<PAGE> 1
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Gannett Co., Inc.
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<PAGE> 2
[GANNETT LOGO]
JOHN J. CURLEY
Chairman, CEO
and President
March 26, 1997
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 6, 1997,
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 three
directors and for the election of Price Waterhouse as the Company's independent
auditors for 1997. These matters are discussed in detail in the attached proxy
statement.
Your Board of Directors believes these proposals are in the best interests
of the Company and its shareholders and recommends that you vote for them.
It is important that your shares be represented at the meeting whether or
not you plan to attend. Please sign and date the enclosed proxy card and return
it in the envelope provided.
An admission ticket is required for attendance at the Annual Meeting.
Please see page 1 of the proxy statement for instructions about obtaining
tickets.
Thank you for your continued support.
Cordially,
/s/ JOHN J. CURLEY
------------------
John J. Curley
1100 Wilson Boulevard, Arlington, VA 22234 (703) 284-6000
<PAGE> 3
[GANNETT LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1997
------------------------
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 6, 1997 for the following purposes:
(1) to elect three directors; and
(2) to act upon a proposal to elect Price Waterhouse as the Company's
independent auditors for the 1997 fiscal year.
The Board of Directors has set the close of business on March 14, 1997 as
the record date to determine the 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 26, 1997
<PAGE> 4
[GANNETT LOGO]
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Gannett for the Annual Meeting of
Shareholders to be held on May 6, 1997.
The Board fixed March 14, 1997 as the record date. Shareholders of record
on that date may attend and vote at the Annual Meeting. On that date, there were
141,492,862 shares of Common Stock outstanding and entitled to vote. Each share
is entitled to one vote.
There generally has been sufficient space for interested shareholders to
attend the meeting. Since seating is limited, however, an admission ticket is
required. We will do our best to accommodate as many shareholders as the space
allows. We will provide each individual or institutional shareholder with up to
two admission tickets. Only you or your proxy are allowed to use your ticket(s).
If you are a shareholder of record, please check the appropriate box on your
proxy card, telling us you plan to attend the meeting and the number of tickets
you request, and return it in the enclosed return envelope. If you hold shares
through an intermediary, such as a bank or broker, and you plan to attend the
meeting, you will need to send a written request for ticket(s), along with proof
of share ownership, such as a bank or brokerage firm account statement or a
letter from the broker, trustee, bank or nominee holding your shares, confirming
ownership, to: Secretary, Gannett Co., Inc., 1100 Wilson Boulevard, Arlington,
VA 22234. Requests for admission tickets will be processed in the order in which
they are received and should be submitted promptly. If you decide not to attend
the meeting, please return your ticket(s) to the Secretary, Gannett Co., Inc. at
the above address.
Shares represented by proxies will be voted as directed on the proxy card
by the shareholder. Unless you direct otherwise, your shares will be voted for
the Board's nominees for director and for the election of auditors. If you send
in a proxy, you have the right to revoke it by another proxy bearing a later
date, by attending the meeting and voting in person, or by notifying the Company
before the meeting that you want to revoke it.
If you participate in the Company's Dividend Reinvestment or 401(k) Plans,
your Gannett stock in those plans may be voted on the proxy card accompanying
this Proxy Statement. If no instructions are given by you, shares held in the
Dividend Reinvestment Plan will not be voted. All shares in the 401(k) Plan for
which no instructions are received will be voted by the trustee in the same
proportion as shares for which the trustee receives instructions.
This Proxy Statement and the enclosed proxy card are being furnished to
shareholders on or about March 26, 1997.
<PAGE> 5
PROPOSAL 1--ELECTION OF DIRECTORS
YOUR BOARD
The Board of Directors is composed of 12 directors, but following the
retirements discussed below, its size will be reduced to 9 directors. The
By-laws of the Company provide that each director must own at least one thousand
shares of Gannett stock and each director owns at least 3,381 shares. The Board
is divided into three classes, as equal in number as possible. Toward this end,
following the retirements discussed below, effective on May 6, 1997, Josephine
Louis has been elected by the Board to fill the vacancy created by Dr. Brimmer's
retirement in the class of directors whose term ends at the 1998 Annual Meeting.
