Curley........... 5,000 83,125 23,835 26,175 429,670 175,483
</TABLE>
EMPLOYMENT CONTRACTS, RETIREMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Company has a Transitional Compensation Plan (the "Plan") which provides
termination benefits to key executives of the Company and its subsidiaries who
are actually or constructively terminated without cause within two years
following a change in control of the Company. Participants who elect to
terminate their employment during the 30-day period following the first
anniversary of the change in control will also qualify for benefits under the
Plan. A participant entitled to compensation under the Plan will receive (i)
all amounts to which the participant is entitled through the date of
termination under any compensation arrangement or benefit plan; (ii) a
severance payment which will equal two to three years' salary and bonus
compensation, depending on years of prior service; (iii) life insurance and
medical benefits for the same period; (iv) the extra retirement plan benefits a
participant would have received had his or her employment continued for such
two-to-three-year period; and (v) an amount that, after income and additional
excise taxes, will equal the amount of any excise tax imposed on the severance
payment by Section 4999 of the Internal Revenue Code of 1986. All executive
officers included in the Compensation Tables are covered by the Plan.
The Company has a contract with John Curley that provides for his employment
as Chairman, President and Chief Executive Officer, or in such other senior
executive position as mutually agreed upon, until the earlier of his normal
retirement date or four years after notice of termination. During the period of
his employment, Mr. Curley will receive an annual salary of $800,000 per annum
or such greater amount as the Board of Directors shall determine and an annual
bonus if the Board of Directors so determines. In the event that Mr. Curley's
employment is terminated without cause, he shall be entitled to receive his
annual salary for the balance of the term, subject to his fulfilling certain
specified obligations. The contract also allows Mr. Curley to terminate his
employment with the Company if there has been a change in control of the
Company, as defined in detail in the contract. In the event that, within 24
months after a change in control, he elects to terminate his employment or in
the event his employment is terminated by the Company for other than cause
during that period, he will be entitled to the following: (i) continued payment
through the contract term of his salary at the higher of the annual rate in
effect on the date of the change in control, or the rate in effect on the date
his employment is terminated; (ii) continued payment for the period through the
contract term of an annual bonus at a rate equal to the highest annual bonus
paid to him with respect to the three years preceding termination;
15
<PAGE>
(iii) continuation of insurance and similar benefits; (iv) payment on a monthly
basis of a supplemental retirement benefit to make up the difference between
his actual payments under the Company's retirement plans and the payments that
would have been made under the plans if he had remained an employee through the
contract term; (v) any Performance Units and Stock Incentive Rights previously
awarded to Mr. Curley under the 1978 Executive Long-Term Incentive Plan (the
"1978 Plan") shall be deemed to have been earned by him; (vi) to the extent
permissible under the 1978 Plan or other applicable plans, he also shall be
entitled immediately to exercise in full, or to surrender and receive the value
of, all stock options or related alternate appreciation rights under those
plans; and (vii) receipt of a "gross-up" payment with respect to income and
excise taxes payable by Mr. Curley as a result of the foregoing benefits. The
post-employment benefits and payments described in this paragraph are in
addition to Mr. Curley's benefits under the Gannett Retirement Plan and Gannett
Supplemental Retirement Plan. The Tax Reform Act of 1984 denies an income tax
deduction to a company for payments that are contingent upon a change in
control if those payments have a present value of over 300% of the employee's
average compensation for the last five years and are made pursuant to an
agreement, like the employment agreements described in this Proxy Statement,
entered into after June 14, 1984. Senior company executives, including Mr.
Curley, are participants in the Company's Transitional Compensation Plan
described above. This plan provides benefits in the event of a change in
control comparable to those under Mr. Curley's employment agreement. Mr.
Curley's participation in that plan would continue after the expiration of his
employment contract.
