<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Gannett Co., Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Gannett Co., Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF GANNETT APPEARS HERE]
March 18, 1998
Dear Shareholder:
On behalf of your Board of Directors and management, we cordially invite you
to attend the Annual Meeting of Shareholders to be held on Tuesday, April 28,
1998, 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 1998. 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.
There also is one shareholder proposal that we understand will be presented
for consideration at the meeting. The shareholder proposal is discussed in the
attached proxy statement. Your Board believes this 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 note that this year you may vote your shares by
telephone or by using the enclosed proxy card. The toll-free telephone number
and instructions are shown on the enclosed proxy card. Alternatively, you can
vote by signing and dating the proxy card and returning 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 /s/ Douglas H. McCorkindale
John J. Curley Douglas H. McCorkindale
Chairman and Chief Vice Chairman and President
Executive Officer
1100 Wilson Boulevard, Arlington, VA 22234 (703) 284-6000
<PAGE>
[LOGO OF GANNETT APPEARS HERE]
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1998
----------------
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 April 28, 1998 for the following purposes:
(1) to elect three directors;
(2) to act upon a proposal to elect Price Waterhouse as the Company's
independent auditors for the 1998 fiscal year;
(3) to consider a shareholder proposal; and
(4) to transact such other business, if any, as may properly come before
the meeting.
The Board of Directors has set the close of business on March 2, 1998 as the
record date to determine the shareholders entitled to notice of and to vote at
the meeting.
YOUR VOTE IS IMPORTANT. PLEASE FOLLOW THE INSTRUCTIONS ON THE NEXT PAGE TO
VOTE USING THE TOLL-FREE TELEPHONE NUMBER ON THE ENCLOSED PROXY CARD OR BY
SIGNING AND DATING THE PROXY CARD AND RETURNING 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, 1998
<PAGE>
[LOGO OF GANNETT APPEARS HERE]
PROXY STATEMENT
1998 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 April 28, 1998.
The Board set March 2, 1998 as the record date. Shareholders of record on
that date may attend and vote at the Annual Meeting. On that date, there were
284,289,821 shares of Common Stock outstanding and entitled to vote. Each
share is entitled to one vote.
There has been sufficient space for interested shareholders to attend past
meetings. 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 shareholder with one admission ticket. Only you or your
proxy are allowed to use your ticket. If you are a shareholder of record and
plan to attend the meeting, please check the appropriate box on your proxy
card, and return it in the enclosed return envelope. If you vote by telephone,
you can request a ticket when you vote. 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 a ticket, 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 must be received by no later than April
21, 1998. If you decide not to attend the meeting, please return your ticket
to the Secretary, Gannett Co., Inc. at the above address.
Shares represented by proxies will be voted as directed by the shareholder
on the proxy card or by telephone. Unless you direct otherwise, your shares
will be voted for the Board's nominees for director and for the election of
auditors, and against the one shareholder proposal. If you deliver a proxy by
mail or telephone, you have the right to revoke it in writing (by another
proxy bearing a later date) or by phone (by another call at 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 can be voted on the proxy card accompanying
this Proxy Statement or by telephone. 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 18, 1998.
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
YOUR BOARD
The Board of Directors is composed of 10 directors, but following the
retirement of Dolores Wharton 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 meets or exceeds
this requirement. The Board is divided into three classes, as equal in number
as possible. 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
1997, 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, the Audit Committee and the Public Responsibility and
Personnel Practices Committee are four 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 1999 Annual Meeting, the Committee will consider any written
suggestions of shareholders received by the Secretary of the Company by
February 3, 1999. The Committee members are Meredith A. Brokaw, Chair, John J.
Curley, and Drew Lewis. This Committee met 5 times during 1997.
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 1997.
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, Drew Lewis, Josephine P.
Louis, Thomas A. Reynolds, Jr. and Karen Hastie Williams. None of the members
of the Committee is an employee of the Company. This Committee met 3 times
during 1997.
The Pubic Responsibility and Personnel Practices Committee monitors the
Company's performance in meeting its obligations of fairness in internal and
external matters and under its equal employment opportunity programs. The
Committee's members are Josephine P. Louis, Chair, Meredith A. Brokaw and
Peter B. Clark. None of the members of the Committee is an employee of the
Company. This Committee met 3 times during 1997.