The vacancy created by this change in Mrs. Louis's former class of directors
will be eliminated so that, following the annual meeting, the Board will consist
of three classes with three directors in each class. At each Annual Meeting of
Shareholders, one class of directors is elected for a three-year term. The Board
of Directors held 6 meetings during 1996, and all of the directors attended at
least 75% of the total meetings of the Board and any committee on which they
served.
The Board of Directors conducts its business through meetings of the Board
and its committees. The Management Continuity Committee, the Executive
Compensation Committee and the Audit Committee are three of those committees.
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 1998 Annual Meeting, the Committee will consider any written suggestions
of shareholders received by the Secretary of the Company by January 28, 1998.
The Committee members are Meredith A. Brokaw, Chair, John J. Curley, and Drew
Lewis. This Committee met 4 times during 1996.
The Executive Compensation Committee makes recommendations concerning the
compensation and benefits of elected officers and senior executives and
administers the Company's executive incentive plans. The Committee members are
Thomas A. Reynolds, Jr., Chair, Stuart T. K. Ho, and Dolores D. Wharton. None of
the members of the Committee is an employee of the Company. This Committee met 6
times during 1996.
The Audit Committee reviews the Company's auditing practices and procedures
and recommends independent auditors to be elected by the shareholders. The Audit
Committee members are Stuart T. K. Ho, Chair, Andrew F. Brimmer, Drew Lewis,
Josephine P. Louis and Thomas A. Reynolds, Jr. None of the members of the
Committee is an employee of the Company. This Committee met 4 times during 1996.
NOMINEES
The Board intends to nominate the three persons named below for election
this year. All three nominees are currently directors. If they are elected,
their term will run until the Annual Meeting in 2000 or until their successors
are elected. The Company's By-laws provide that a director must retire on or
before the annual meeting following his or her 70th birthday or, in the case of
directors who are also employees, his or her 65th birthday. Andrew Brimmer
reached age 70 and Rollan Melton reached age 65 last year and will retire from
the Board at this meeting. Dolores Wharton will reach age 70 in 1997 and will
retire from the Board by the 1998 Annual Meeting. Rosalynn Carter also will
retire prior to this year's meeting.
The Board believes that all the nominees will be available and able to
serve as directors. If any nominee is unable to serve, the Board may decide to
do one of three things. The Board may recommend a substitute nominee, the Board
may reduce the number of directors to eliminate the vacancy, or the Board may
fill the vacancy later. The shares represented by all valid proxies may be voted
for the election of a substitute if one is nominated.
2
<PAGE> 6
The three 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 shares in a broker's account and has
given specific voting instructions, the shares will be voted as the shareholder
directed. If no instructions are given, under New York Stock Exchange rules the
broker may decide how to vote for the Board nominees.
The principal occupations and business experience of the nominees and of
the continuing directors are described below:
THE FOLLOWING HAVE BEEN NOMINATED FOR ELECTION AT THE 1997 ANNUAL MEETING
OF SHAREHOLDERS:
DREW LEWIS
Mr. Lewis, 65, is the former Chairman and Chief Executive Officer of Union
Pacific Corporation. He served as the United States Secretary of Transportation
from 1981 to 1983. He is a director of Union Pacific Resources Group Inc.,
American Express Company, Gulfstream Aerospace, Lucent Technologies, Mafco
Consolidated, Ford Motor Company and the FPL Group, Inc. He has been a director
of Gannett since 1995.
THOMAS A. REYNOLDS, JR.
Mr. Reynolds, 68, is Chairman Emeritus of the law firm of Winston & Strawn,
Chicago, Illinois. He is a director of Jefferson Smurfit Group and Union Pacific
Corporation. Winston & Strawn performed legal services for Gannett in 1996. He
has been a director of Gannett since 1979.
DOLORES D. WHARTON
Mrs. Wharton, 69, 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 a
director of the Kellogg Company, COMSAT Corporation, and Capital Bank & Trust
Co. She has been a director of Gannett since 1979.
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT
THE 1998 ANNUAL MEETING:
STUART T. K. HO
Mr. Ho, 61, is Chairman of the Board and President of Capital Investment of
Hawaii, Inc. Mr. Ho is a director of Aloha Airgroup, Inc., Bancorp Hawaii, 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.