The Company has a contract with Mr. McCorkindale that provides for his
employment as Vice Chairman and Chief Financial and Administrative Officer or
in such other senior executive position as mutually agreed upon, until the
earlier of his normal retirement date or four years after notice of
termination. During the period of his employment, Mr. McCorkindale will receive
an annual salary of $650,000 or such greater amount as the Board of Directors
shall determine and an annual bonus if the Board of Directors so determines. In
the event that Mr. McCorkindale's employment is terminated without cause, he
shall be entitled to receive his annual salary for the balance of the term,
subject to his fulfilling certain specified obligations. His contract also
provides for arrangements in the event of a change in control of the Company
comparable to those described above. Mr. McCorkindale also is a participant in
the Company's Transitional Compensation Plan discussed above.
In the event of a change in control of the Company, as defined in the 1978
Plan, options and alternate rights will be immediately exercisable in full and
stock incentive rights will be deemed to have been earned by Plan participants.
In addition, the 1978 Plan provides for option surrender rights to be granted
in tandem with stock options. In the event of a change in control, option
surrender rights permit the employee to receive a payment equal to 100% of the
spread between the option exercise price and the highest price paid in
connection with the change in control. If option surrender rights are
exercised, the related options and performance units are cancelled.
PENSION PLANS
The Company has a defined benefit pension plan, the Gannett Retirement Plan,
in which its officers participate, which is qualified under Section 401 of the
Internal Revenue Code, and an unfunded, non-qualified plan, the Gannett
Supplemental Retirement Plan. The annual pension benefit under the plans, taken
together, is largely determined by the number of years of employment multiplied
by a percentage of the participant's final average earnings (during the highest
five consecutive years). The Internal Revenue Code places certain limitations
on the amount of pension benefits that may be paid under qualified plans. Any
benefits payable in excess of those limitations will be paid under the Gannett
Supplemental Retirement Plan.
The table below may be used to calculate the approximate annual benefits
payable at retirement at age 65 under the Gannett Retirement Plan and the
Gannett Supplemental Retirement Plan to
16
<PAGE>
individuals in specified remuneration and years-of-service classifications
(subject to a reduction equal to 50% of the Social Security Primary Insurance
Amount payable).
PENSION TABLE
<TABLE>
<CAPTION>
FINAL 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
AVERAGE OF CREDITED OF CREDITED OF CREDITED OF CREDITED OF CREDITED
EARNINGS SERVICE SERVICE SERVICE SERVICE SERVICE
-------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
400,000 120,000 160,000 200,000 214,000 228,000
500,000 150,000 200,000 250,000 267,500 285,000
600,000 180,000 240,000 300,000 321,000 342,000
700,000 210,000 280,000 350,000 374,500 399,000
800,000 240,000 320,000 400,000 428,000 456,000
900,000 270,000 360,000 450,000 481,500 513,000
1,000,000 300,000 400,000 500,000 535,000 570,000
1,500,000 450,000 600,000 750,000 802,500 855,000
</TABLE>
The compensation included in the Compensation Tables under salary and bonuses
qualifies as remuneration for purposes of the Gannett Retirement Plan and the
Gannett Supplemental Retirement Plan. The credited years of service as of the
end of the last fiscal year for the five executive officers named in the
Compensation Tables are as follows: John Curley--24, Mr. McCorkindale--22, Mr.
Watson--24, Mr. Walker--21, and Thomas Curley--21.
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS
The Company's independent auditors are Price Waterhouse, independent
accountants. At the Annual Meeting, the shareholders will consider and vote
upon a proposal to elect independent auditors for the Company's fiscal year
ending December 25, 1994. The Audit Committee of the Board of Directors has
recommended that Price Waterhouse be re-elected as independent auditors for
that year. The Board of Directors unanimously recommends that shareholders vote
FOR this proposal. Proxies solicited by the Board of Directors will be voted
FOR the foregoing unless otherwise indicated.
Representatives of Price Waterhouse will be present at the Annual Meeting to
make a statement, if they wish, and to respond to appropriate questions from
shareholders.