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 2001 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. Dolores Wharton
reached age 70 this year and will retire from the Board at this meeting.
Thomas A. Reynolds, Jr. and Peter B. Clark will reach age 70 this year and
will retire from the Board by the 1999 Annual Meeting. The Board elected Karen
Hastie Williams to the Board in December 1997. She joined the class of
directors whose term expires at the 2000 Annual Meeting.
2
<PAGE>
Dr. Michael J. Franzblau, of Greenbrae, California, has notified the Company
that he plans to attend the annual meeting and to nominate Dr. David Bloom for
election to Gannett's Board of Directors at the meeting. Dr. Bloom, 60, is a
gastroenterologist practicing in Greenbrae, California. Dr. Franzblau
submitted Dr. Bloom's nomination to the Management Continuity Committee for
the Committee's consideration, and the Committee did not nominate Dr. Bloom.
This proxy statement is prepared by the Company and only solicits voting
authority with respect to management nominees.
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 do one of three
things. The Board may recommend a substitute nominee, reduce the number of
directors to eliminate the vacancy, or fill the vacancy later. The shares
represented by all valid proxies may be voted for the election of a substitute
if one is nominated.
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 on the Board nominees.
The principal occupations and business experience of the management nominees
and of the continuing directors are described below.
THE FOLLOWING HAVE BEEN NOMINATED FOR ELECTION AT THE 1998 ANNUAL MEETING:
STUART T. K. HO
Mr. Ho, 62, is Chairman of the Board and President of Capital Investment of
Hawaii, Inc. Mr. Ho is a director of Aloha Airgroup, Inc., Pacific Century
Financial Corporation, 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, 67, 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, 58, is Vice Chairman and President of Gannett. He was Vice
Chairman and Chief Financial and Administrative Officer from 1985 to 1997. He
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.
3
<PAGE>
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT THE
1999 ANNUAL MEETING:
MEREDITH A. BROKAW
Mrs. Brokaw, 57, is the founder of Penny Whistle Toys, Inc., in New York City,
and is the author of children's books. She is a director of Conservation
International, Washington, D.C. She has been a director of Gannett since 1983.
PETER B. CLARK
Mr. Clark, 69, 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, 59, is Chairman and Chief Executive Officer of Gannett. He was
Chairman, President and Chief Executive Officer from 1989 to 1997, 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.
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT THE
2000 ANNUAL MEETING:
DREW LEWIS
Mr. Lewis, 66, 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, AmTec, Inc. and the FPL Group, Inc. He has been a director of
Gannett since 1995.
THOMAS A. REYNOLDS, JR.
Mr. Reynolds, 69, 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
1997. He has been a director of Gannett since 1979.
KAREN HASTIE WILLIAMS
Ms. Williams, 53, is a Partner at the law firm of Crowell & Moring,
Washington, D.C. Ms. Williams is a director of Crestar Financial Services
Corporation, Continential Airlines, Inc., Fannie Mae, SunAmerica, Inc., and
Washington Gas Light Company. She has been a director since 1997.
4
<PAGE>
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 2, 1998:
<TABLE>
<CAPTION>
NAME OF OFFICER OR DIRECTOR TITLE SHARES OWNED
- --------------------------- ----- ------------
<S> <C> <C>
John J. Curley................. Chairman and CEO 1,457,934
Douglas H. McCorkindale........ Vice Chairman and President 1,196,320
Gary L. Watson................. President/Newspaper Division 248,992
Cecil L. Walker................ President/Broadcasting Division 83,740
Thomas Curley.................. President and Publisher, USA TODAY 138,737
Meredith A. Brokaw............. Director 11,045
Peter B. Clark................. Director 7,107
Stuart T.K. Ho................. Director 17,818
Drew Lewis..................... Director 12,000
Josephine P. Louis............. Director 116,130
Thomas A. Reynolds, Jr. ....... Director 23,702
Dolores D. Wharton............. Director 10,000
Karen H. Williams.............. Director 1,000
All directors and executive
officers as a group (35
persons including those named
above)........................ 4,325,276
</TABLE>
Each person listed owns less than 1% of Gannett's outstanding shares. All
directors and executive officers as a group beneficially owned 4,325,276
shares on March 2, 1998. This represents 1.5% of the outstanding shares. The
following shares are included because they may be acquired under stock options
by May 1, 1998: Mr. John J. Curley--1,017,500; Mr. McCorkindale--817,500;
Mr. Watson--196,525; Mr. Walker--43,210; Mr. Thomas Curley--94,180; all
executive officers as a group--2,839,846. 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
2,000 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--600; Mr. McCorkindale--874; Mr. Watson--24; all directors
and executive officers as a group--49,634.