JOSEPHINE P. LOUIS
Mrs. Louis, 66, is Chairman and Chief Executive Officer of Eximious Inc.
and Eximious Ltd. She is a director of HDO Productions, Inc. and a trustee of
the Chicago Horticultural Society and the Chicago Historical Society. She has
been a director of Gannett since 1994.
DOUGLAS H. MCCORKINDALE
Mr. McCorkindale, 57, 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 a director of Continental Airlines, Inc.
and Frontier Corporation and a director or trustee of a number of investment
companies in the family of Prudential Mutual Funds. He has been a director of
Gannett since 1977.
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT
THE 1999 ANNUAL MEETING:
MEREDITH A. BROKAW
Mrs. Brokaw, 56, is the founder of Penny Whistle Toys, Inc., in New York
City, and is the author of eight children's books. She is a director of
Conservation International, Washington, D.C. She has been a director of Gannett
since 1983.
3
<PAGE> 7
PETER B. CLARK
Mr. Clark, 68, is the former Chairman, President and Chief Executive
Officer of The Evening News Association, which merged with Gannett in 1986. He
was President of The Evening News Association from 1963 until his retirement in
1986. He has been a director of Gannett since 1986.
JOHN J. CURLEY
Mr. Curley, 58, 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 from 1984 to 1986. He has
served the Company in various other executive capacities since 1983 and has been
a director since 1983.
SECURITIES OWNED BY GANNETT MANAGEMENT
The following table shows the number of shares of Gannett common stock
beneficially owned by all directors and by the five most highly compensated
executive officers. The table is correct as of March 14, 1997:
<TABLE>
<CAPTION>
NAME OF OFFICER OR DIRECTOR TITLE SHARES OWNED
- --------------------------------------- ----------------------------------- ------------
<S> <C> <C>
John J. Curley......................... Chairman, President & CEO 664,073
Douglas H. McCorkindale................ Vice Chairman, Chief Financial &
Administrative Officer 516,984
Gary L. Watson......................... President/Newspaper Division 96,375
Cecil L. Walker........................ President/Broadcasting Division 42,784
Thomas Curley.......................... President and Publisher, USA TODAY 65,501
Andrew F. Brimmer...................... Director 3,693
Meredith A. Brokaw..................... Director 5,152
Rosalynn Carter........................ Director 4,601
Peter B. Clark......................... Director 3,381
Stuart T. K. Ho........................ Director 8,798
Drew Lewis............................. Director 6,000
Josephine P. Louis..................... Director 126,044
Rollan Melton.......................... Director 49,991
Thomas A. Reynolds, Jr................. Director 11,086
Dolores D. Wharton..................... Director 5,000
2,022,688
All directors and executive officers as
a group (37 persons including those
named above).........................
</TABLE>
Each person listed owns less than 1% of Gannett's outstanding shares. All
directors and executive officers as a group beneficially owned 2,022,688 shares
on March 14, 1997. This represents 1.4% of the outstanding shares. The following
shares are included because they may be acquired through stock options by May 6,
1997: Mr. John Curley--447,500; Mr. McCorkindale-- 330,000; Mr. Watson--65,367;
Mr. Walker--23,325; Mr. Thomas Curley--43,975; all executive officers as a
group--1,188,887. For all shares owned, each director or executive officer
possesses sole voting power and sole investment power, except for Mr. Ho, who
shares investment and voting power with respect to 1,000 shares held in trust,
Mrs. Louis, who shares investment and voting power with respect to 67,979 shares
held in trust, and Mr. Melton, who shares investment and voting power with
respect to 49,350 shares held in trust.
Some shares have not been listed above because 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 or in trust:
Mr. Clark--300; Mr. McCorkindale--437; Mr. Watson--12; all directors and
executive officers as a group--21,301.
Also included among the shares listed above are the following shares which
are held for individual deferred compensation accounts by The Northern Trust
Company as Trustee of the
4
<PAGE> 8
Gannett 1987 Deferred Compensation Plan: Mr. McCorkindale--5,646; Mr.