PROPOSAL 3--SHAREHOLDER PROPOSAL CONCERNING EXECUTIVE
COMPENSATION REVIEW
The Province of St. Joseph of the Capuchin Order, 1016 N. Ninth Street,
Milwaukee, Wisconsin 53233, beneficial owner of 190 shares of Gannett Common
Stock, The Literacy Society of St. Catharine of Siena, St. Catharine, Kentucky
40061, beneficial owner of 4,000 shares of Gannett Common Stock, and John and
Peggy Law, 830 Los Trancos Road, Portola Valley, California 94025, beneficial
owners of 200 shares of Gannett Common Stock, have given notice that they
intend to present the following Proposal at the Annual Meeting:
"WHEREAS: Business Week editorialized (4/26/93): "The figures for executive
pay are simply astonishing." We believe financial, social, and
environmental criteria should be considered in fixing compensation packages
for top corporate officers. Too often top executives receive considerable
increases in compensation packages, even when corporate financial
performance is poor and stockholders watch dividends slip and stock prices
drop.
17
<PAGE>
--Executive compensation, even when it decreases in a bad year, is usually
not proportional to a year's poor returns and the financial burden borne
by stockholders. Professor Graef Crystal, a national authority on
executive compensation, argues that CEOs are paid "hugely in good years,"
and "if not hugely, then merely wonderfully in bad years."
--Business Week reported (May 4, 1992) in its "Executive Compensation
Scoreboard" that, while John J. Curley, Chairman, President and CEO of our
Company did not receive any percentage change in his compensation in 1991
from 1990, the rating of his pay for shareholder return was a "4" on a
scale of 1--5 with "5" being the lowest. Similarly, Douglas H.
McCorkindale, Vice-Chairman and Chief Financial Officer received a 5%
increase in his compensation.
"We believe our Company is progressive in its affirmative action program,
includes women and people of color on its Board, and is moving in the area
of recycling. However, its record is poor in its refusal to hold cigarette
companies accountable for their own advertising code vis-a-vis in our
newspapers and billboards. For instance, we readily run ads declaring
Newport is "Alive with Pleasure," and yet report in our papers that every
cigarette takes 7 minutes from a smoker's life, adding up to 5,000,000
years of potential life Americans lose to cigarettes annually. Since our
billboards began featuring "Cool Joe Camel" youth smoking Camels increased
from -.5% [sic] to 33% in four years.
RESOLVED: Shareholder requests that the Board institute an Executive
Compensation Review, and prepare a report available to shareholders by
October, 1994 with the results of the Review, along with any recommended
changes in practice. The Review shall cover pay, benefits, perks, stock
options and special arrangements in the compensation packages for all the
company's top officers."
The following statement has been submitted in support of this Proposal:
"Recently Business Week concluded an editorial on "Executive Pay: It
Doesn't Add Up:" If Corporate America doesn't show some restraint on
executive compensation, a populist wave may soon push politicians to take a
crack at it." This Report will show our Company's sincerity on this issue.
We recommend the Report review:
1. Ways to link executive compensation more closely to financial
performance with proposed criteria and formulae.
2. Ways to link compensation to social and environmental performance
(e.g. lower base pay with incentives given for meeting or surpassing social
and environmental standards, especially as they affect public health).
3. Ways to link financial viability of the company to long-term social
health of the company's consumers and environmental sustainability.
4. Comparison of compensation packages for officers and the lowest and
average wages for the company's employees."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The Board believes that, given the record of the Company in compensation
practices, in compensation disclosure and in social and environmental policies,
this proposal is wholly misplaced as it unfairly implies deficiencies in the
Company's policies where the record demonstrates otherwise.