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 Gannett 1987 Deferred Compensation Plan: Mr.
McCorkindale--16,094; Mr. Watson--12,097; Mr. Walker--12,179; Mr. Thomas
Curley--9,353; Mrs. Brokaw--9,045; Mr. Clark--1,507; Mr. Ho--15,261; Mr.
Reynolds--9,702; all directors and executive officers as a group--187,072.
The shares reported above do not include 1,239,826 shares owned on March 2,
1998 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 J. Curley, Douglas H. McCorkindale, Richard
L. Clapp (Senior Vice President, Human Resources), Larry F. Miller (Executive
Vice President and Chief Financial Officer), and Jimmy L. Thomas (Senior Vice
President, Financial Services and Treasurer).
5
<PAGE>
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 could 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 1997:
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
COMPENSATION POLICY: PAY FOR PERFORMANCE
The Executive Compensation Committee continues to place heavy emphasis on
the principle of pay for performance.
One important aspect of pay for performance is the Committee's continued
emphasis on long-term stock compensation, which is consistent with the
Committee's policy of tying the interests of the senior executives closely
with those of the Company's shareholders and creating a greater incentive for
key executives to manage the Company so as to increase shareholder value.
Stock compensation includes long-term awards under the 1978 Long-Term
Incentive Plan, payment of 25% of an executive's bonus in Gannett stock, and
minimum stock ownership guidelines for all executive officers.
THE ELEMENTS OF COMPENSATION AT GANNETT
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,
while the value of stock awards depends upon long-term results. These elements
of compensation are discussed in detail below.
In 1992, the Committee adopted the following Compensation Policy, which
continues to guide the Committee in making its compensation decisions:
6
<PAGE>
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.
A job grading system is used to make equitable grants. At the lower end of
the management grades, more emphasis is placed on cash and stock incentive
rights with the bonus target increasing through the grades. Options are
given in larger amounts at higher grade levels because these performers can
more directly influence long-term results.
COMPENSATION DECISIONS IN 1997
In 1997, the Committee applied the Compensation Policy and continued to
emphasize the important link between the compensation of its executive
officers and the Company's performance relative to its business objectives and
its competitors' performance. The Company's material business objectives are
increasing shareholder value, performance against budget, product quality and
employee development.
In making its compensation decisions, the Committee 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 considered
management's recommendations for individual compensation awards. 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 or profits in other industries also were surveyed to
ensure that executive compensation was 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 peer group
companies named on page 11.)
While the Committee considered these individual and Company performance
factors in making individual compensation decisions, the Committee applied its
own subjective good judgment in making final determinations.
7
<PAGE>
In 1997, the Committee continued to emphasize key executives' ownership of
Gannett common stock as a component of their compensation. The Committee
continued to oversee the executive share ownership guidelines for the five
highest-paid officers' ownership of Gannett common stock equal to three times
their salary range midpoint and other key executives' ownership of Gannett
common stock equal to their salary range midpoint. All of these officers and
key executives exceed these stock ownership guidelines.
The Committee took into account the deductibility of compensation
expenditures under section 162(m) of the Internal Revenue Code. The Committee
does not believe that rigid compliance with these tax law requirements is
always consistent with sound executive compensation practices intended to
improve shareholder value. $945,000 of Chairman and Chief Executive Officer
John J. Curley's 1997 compensation, and $5,625 of Vice Chairman and President
Douglas H. McCorkindale's 1997 compensation, was non-deductible for income tax
purposes under Section 162(m). The Committee anticipates that future
compensation of certain key executives will include some amounts that likewise
are not deductible.
