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
JOURNAL COMMUNICATIONS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
JOURNAL COMMUNICATIONS, INC.
333 West State Street
Milwaukee, Wisconsin 53203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 2, 1998
The Annual Meeting of the Stockholders of Journal Communications, Inc.
(the "Company") will be held in the Board of Directors room, Journal
Communications, Inc., 333 West State Street, Milwaukee, Wisconsin 53203,
on Tuesday, June 2, 1998 at 9:30 a.m. for the purpose of electing twenty-
six (26) directors, the names of whom are set forth in the accompanying
proxy statement, to serve until the 1999 Annual Meeting.
Stockholders of record at the close of business on April 28, 1998, will be
entitled to vote at this meeting or any adjournment thereof. Also, active
employees of the Company or its subsidiaries who hold units of beneficial
interest in the Journal Employees' Stock Trust as of April 28, 1998, are
entitled to vote pursuant to the enclosed proxy.
Regardless of the number of shares or units you own, it is important that
you be represented at the meeting. Therefore, please sign, date and
return the enclosed proxy form in the return envelope provided. If you
attend the meeting, you may revoke your proxy and vote in person if you so
desire.
PLEASE VOTE AND SIGN YOUR PROXY AND RETURN NO LATER THAN MAY 22, 1998 TO
HAVE YOUR VOTE COUNTED.
By Order of the Board of Directors,
________________________________
Paul E. Kritzer, Secretary
Dated: May 12, 1998
<PAGE>
TRUSTEES' PROXY TO UNITHOLDERS
For the Annual Meeting of Stockholders of Journal Communications, Inc.
to be held on June 2, 1998
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned holders of
14,400,000 shares of capital stock of Journal Communications, Inc., a
Wisconsin corporation, do hereby appoint each unitholder in the Journal
Employees' Stock Trust, as proxy with power of substitution, for and in
the name of the undersigned to vote one share of said stock for each Trust
unit held by such unitholder as evidenced on the transfer books of the
Trustees at the close of business on April 28, 1998, at the Annual Meeting
of Stockholders of said Company to be held at the time and place specified
in the foregoing notice and at any adjournment of said meeting, in
relation to any and all matters which may properly come before such
meeting, with all of the powers that the undersigned would possess if
personally present thereat. A certified list of such unitholders,
together with the number of shares they are so entitled to vote, has been
delivered to the Company by the Trustees.
This proxy is issued pursuant to the provisions of Section 21 of the
Journal Employees' Stock Trust Agreement dated May 15, 1937, as amended,
and the authority hereby conferred is subject to each of the restrictive
conditions expressed therein as follows:
"The Trustees, as soon as they shall receive notice of any
meeting of the owners of Journal Stock, shall issue to each
owner of units, except ex-employee-eligibles, employee benefit
trusts and employee-eligible transferees, a proxy authorizing
him/her or such other person(s) as he/she may substitute for
him/her to vote at such meeting the number of shares of Journal
Stock represented by the units owned by him/her, provided,
however, and each such proxy shall so state, that neither the
owner of such units nor his/her substitute(s) shall have the
power or authority to vote (a) to sell or lease all or
substantially all of the assets of the Company, or (b) to
dissolve the Company or (c) to merge or consolidate the Company
with any other corporation(s) in which the Company and/or the
stockholders of the Company upon completion of such
consolidation or merger do not control directly or indirectly a
majority of the voting stock, unless the employee-owners of at
least two-thirds of the outstanding units owned by employee-
eligibles shall have authorized the Trustees to offer all shares
held by the Trustees for sale in accordance with the provisions
of Section 24 to the classes of optionees therein defined and
such options shall have expired within three months prior to
such vote. The Trustees may authorize the affixing of a
facsimile of their signatures to any proxy with the same effect
as though such proxy were signed by them personally. The
Trustees shall have exclusive authority to vote all shares of
Journal Stock represented by units owned by ex-employee-
eligibles, employee benefit trusts and employee-eligible
transferees."
The Trustees will vote 3,854,544 units owned by ex-employee-eligibles,
employee benefit trusts and employee-eligible transferees.
Dated: May 12, 1998
Trustees Under Journal Employees' Stock Trust Agreement, dated May 15,
1937, as amended
<PAGE>
JOURNAL COMMUNICATIONS, INC.