Watson--5,185; Mr. Walker--5,323; Mr. Thomas Curley--3,959; Dr. Brimmer--2,454;
Mrs. Brokaw--4,152; Mrs. Carter--2,886; Mr. Clark--581; Mr. Ho--7,523; Mr.
Reynolds--4,086; all directors and executive officers as a group--88,366.
The shares reported above do not include 700,700 shares owned on March 14,
1997 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 (Senior
Vice President, Personnel), and Jimmy L. Thomas (Senior Vice President,
Financial Services and Treasurer).
COMPENSATION OF DIRECTORS
The Company pays its directors an annual fee and meeting fees. The annual
fee is $42,500. Each director receives $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 $1,000 for each committee meeting
attended. Directors who are also employees of the Company receive no director
fees. Directors may elect to defer their fees under the 1987 Deferred
Compensation Plan, which provides for eight investment options, including mutual
funds and a Gannett Common Stock fund.
In 1987, the Company established a Retirement Plan for Directors in which
non-employee members of the Board of Directors participate. In 1996, the Board
terminated this Plan as to any new directors. The annual benefit under the Plan
is equal to a percentage of the director's highest annual compensation during
the ten years of service preceding the director's retirement from the Board as
follows: 10 years or more, 100%; nine years, 90%; eight years, 80%; seven years,
70%; six years, 60%; five years, 50%; and less than five years, 0%. The annual
benefit will be paid each quarter for 10 years except for lump sum payments in
the event of death.
COMPENSATION OF GANNETT MANAGEMENT
The Executive Compensation Committee (the "Committee") of the Board of
Directors is responsible for 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 compensation
decisions in 1996:
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
In 1996, 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 in the following areas: earnings per share, operating
income as a percentage of sales, return on assets, return on equity, operating
cash flow, stock price, and market value. In addition, the Committee considers
management's recommendations and applies its own subjective judgment.
The Committee also compared the Company's performance to that of its
competitors and concluded that the Company's performance was superior. Companies
with comparable revenues in other industries also were surveyed to ensure that
executive compensation is competitive in the overall marketplace. 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.
(References to "competitors" are to the companies that constitute the S&P
Publishing/Newspaper Index used in the performance graph on p. 11.)
In making its decisions about compensation, the Committee placed continued
emphasis on increasing key executives' ownership of Gannett common stock as a
component of their compensa-
5
<PAGE> 9
tion. Stock ownership is consistent with our policy of tying the interests of
the senior executives closely with those of the Company's shareholders. The
Committee believes that ownership of stock creates a greater incentive for key
executives to manage the Company so as to increase shareholder value.
The Committee continued the 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.
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 stock awards under the 1978 Long-Term Incentive 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 pay for performance. The
value of stock awards depends upon long-term results. The individual elements of
compensation provided by the Company are discussed in detail below.
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's
stock has performed over a similar period of time is also reviewed and
taken into account in the overall compensation plan.
6
<PAGE> 10
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 1996, in establishing the compensation of executive officers, the
Committee 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 also reviewed the 1996 executive compensation in light of
the $1 million ceiling on tax deductions for compensation that is included in
section 162(m) of the Internal Revenue Code. The Committee has concluded that
all of the Company's 1996 compensation expense will be deductible for federal
income tax purposes. While the Committee wishes to maximize deductibility of
certain compensation, the Committee does not believe that rigid compliance with
these tax law requirements is always consistent with sound executive
compensation practices and incentives intended to improve shareholder value.
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 the index used in the graph on p. 11) and with companies of
comparable size in the media industry. 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. The Company is both larger than its competitors and has
outperformed them. Those factors and general compensation practices in the media
industry have led the Company to place its management salaries above the median
for the comparative companies.
In establishing salaries for executive officers, the Committee considered
the Company's performance, individual performance and experience and the chief
executive's recommendations. The most important factor, however, was the
Committee members' 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 1995 SALARY 1996 SALARY
---------------------------------------------- ----------- -----------
<S> <C> <C>
John J. Curley................................ $ 800,000 $ 800,000
Douglas H. McCorkindale....................... 650,000 650,000
Gary L. Watson................................ 460,000 480,000
Cecil L. Walker............................... 350,000 385,000
Thomas Curley................................. 335,000 350,000
</TABLE>
Mr. Curley and Mr. McCorkindale have employment contracts, described more
fully on pp. 14 and 15, which provide for minimum salary levels but which had no
other impact on the Committee's deliberations.