The Company's executive compensation policies and practices are thoroughly
explained under the section entitled "Compensation of Gannett Management,"
including the report of the Executive Compensation Committee of the Board of
Directors. As that discussion demonstrates, there is a direct and beneficial
linkage between Company performance and executive compensation. During the last
two years, the Company's executive officers have received only modest increases
in compensation while earnings per share increased 36% from $2.00 in 1991 to
$2.72 in 1993 and quarterly dividends
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increased from $.31 in 1991 to $.33 in 1993. In fact, during that same time
period, the top two executives have not taken any raises in salary or bonus.
The Company has been a leader in compensation review and disclosure over the
past several years, including detailed disclosure of its policies and practices
before the Securities and Exchange Commission implemented its requirements on
disclosure of compensation. The report on pages 6 through 17 is an exhaustive
statement on the Company's compensation policies and therefore a shareholder
resolution calling for a further report seems superfluous.
In addition, the Company has been a leader in numerous social policy areas,
including programs encouraging women's rights and affirmative action, as even
the proponent agrees. Moreover, the Company has a very responsible record in
connection with environmental matters, including a leadership role in the use
of recycled paper in its publishing operations.
The proponent notes that often executives receive increases in compensation
even when corporate financial performance is poor. However, the Company's
record shows that its financial performance has been excellent while the salary
and bonus for its two top executives has remained flat, at their request, and
compensation for its other executives has increased on average only 4.8%. The
Company believes that it is unfair and misleading for the proponent to group
our compensation policies with those of others who increase salary when
financial performance is stagnant or decreasing.
By quoting an April 23, 1993 Business Week editorial the proposal seems to
suggest that the editorial supports this proposal on compensation. There is
nothing in the editorial that seeks to link compensation to social and
environmental performance in the way that the proponent suggests. It is
somewhat baffling how to assess the social health of the Company's consumers in
the context of financial compensation issues. We are not aware of any
compensation policy which measures shareholder value on the basis of social
health issues. Indeed, the diversity of our consumers and advertisers and the
diversity of editorial policy at our newspapers reflect such a broad range of
views on what constitutes "social health" as to render moral judgments by the
Company on these issues to be divisive, to the detriment of shareholders.
Finally, we note that the Province of St. Joseph of the Capuchin Order has
come before the shareholders of the Company in the last two annual meetings and
proxy statements expressing its views with respect to cigarette advertising.
The Company has published these proposals and distributed them to its
shareholders and provided an ample opportunity for such proponent to speak on
these issues at both annual meetings. However, the proposals at the last two
annual meetings were defeated by an overwhelming majority of votes, such that
even the Securities and Exchange Commission rules which favor shareholder
proposals provide that such proponent is no longer entitled to present its
proposals on cigarette advertising again. Nevertheless, it has chosen to raise
those issues once again in the context of the compensation proposal, thereby
attempting to do indirectly what it would not be permitted to do directly. We
were somewhat surprised and dismayed that the Province of St. Joseph would
undertake a technique of this type.
The Board of Directors believes that the Company's executive compensation
structure is meeting its goals of linking compensation to success in achieving
annual and long-term objectives. We believe the discussion of these policies
set forth in the executive compensation sections of this proxy statement amply
demonstrates that linkage, and that the proponent's proposal would redirect
some of those policies in a manner much less focused on shareholder value.
Proxies solicited by the Board of Directors will be voted AGAINST the
adoption of the foregoing Proposal unless otherwise indicated. The affirmative
vote of a majority of the shares present in person or by proxy and entitled to
vote at the meeting is required for approval of this Proposal. If a
shareholder, present in person or by proxy, abstains from voting on this
Proposal, the shareholder's shares will not
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be voted. An abstention from voting on this Proposal has the same legal effect
as a vote "against" the Proposal. If a shareholder holds his shares in a
broker's account and has given specific voting instructions, the shares will be
voted in accordance with those instructions. If no voting instructions are
given, the shareholder's shares will not be voted with respect to this Proposal
and will not be counted in determining the number of shares entitled to vote on
this Proposal.