BASE SALARIES: TO ATTRACT AND RETAIN MANAGEMENT TALENT
Base salaries are designed to help attract and retain 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 the Company's competitors and with other
companies of comparable size in the media industry. Companies with comparable
revenues or profits 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 officer'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 1996 SALARY 1997 SALARY
---- ----------- -----------
<S> <C> <C>
John J. Curley.................................... $800,000 $900,000
Douglas H. McCorkindale........................... $650,000 $750,000
Gary L. Watson.................................... $480,000 $500,000
Cecil L. Walker................................... $385,000 $415,000
Thomas Curley..................................... $350,000 $375,000
</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.
EXECUTIVE INCENTIVE BONUS PLAN: TO MOTIVATE YEAR-TO-YEAR
Annual bonuses paid under the Executive Incentive Bonus Plan focus
performance, motivate executive officers and reward them for good performance.
The goal of the Executive Incentive Bonus 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.
8
<PAGE>
The bonuses for 1997 were determined on the basis of individual performance
in the areas of profit, product and people and, depending on the executive's
responsibilities, the performance of the executive's business unit and/or the
Company's overall performance. First, division performance was evaluated, and
the available bonus fund was allocated by division. Second, each operating
unit's performance was assessed, followed by individual performance
evaluations conducted by senior management. Individual bonus amounts then were
determined. The Committee's review of the bonuses was subjective, based on its
knowledge of the Company, its regular contact with the executives throughout
the year and a review of performance. No relative ranking of these various
factors was applied.
In furtherance of the Committee's goal of increasing the stock ownership by
key executives, 25% of the bonuses for 1997 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>
1996 BONUS 1997 BONUS
------------------- -------------------
NAME CASH GCI SHARES CASH GCI SHARES
---- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
John J. Curley.................... $712,500 5,820 $937,500 4,936
Douglas H. McCorkindale........... $656,250 5,360 $881,250 4,640
Gary L. Watson.................... $251,250 2,112 $300,000 1,579
Cecil L. Walker................... $217,500 1,776 $262,500 1,382
Thomas Curley..................... $210,000 1,716 $251,250 1,323
</TABLE>
All references to stock compensation in this Report have been adjusted to
reflect the two-for-one split of the Company's stock on October 6, 1997.
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 the
executives' interests with those of the Company's shareholders. 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 through 1995 and
ten years thereafter) at the fair market value on the date of grant. A stock
incentive right is 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 examination of the competitive marketplace.
The Company evaluated the competitive marketplace by examining the Company's
competitors 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.
9
<PAGE>
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>
NAME 1996 OPTIONS 1997 OPTIONS
---- ------------ ------------
<S> <C> <C>
John J. Curley.................................. 280,000 170,000
Douglas H. McCorkindale......................... 230,000 140,000
Gary L. Watson.................................. 80,180 55,600
Cecil L. Walker................................. 51,240 33,700
Thomas Curley................................... 42,320 28,200
</TABLE>
CHIEF EXECUTIVE OFFICER COMPENSATION:
As it does each year, the Committee thoroughly reviewed the compensation of
John J. Curley, Chairman 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 1997 fiscal year,
basic earnings per share from continuing operations, excluding a non-recurring
33-cent gain from an exchange of radio and television stations, increased 34%,
from $1.88 to $2.52. Operating income as a percent of sales increased from
24.1% to 27.8%. In addition, the Company's stock price, adjusted for the two-
for-one stock split effective October 6, 1997, and excluding dividends,
increased 65%, from $37.44 to $61.81. The Company's peer group, consisting of
the S&P Publishing/Newspaper Index and the S&P Publishing Index, excluding
dividends, increased 54% and the S&P 500 Index, excluding dividends, increased
31%. Cumulatively, over the last five years, excluding dividends, the
Company's stock price increased 144%, the peer group increased 132% and the
S&P 500 Index increased 123%. In 1997, the Company's total market value
increased 66%, from $10.58 billion to $17.55 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 acquisitions and
dispositions.
By all measures, the Committee concluded that 1997 was an excellent year,
and Mr. Curley's bonus and salary for 1997 reflected these results.