7
<PAGE> 11
EXECUTIVE INCENTIVE BONUS PLAN: TO MOTIVATE YEAR-TO-YEAR.
Annual bonuses paid under the Executive Incentive Plan serve to focus
performance, motivate executive officers and reward them for good performance.
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 for 1996 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. The available bonus fund was allocated
among the divisions and operating units. Individual bonus amounts then 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. No relative ranking of various factors was applied.
In furtherance of the Committee's goal of increasing the stock ownership by
key executives, 25% of the bonuses for 1996 were paid to them in the form of
Gannett common stock. This continues a practice established in 1994. The pre-tax
value of the bonuses awarded to the five highest paid officers of the Company
are as follows:
<TABLE>
<CAPTION>
1995 BONUS 1996 BONUS
---------------------- ----------------------
NAME CASH GCI SHARES CASH GCI SHARES
-------------------------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
John J. Curley.................. $637,500 3,214 $712,500 2,910
Douglas H. McCorkindale......... 581,250 2,930 656,250 2,680
Gary L. Watson.................. 240,000 1,210 251,250 1,056
Cecil L. Walker................. 187,500 945 217,500 888
Thomas Curley................... 180,000 907 210,000 858
</TABLE>
LONG-TERM STOCK INCENTIVE PLAN: TO PROMOTE LONG-TERM GROWTH.
Long-term stock awards under the 1978 Long-Term Incentive Plan are based on
the performance of Gannett common stock and are designed to align shareholders'
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, so as 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 executives' attention on managing the Company from the
perspective of an owner with an equity stake in the business.
In recent years, the Committee has used 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 (eight years for grants before 1996
and ten years thereafter) 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 on continued employment throughout a specified period (typically
four years). Stock incentive rights are not awarded to executive officers.
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
8
<PAGE> 12
examination of the competitive marketplace. The Company evaluated the
competitive marketplace by examining the companies included in the performance
graph on p. 11 and by using a Towers Perrin Media Survey. 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.
The following chart shows the number of stock options awarded to the five
highest paid officers of the Company, including the chief executive officer:
<TABLE>
<CAPTION>
1995 1996
NAME OPTIONS OPTIONS
-------------------------------------------------------- ------- -------
<S> <C> <C>
John J. Curley.......................................... 125,000 140,000
Douglas H. McCorkindale................................. 100,000 115,000
Gary L. Watson.......................................... 36,000 40,090
Cecil L. Walker......................................... 21,400 25,620
Thomas Curley........................................... 18,000 21,160
</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 its earnings per
share, return on assets, return on equity, operating cash flow, operating income
as a percent of sales, stock price, and market value. For the 1996 fiscal year,
earnings per share from continuing operations, excluding a non-recurring 66-cent
gain from an exchange of radio and television stations, increased 14.9%, from
$3.28 to $3.77. Operating income as a percent of sales increased from 22% to
24.1%. In addition, the Company's stock price, excluding dividends, increased
22%, from $61.38 to $74.88. The S&P Publishing/Newspaper Index, excluding
dividends, increased 25% and the S&P 500 Index, excluding dividends, increased
20%. Cumulatively, over the last five years, excluding dividends, the Company's
stock price increased 65%, the S&P Publishing/Newspaper Index increased 70% and
the S&P 500 Index increased 78%. In 1996, the Company's total market value
increased 23%, from $8.6 billion to $10.58 billion. Each of these factors was
subjectively evaluated by the Committee members without giving particular weight
to any one or more factors.
In addition, the Committee considered the significant activity of the
Company in completing various business transactions. The Company completed the
successful disposition of businesses which were not part of its ongoing business
plan and acquired other properties which were. Further, the Company effectively
integrated the former Multimedia properties without the anticipated dilution of
earnings.
By all measures, the Committee concluded 1996 was an excellent year.