PRINCIPAL HOLDERS OF COMMON STOCK
As of March 4, 1994, the only person or group known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of Gannett Common
Stock was The Capital Group, Inc., 333 South Hope Street, Los Angeles,
California 90071. The Capital Group, Inc. is the parent company of six
investment management companies. As of December 31, 1993, The Capital Group,
Inc., through these operating companies, exercised investment discretion over
various institutional accounts which held 8,259,590 shares of Gannett Common
Stock, which then constituted 5.63% of the total outstanding shares.
In February, 1994, The Capital Group, Inc. filed a report with the Securities
and Exchange Commission indicating that the shares were held solely for
investment purposes in the ordinary course of business and not for the purpose
or effect of changing or influencing control of the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present any matter for action at the Annual Meeting other than as set
forth in the Notice of Annual Meeting. If any other matters properly come
before the meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
In order to be eligible for inclusion in the proxy materials for the
Company's 1995 Annual Meeting of Shareholders, any shareholder proposal to take
action at such meeting must be received at the Company's principal executive
offices by November 18, 1994.
The cost of the solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by mail, certain of the officers and
employees of the Company, without extra remuneration, may solicit proxies
personally or by telephone, telegraph or cable. The Company will also request
brokerage houses, nominees, custodians and fiduciaries to forward soliciting
materials to the beneficial owners of stock held of record and will reimburse
such persons for forwarding such materials. In addition, Georgeson & Company,
Inc., New York, New York, has been retained to aid in the solicitation of
proxies at a fee of $10,000, plus out of pocket expenses.
Copies of the 1993 Annual Report have been mailed to shareholders. Additional
copies may be obtained from the Secretary, Gannett Co., Inc., 1100 Wilson
Boulevard, Arlington, Virginia 22234.
March 18, 1994
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GANNETT CO., INC
P
This Proxy is Solicited on Behalf of the Board of Directors
Annual Meeting of Shareholders-May 3, 1994
R
The undersigned hereby appoints John J. Curley and Douglas H.
O McCorkindale or either of them, attorneys and proxies each with the power
of substitution to represent the undersigned at the Annual Meeting of
Shareholders of the Company, to be held on May 3, 1994 and at any
X adjournment or adjournments thereof, with all the power that the
undersigned would possess if personally present, and to vote all shares of
stock that the undersigned may be entitled to vote at said meeting, as
Y designated on the reverse, and in accordance with their best judgement in
connection with such other business as may come before the meeting.
Nominees for Directors: Rosalynn Carter, Thomas A. Reynolds, Jr.,
Carl T. Rowan, Dolores D. Wharton
Please cast your votes on the reverse side. The Board of Directors
recommends a vote FOR Proposals 1 and 2 and AGAINST Proposal 3. To vote in
accordance with the Board of Directors' recommendations just sign the
reverse side; no boxes need to be checked. Unless marked otherwise, this
proxy will be voted in accordance with the Board of Directors'
recommendations.
SEE REVERSE
SIDE
<PAGE>
/X/ Please mark your
vote as in this
example.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. VOTE FOR / / VOTE / / 2. Proposal to elect / / / / / /
all nominees WITHHELD Price Waterhouse
listed. from all as the Company's
nominees. Auditor.
For, except vote withheld from the following nominee(s).
- --------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST Proposal 3.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Shareholder Proposal / / / / / /
concerning Executive
Compensation
Review.
- --------------------------------------------------------------------------------
I plan to attend the meeting / /
PLEASE sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
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SIGNATURE(S) DATE
<PAGE>
APPENDIX
OMITTED GRAPHIC OR IMAGE MATERIAL
The performance graph required under Item 402(1) of Regulation S-K,
which compares the performance of the Company's Common Stock with two indices,
is omitted from the electronically-filed Proxy Statement. A description of the
data in the graph is contained in chart form on page 12 of the Proxy
Statement.