To assess the competitiveness of Mr. Curley's compensation, the Committee
surveyed the compensation levels of chief executive officers of the Company's
competitors, and of companies with revenues or profits 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
that of its competitors 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 170,000 stock
options in December 1997. 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>
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the performance of the Company's Common Stock
during the period December 31, 1992 to December 31, 1997 with the S&P 500
Index and a "peer group" combining the companies on the S&P
Publishing/Newspaper Index (Gannett Co., Inc., Knight-Ridder, Inc., The New
York Times Company, and Tribune Company) and on the S&P Publishing Index (Dow
Jones & Co., Inc., The McGraw-Hill Companies, Inc., Meredith Corporation, and
Times Mirror Company).
Previously, the Company has compared its performance with only the S&P
Publishing/Newspaper Index. As this Index consists of only three companies in
addition to Gannett and the companies in the S&P Publishing Index also are
competitors of the Company in the media industry, the Company believes that a
comparison with a peer group consisting of both Indices more appropriately
measures the Company's performance vis-a-vis its industry peers.
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 and the S&P Publishing
Index also are weighted by market capitalization.
The graph depicts the results of investing $100 in the Company's Common
Stock, the S&P 500 Index, the S&P Publishing/Newspaper Index and the peer
group at closing prices on December 31, 1992. It assumes that dividends were
reinvested quarterly with respect to the Company's Common Stock, daily with
respect to the S&P 500 Index and monthly with respect to the S&P
Publishing/Newspaper Index and the S&P Publishing Index.
[LINE GRAPH APPEARS HERE]
- -------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- -------------------------------------------------------------------------------
Gannett Co., Inc. 100.00 115.68 110.47 130.50 162.43 272.08
- -------------------------------------------------------------------------------
S&P Publishing/Newspaper Index 100.00 115.82 107.00 134.81 171.39 279.39
- -------------------------------------------------------------------------------
S&P 500 Index 100.00 110.08 111.53 153.45 188.68 251.63
- -------------------------------------------------------------------------------
Peer Group 100.00 116.43 109.42 143.78 175.25 275.06
- -------------------------------------------------------------------------------
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation paid to the CEO and
the four other most highly compensated executive officers of the Company for
services rendered to the Company over the past three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(3)
-------------------------------- ------------
OTHER
ANNUAL SECURITIES
COMPEN- UNDERLYING ALL OTHER
NAME AND SALARY BONUS(1) SATION(2) OPTIONS COMPENSATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------ ---- ------- --------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
John J. Curley.......... 1997 900,000 1,250,000 4,796 170,000 77,365
(Chairman and CEO) 1996 800,000 950,000 4,207 280,000 75,203
1995 800,000 850,000 9,514 250,000 60,022
Douglas H.
McCorkindale........... 1997 750,000 1,175,000 11,924 140,000 43,141
(Vice Chairman and 1996 650,000 875,000 15,402 230,000 43,666
President) 1995 650,000 775,000 17,269 200,000 44,206
Gary L. Watson.......... 1997 500,000 400,000 6,298 55,600 26,494
(President/Newspaper 1996 480,000 335,000 4,827 80,180 26,989
Division) 1995 460,000 320,000 11,702 72,000 28,436
Cecil L. Walker......... 1997 415,000 350,000 4,200 33,700 23,339
(President/Broadcasting 1996 385,000 290,000 4,207 51,240 23,848
Division) 1995 350,000 250,000 6,350 42,800 23,485
Thomas Curley(5)........ 1997 375,000 335,000 4,977 28,200 15,171
(President & Publisher 1996 350,000 280,000 4,632 42,320 16,282
USA TODAY) 1995 335,000 240,000 6,472 36,000 14,815
</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, and option surrender 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 J. Curley--$75,765; Mr. McCorkindale--$41,541;
Mr. Watson--$24,894; Mr. Walker--$21,739; and Thomas Curley--$14,171. The
column also includes a matching contribution of $1,600 in Gannett Common
Stock received by each of the five named officers under its 401(k) plan.
(5) John J. Curley and Thomas Curley are brothers.