To assess the competitiveness of Mr. Curley's compensation, the Committee
surveyed the compensation levels of chief executive officers of the three
competitors included in the S&P Publishing/Newspaper Index, and of 20 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
9
<PAGE> 13
a higher level than industrial or commercial enterprises. In particular, the
Committee noted that the Company's revenue is significantly larger than all
three of the competitors surveyed and its net income and earnings per share set
new records.
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 140,000 stock
options in December 1996. It is the Committee's view that the award of these
stock options is an effective way of continuing to tie Mr. Curley's financial
interest to that of the Company's shareholders, since the value of these stock
options is directly linked to increases in shareholder value. Unless the price
of the Company's stock increases, his stock options will be valueless.
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
Stuart T. K. Ho
Dolores D. Wharton
10
<PAGE> 14
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the performance of the Company's Common Stock
during the period December 31, 1991 to December 31, 1996 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., Knight-Ridder, Inc., The New
York Times Company, and Tribune Company.
The graph depicts the results of investing $100 in the Company's Common
Stock, the S&P 500 Index and the S&P Publishing/Newspaper Index at closing
prices on December 31, 1991. It assumes that dividends were reinvested quarterly
with respect to the Company's Common Stock, daily with respect to the S&P 500
Index and monthly with respect to the S&P Publishing/Newspaper Index.
<TABLE>
<CAPTION>
S&P
MEASUREMENT PERIOD PUBLISHING/NEWSPAPER
(FISCAL YEAR COVERED) GANNETT CO., INC. INDEX S&P 500 INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 114.59 111.83 107.62
1993 132.56 129.52 118.46
1994 126.59 119.65 120.03
1995 149.55 150.75 165.13
1996 186.13 191.66 203.05
</TABLE>
11
<PAGE> 15
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation paid to the CEO and
the four other most highly compensated executive officers of the Company for
services rendered to the Company over the past three fiscal years.
<TABLE>
<CAPTION>
LONG- TERM
COMPEN-
ANNUAL COMPENSATION SATION
----------------------------------- AWARDS(3)
OTHER ----------
ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND SALARY BONUS(1) SATION(2) OPTIONS SATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ---------------------------------------------------- ---- ------- -------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
John J. Curley...................................... 1996 800,000 950,000 4,207 140,000 75,203
(Chairman, President & CEO) 1995 800,000 850,000 9,514 125,000 60,022
1994 800,000 750,000 14,737 125,000 42,375
Douglas H. McCorkindale............................. 1996 650,000 875,000 15,402 115,000 43,666
(Vice Chairman, & Chief Financial 1995 650,000 775,000 17,269 100,000 44,206
& Administrative Officer) 1994 650,000 675,000 19,681 100,000 43,449
Gary L. Watson...................................... 1996 480,000 335,000 4,837 40,090 26,989
(President/Newspaper Division) 1995 460,000 320,000 11,702 36,000 28,436
1994 440,000 290,000 16,878 25,000 28,845
Cecil L. Walker..................................... 1996 385,000 290,000 4,207 25,620 23,848
(President/Broadcasting Division) 1995 350,000 250,000 6,350 21,400 23,485
1994 335,000 220,000 5,760 12,000 21,672
Thomas Curley(5).................................... 1996 350,000 280,000 4,632 21,160 16,282
(President & Publisher 1995 335,000 240,000 6,472 18,000 14,815
USA TODAY) 1994 320,000 215,000 5,760 12,000 12,468
</TABLE>
- ---------------
(1) Bonus awards may be in the form of cash, deferred cash or shares of Gannett
Common Stock. Bonuses to executive officers were paid 25% in Gannett Common
Stock and 75% in cash.
(2) This column includes amounts paid by the Company under the Medical
Reimbursement Plan and 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, alternate appreciation rights, performance bonus
units, option surrender rights and stock incentive rights 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.
(4) This column includes the annual premiums paid by the Company on life
insurance policies which are individually owned by the five named officers,
as follows: John Curley--$73,070; Mr. McCorkindale--$41,541; Mr.
Watson--$24,894; Mr. Walker --$21,739; and Thomas Curley--$14,171. 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: John Curley--$2,133; Mr. McCorkindale-- $2,125; Mr.
Watson--$2,095; Mr. Walker--$2,109; and Thomas Curley--$2,111.
(5) John Curley and Thomas Curley are brothers.
12
<PAGE> 16
OPTION GRANT TABLE
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME (#) IN FISCAL YEAR ($/SH) DATE PRESENT VALUE ($)
- -------------------------------- ---------- -------------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
John J. Curley.................. 140,000 11.28 $74.75 12/10/06 2,499,000
Douglas H. McCorkindale......... 115,000 9.26 $74.75 12/10/06 2,052,750
Gary L. Watson.................. 40,090 3.23 $74.75 12/10/06 715,607
Cecil L. Walker................. 25,620 2.06 $74.75 12/10/06 457,317
Thomas Curley................... 21,160 1.70 $74.75 12/10/06 377,706
</TABLE>
"Grant Date Present Value" has been calculated using the Black-Scholes
model of option valuation. The assumptions used in calculating these values are:
a dividend yield of 2.34%, expected volatility of 15.25%, a risk-free interest
rate of 5.95% and a 7-year expected life. The calculated value of the options on
the grant date was determined to be $17.85 per option.
(1) This table shows stock options awarded to the five named officers in 1996.
Stock options vest in 25% increments each year after the date of grant.
Accordingly, 25% of the stock options granted in the last fiscal year may be
exercised on December 10, 1997, 50% on December 10, 1998, 75% on December
10, 1999, and 100% on December 10, 2000. 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 that time. Upon
the exercise of an OSR or a stock option, the accompanying stock option or
OSR is automatically cancelled.
On December 29, 1996, 12,060,506 shares of Gannett common stock were
available for grants under the 1978 Executive Long-Term Incentive Plan. At
that time, there were 4,433,329 options outstanding with a weighted average
exercise price of $59.28. The expiration dates range from January 2, 1998 to
December 10, 2006.
13
<PAGE> 17
STOCK OPTION TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
SHARES (#) ($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Curley... 65,000 $ 2,460,750 472,500 327,500 $12,727,813 $ 3,614,688
Douglas H.
McCorkindale... 30,000 1,023,750 330,000 265,000 8,563,125 2,894,375
Gary L. Watson... 17,500 411,250 65,637 87,213 1,428,761 857,054
Cecil L.
Walker......... 27,600 748,550 23,325 50,995 481,691 446,164
Thomas Curley.... 6,210 218,126 43,975 43,985 1,178,809 412,618
</TABLE>
EMPLOYMENT CONTRACTS, RETIREMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Company has a Transitional Compensation Plan (the "Plan") which
provides certain payments to key executives of the Company and its subsidiaries
who are terminated without cause within two years after a change in control.
Participants who elect to leave their employment within 30 days after the first
anniversary of the change in control also qualify for payments under the Plan. A
participant entitled to compensation will receive (i) all payments and benefits
earned through the date of termination; (ii) a severance payment of two to three
years' salary and bonus compensation, depending on years of service; (iii) life
insurance and medical benefits for the same period; (iv) extra retirement plan
benefits as though employment had continued for such two-to-three-year period;
and (v) an amount that, after 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.
If there is a change in control of the Company, as defined in the
Transitional Compensation Plan, options become exercisable in full and stock
incentive rights become payable. In addition, the 1978 Executive Long-Term
Incentive 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 the spread between the option
exercise price and the highest price paid for Company shares in connection with
the change in control. If option surrender rights are exercised, the related
options and performance units are cancelled.
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 is mutually agreed upon, until the earlier of
January 1, 2004 (his normal retirement date) or four years after notice of
termination of his contract. During his employment, Mr. Curley will receive an
annual salary of $800,000 or such greater amount as the Board of Directors
determines and an annual bonus if the Board of Directors decides to pay him one.
In the event that Mr. Curley's employment is terminated without cause, he will
be entitled to receive his salary for the balance of the term, subject to
certain conditions. The contract also allows him to terminate his employment if
there has been a change in control of the Company, as defined in the contract.