12
<PAGE>
OPTION GRANT TABLE
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME (#) IN FISCAL YEAR ($/SH) DATE PRESENT VALUE ($)
---- ---------- -------------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
John J. Curley.......... 170,000 9.71 $59.50 12/9/07 $2,500,700
Douglas H.
McCorkindale........... 140,000 7.99 $59.50 12/9/07 $2,059,400
Gary L. Watson.......... 55,600 3.18 $59.50 12/9/07 $ 817,876
Cecil L. Walker......... 33,700 1.93 $59.50 12/9/07 $ 495,727
Thomas Curley........... 28,200 1.61 $59.50 12/9/07 $ 414,822
</TABLE>
This table shows stock options awarded to the five named officers in 1997.
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 9, 1998, 50% on December 9, 1999, 75% on December 9,
2000, and 100% on December 9, 2001. 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.
"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 2.15%, expected volatility of 16.28%, a risk-free interest
rate of 5.87% and a 7-year expected life. The calculated value of the options
on the grant date was determined to be $14.71 per option.
On December 28, 1997, 22,328,063 shares of Gannett common stock were
available for grants under the 1978 Executive Long-Term Incentive Plan. At
that time, there were 9,234,421 options outstanding with a weighted average
exercise price of $36.00. The expiration dates range from December 31, 1998 to
December 9, 2007.
STOCK OPTION TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END AT FY-END
ACQUIRED (#) ($)
ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Curley.......... 150,000 $3,867,413 1,052,500 567,500 $32,974,532 $9,605,469
Douglas H.
McCorkindale........... 50,000 $1,160,625 817,500 462,500 $25,542,344 $7,775,781
Gary L. Watson.......... -- -- 196,525 164,235 $ 5,778,847 $2,572,023
Cecil L. Walker......... 23,950 $ 437,562 58,860 99,530 $ 1,622,126 $1,534,697
Thomas Curley........... 12,000 $ 330,750 108,180 83,940 $ 3,346,619 $1,311,469
</TABLE>
13
<PAGE>
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 choose 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 under 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 J. 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 by the Company
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
without cause, he will be entitled to: (i) continued payment of his salary and
bonus; (ii) continued 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 allowed under the 1978 Executive Long-Term Incentive Plan or
other plans, he also will be entitled immediately to exercise in full, or
receive the value of, all stock options under those plans; and (v) 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 annual 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.
14
<PAGE>
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. In August 1997, the Board elected Mr. McCorkindale to
the office of Vice Chairman and President of the Company. 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 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 officer's five highest 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 the
individuals named in the above Summary Compensation Table 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>
15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
FINAL OF OF OF OF OF
AVERAGE CREDITED CREDITED CREDITED CREDITED CREDITED
EARNINGS SERVICE SERVICE SERVICE SERVICE SERVICE
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
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>
Final Average Earnings includes salaries and bonuses shown on page 12. 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 J.
Curley--28, Mr. McCorkindale--26, Mr. Watson--28, Mr. Walker--25, and Thomas
Curley--25.
15
<PAGE>
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
27, 1998. The Audit Committee of the Board has recommended that Price
Waterhouse be re-elected as independent auditors for 1998. 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.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
The Company has received the following shareholder proposal. The Board of
Directors recommends a vote AGAINST the proposal, and your proxy will be so
voted unless you specify otherwise.
The affirmative vote of a majority of the shares present in person or by
proxy and entitled to vote at the meeting will constitute approval of the
shareholder proposal. Proxies solicited by the Board of Directors will be
voted AGAINST proposal 3 unless otherwise indicated. If a shareholder, present
in person or by proxy, abstains from voting, the shareholder's shares will not
be voted. An abstention from voting has the same legal effect as a vote
"against" a proposal. If a shareholder holds 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 the proposal and will
not be counted in determining the number of shares entitled to vote on the
proposal.
PROPOSAL 3--DECLASSIFICATION OF THE BOARD OF DIRECTORS
The Carpenters Pension and Annuity Fund of Philadelphia and Vicinity, 1803
Spring Garden Street, Philadelphia, PA 19103-3916, beneficial owner of 3,400
shares of Gannett Common Stock, has notified the Company that it intends to
present the following proposal for consideration at the meeting.