If within two years after a change in control he terminates his employment or if
his employment is terminated by the Company for other than cause, he will be
entitled to: (i) continued payment of his salary and bonus; (ii) continuation of
insurance and similar benefits; (iii) 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; (iv) to the extent permissible
under the 1978 Executive Long-Term Incentive Plan or other applicable plans, he
also will be entitled immediately to exercise in full, or receive the value of,
all stock options under those
14
<PAGE> 18
plans; and (v) receipt of a "gross-up" payment for taxes payable by Mr. Curley
as a result of all these 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 laws
deny 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 more than three
times the employee's average compensation for the last five years and are made
under an agreement, like the employment agreements described in this Proxy
Statement.
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 his employment contract ends as long as he continues as an
employee of the Company.
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 is mutually agreed upon, until the
earlier of July 1, 2004 (his normal retirement date) or four years after notice
of termination. During 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 will be
entitled to receive his annual salary for the balance of the term, subject to
certain conditions. His contract also provides for arrangements in the event of
a change in control of the Company like those described above for Mr. Curley.
Mr. McCorkindale also is a participant in the Company's Transitional
Compensation Plan.
PENSION PLANS
The Company's executive officers participate in the Gannett Retirement
Plan, a defined benefit pension plan which is qualified under Section 401 of the
Internal Revenue Code, and the Gannett Supplemental Retirement Plan, an
unfunded, nonqualified 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
executive's highest five consecutive years). The Internal Revenue Code places
limitations on the amount of pension benefits that may be paid under qualified
plans. Any benefits payable above 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 these two retirement plans to individuals
in specified compensation 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
2,000,000 600,000 800,000 1,000,000 1,070,000 1,140,000
</TABLE>
15
<PAGE> 19
Compensation included in the Compensation Tables under salary and bonuses
qualifies under 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--27, Mr. McCorkindale--25, Mr. Watson--27, Mr. Walker--24,
and Thomas Curley--24.
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS
The Company's independent auditors are Price Waterhouse, independent
accountants. At the Annual Meeting, the shareholders will vote on a proposal to
elect independent auditors for the Company's fiscal year ending December 28,
1997. The Audit Committee of the Board has recommended that Price Waterhouse be
re-elected as independent auditors for 1997. The Board unanimously recommends
that shareholders vote FOR this proposal. Proxies solicited by the Board will be
voted FOR Price Waterhouse 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.
OTHER MATTERS
As of the date of this Proxy Statement, the Board 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 1998 Annual Meeting, shareholder proposals must be received at the
Company's principal executive offices by November 26, 1997.
The cost of soliciting 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 compensation, may solicit proxies personally or by
telephone, telegraph or other means. 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 them for
forwarding the materials. In addition, Georgeson & Company, Inc., New York, New
York, has been retained to aid in the solicitation of proxies at a fee of
$15,000, plus out of pocket expenses.
Copies of the 1996 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 26, 1997
16
<PAGE> 20
P GANNETT CO., INC.
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O ANNUAL MEETING OF SHAREHOLDERS-MAY 6, 1997
X
Y
The undersigned hereby appoints John J. Curley and Douglas H.
McCorkindale or either of them, attorneys and proxies each with power of
substitution to represent the undersigned at the Annual Meeting of
Shareholders of the Company, to be held on May 6, 1997 and at any
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
designated on the reverse, and in accordance with their best judgment in
connection with such other business as may come before the meeting.
Nominees for Directors: Drew Lewis, Thomas A. Reynolds, Jr. and
Dolores D. Wharton.
PLEASE CAST YOUR VOTES ON THE REVERSE SIDE. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2. 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 THE DIRECTORS' RECOMMENDATIONS.
----------------
SEE REVERSE
SIDE
----------------
<PAGE> 21
(continued form reverse side)
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS: VOTE FOR all nominees except those I have
listed below: [ ]
VOTE WITHHELD from all nominees: [ ]
- -------------------------------------------------------------------------
2. PROPOSAL TO ELECT Price Waterhouse as the Company's Auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE PROXIES are authorized to vote in their discretion upon such other
business, if any, as may properly come before the meeting.
I plan to attend the meeting, and I request:
[ ] 1 ticket or [ ] 2 tickets
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.
---------------------------------------------------
---------------------------------------------------
SIGNATURE(S) DATE