BE IT RESOLVED: That the shareholders of Gannett Company, Inc. ("Company")
urge that the Board of Directors take the necessary steps, in compliance with
state law, to declassify the Board of Directors for the purpose of director
elections. The Board declassification shall be done in a manner that does not
affect the unexpired terms of directors previously elected.
Statement by Shareholder in Support of the Resolution
The election of corporate directors is the primary avenue in the American
corporate governance system for shareholders to influence corporate affairs
and exert accountability on the board and senior management. We strongly
believe that our Company's financial performance is closely linked to its
corporate governance policies and procedures, and the level of management
accountability they impose. Therefore, as shareholders concerned about the
value of our investment, we are disturbed by our Company's current system of
electing only one-third of the board of directors each year. We believe this
staggering of director terms prevents shareholders from annually registering
their views on the performance of the board collectively and each director
individually.
Staggered or classified boards can help insulate directors and senior
executives from the consequences of poor performance by denying shareholders
the opportunity to replace an entire board which is pursuing failed policies.
Concern that the annual election of all directors would leave our Company
without experienced Board members in the event that all incumbents are voted
out is
16
<PAGE>
unfounded. If the owners should choose to replace the entire board, in favor
of an alternative slate of candidates, it would be obvious that the incumbent
directors' contributions were not highly valued. We believe that allowing
shareholders to annually register their views on the performance of the Board
collectively and on each director individually is a sound way to insure that
our Company will be managed in the best interests of the shareholders.
We believe our Board members should stand for election annually, presenting
and defending their strategic plan for the Company. There is growing support
for this view of director elections, as reflected in the strong shareholder
votes recently in favor of shareholder proposals to declassify boards of
directors. Shareholders are interested in establishing effective mechanisms
for achieving board and management accountability. Please give close
consideration and your support to this reform proposal.
Statement By The Board of Directors Against the Resolution
The Company's board hopes that shareholders will give this issue serious
thought and not simply resort to "voting guidelines" or other preconceived
notions. The Board believes that this union proposal is not in the best
interests of the Company and its shareholders and recommends that shareholders
vote against it. We believe that Gannett's history of exemplary financial
returns and operational success demonstrates why this proposal is unnecessary.
The staggered election of directors is a common practice and is similar to
procedures that have been adopted by the shareholders of many major
corporations. Classified boards are specifically permitted by the laws of many
states and by the rules of The New York Stock Exchange.
Shareholders first should ask themselves whether it is true that a
classified board detracts from the value of their investment or, in fact, adds
to it.
In 1985, the Company's shareholders voted in favor of establishing a
classified board system. One key purpose for this measure, as explained in the
1985 proxy statement, was to give the board a greater ability, in case of a
takeover offer, to analyze the takeover proposal, to solicit other offers, and
to negotiate more favorable terms on behalf of the shareholders. The Company
was not facing a takeover in 1985, nor does it do so now, yet the logic
remains the same.
When the shareholders approved the classified board, they obviously
concluded that it would help protect their investment. It is our view that
subsequent events have shown this judgment to be a wise one.
We agree with the proponent's statement that "our Company's financial
performance is closely linked to its corporate governance policies." The
Company has been operating successfully with a classified board system for the
past 12 years, and its performance has been strikingly good. During this
period, the Company's net income has grown 158%, from $276 million to $713
million; its annual dividend rate has grown 72%, from 43c to 74c; and its
stock price has grown 243%, from $18.03 to $61.81. During the past year alone,
the Company's stock price has grown 65% and its total market value has grown
from $10.58 billion to $17.55 billion.
A number of leading institutional investors and commentators have recognized
the benefits of a classified board. For example, in its 1997 Policy Statement
on Corporate Governance, the Teachers Insurance and Annuity
Association/College Retirement Equities Fund has concluded that a classified
board is in full accordance with the principles of good corporate governance.
We believe that a classified board of directors better ensures a level of
stability and familiarity with the Company's policies and business operations
among the directors, and a continuity and quality of leadership that directly
contributes to enhanced long-term value for the Company's shareholders. A
classified board system also reduces the ability of a third party to make a
sudden, unsolicited change in the Company's direction.
17
<PAGE>
Further, shareholders disappointed with the Company's performance can
replace incumbent directors or propose alternate nominees. If any director
were voted out of office due to shareholder dissatisfaction, the remaining
directors would be influenced by that action. Even with a classified board,
shareholders would be able to replace a majority of the Company's directors in
little over one year's time, at two consecutive annual meetings. Since the
inception of a classified board of directors at Gannett in 1985, no slate of
Board candidates has received less than a 97% vote in favor of its election.
The proponent suggests that the current structure "insulate[s] directors and
senior executives from the consequences of poor performance . . . and failed
policies." What "failed policies" does the proponent refer to in Gannett's
case? As noted above, Gannett's financial and operational performances have
been strikingly good, and the Company has always operated in an atmosphere of
full accountability.
Finally, shareholders should note that the adoption of this proposal would
not by itself eliminate Gannett's classified Board, since the proposal is only
an advisory recommendation to the Board. Under the laws of Delaware, where the
Company is incorporated, to eliminate a classified Board of Directors, the
Board first would have to authorize an amendment to the Company's Certificate
of Incorporation and the shareholders then would have to approve that
amendment with at least an 80% vote of the outstanding shares.
We believe that the excellent financial and operational track record of the
Company demonstrates that a classified Board of Directors will continue to
best serve and protect the interests of Gannett's shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3, AND YOUR PROXY
WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
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 1999 Annual Meeting, shareholder proposals must be received at the
Company's principal executive offices by November 18, 1998.
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, by
telephone or other means. The Company also will 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 1997 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, 1998
18
<PAGE>
GANNETT CO., INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 28, 1998
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 April 28, 1998 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.
PLEASE CAST YOUR VOTES ON THE REVERSE SIDE OR BY TELEPHONE AS DESCRIBED
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>
VOTING INSTRUCTIONS FOR GANNETT CO., INC.'S
1998 ANNUAL MEETING OF SHAREHOLDERS
This year for the first time Gannett Co., Inc. shareholders may vote their
shares for matters to be covered at the Company's 1998 Annual Meeting of
Shareholders using a toll-free telephone number. Of course, if you prefer, you
can still vote using the attached proxy card. Below are the instructions for
voting by phone or in writing.
VOTE BY PHONE 1-800-240-6326
Use any touch tone telephone to vote your proxy at anytime 24 hours a day, 7
days a week, until 10:00 a.m. on April 27, 1998. Have your proxy card in hand
when you call. You will be prompted to enter the 3-digit Company Number and your
7-digit Control number which are noted below, and then to follow the simple
voting instructions. If you would like to attend the meeting, you will have the
opportunity to request a ticket at the end of the telephone call.
VOTE BY MAIL
Mark, sign and date the attached proxy card and return it in the enclosed
postage-paid envelope.
IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD.
THANK YOU FOR VOTING.
[DOWN ARROW [DOWN ARROW
APPEARS HERE] Please detach here APPEARS HERE]
- --------------------------------------------------------------------------------
-----------------
COMPANY #
(continued from reverse side) CONTROL #
-----------------
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
---
1. ELECTION OF DIRECTORS: Nominees are: Stuart T. K. Ho, Josephine P. Louis,
Douglas H. McCorkindale
p
L VOTE FOR all nominees except those I have listed below: [ ]
E VOTE WITHHELD from all nominees: [ ]
A
S -------------------------------------------------------------------------
E 2. PROPOSAL TO ELECT Price Waterhouse as the Company's Auditors.
D [ ] FOR [ ] AGAINST [ ] ABSTAIN
E
T THE BOARD RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.
A -------
C 3. SHAREHOLDER PROPOSAL for declassification of the Board of Directors.
H
[ ] FOR [ ] AGAINST [ ] ABSTAIN
H
E THE PROXIES are authorized to vote in their discretion upon such other
R business, if any, as may properly come before the meeting.
E
I plan to attend the meeting, and I
request a ticket [ ]
Please sign exactly as name appears at
the left. Joint owners each should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full related
title.
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SIGNATURE DATE
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SIGNATURE DATE