333 West State Street
Milwaukee, Wisconsin 53203
PROXY STATEMENT
Solicitation of Proxies
The enclosed Proxy is solicited by the Board of Directors of Journal
Communications, Inc. (the "Company"), a Wisconsin corporation, for use at
the Annual Meeting of Stockholders of the Company to be held at 9:30 a.m.
on Tuesday, June 2, 1998 (the "Annual Meeting"), in the Board of Directors
room at Journal Communications, Inc., 333 West State Street, Milwaukee,
Wisconsin 53203. In addition to the use of the mails at Company expense,
the Company may, if it deems it desirable, solicit proxies personally, by
telephone, by e-mail, by facsimile or by other written communication.
Solicitations will be made by regular employees of the Company at Company
expense; however, no such person will receive any compensation over and
above his normal remuneration. A stockholder or unitholder who executes a
proxy may revoke it by giving written notice to the Secretary of the
Company before the meeting or by so stating in the open meeting before the
proxy is exercised. Any proxy that is not revoked will be voted at the
meeting in accordance with the instructions given on the enclosed proxy
form. This proxy statement and enclosed proxy form are being sent to
stockholders and unitholders on or about May 12, 1998.
Outstanding Voting Securities
The Company has only one class of stock authorized and outstanding
("Journal Stock"). Stockholders of record at the close of business on
April 28, 1998, are entitled to notice of the meeting and to vote the
shares of Journal Stock held on that date. Each share is entitled to one
vote. Directors will be elected by a plurality of votes cast at the
Meeting (assuming a quorum is present). For this purpose, "plurality"
means that the individuals receiving the largest number of votes are
elected as directors, up to the maximum number of directors to be chosen
at the election. Consequently, any shares or units of beneficial interest
not voted at the Meeting, whether due to abstention or otherwise, will
have no impact on the election of directors. On April 28, 1998,
14,400,000 shares of Journal Stock were outstanding, of which 12,960,000
shares were held by the Trustees of the Trust under the Journal Employees'
Stock Trust Agreement ("JESTA"), dated May 15, 1937, as amended, which
shares were, in turn, represented by a like number of units of beneficial
interest ("units") issued by the Trustees of the Journal Employees' Stock
Trust (the "Stock Trust"). See "Beneficial Ownership under JESTA" for a
further description of JESTA and the voting rights of the holders of units
("unitholders"). On April 28, 1998, the Company was the holder of 215,585
units, which will not be voted at the meeting.
Principal Stockholders
Listed in the following table are the beneficial owners as of April 28,
1998, of more than five percent (5%) of the issued Journal stock:
Percentage
Name/Address Class Ownership Type Amount Owned of Class
Journal Employees' Common Beneficial 12,960,000 90%
Stock Trust, 333 W. Record
State Street,
Milwaukee, WI 53203
Matex Inc., 735 N. Common Beneficial 1,320,000 9.2%
Water Street, Record
Milwaukee, WI 53202
Ownership by Directors and Officers as a Group
Voting securities beneficially owned by directors and director nominees
are disclosed under "Election of Directors," below. The twenty-six
director-nominees and officers of the Company as a group (but excluding
David G. Meissner, James L. Forbes and Roger D. Peirce) are the beneficial
owners of 657,749 units, or 4.4% of the number of issued shares of Journal
Stock. Mr. Meissner owns no units but is an officer and director of Matex
Inc., which owns 1,320,000 shares of Journal Stock. Mr. Meissner's wife
and two adult children are also officers and directors of Matex Inc. and
together they own or have a beneficial interest in 33% of the outstanding
common stock of Matex Inc. Mrs. Meissner also has a 33% beneficial
interest in a trust that holds 120,000 shares of Journal Stock. Other
members of Mrs. Meissner's family own or have a beneficial interest in the
remaining 67% of Matex Inc. shares and the trust that holds the 120,000
shares of Journal Stock. Mr. Forbes and Mr. Peirce, as non-employees, are
prohibited by JESTA from owning units.
Beneficial Ownership Under JESTA
On April 28, 1998, the Stock Trust, of which Robert A. Kahlor, Steven J.
Smith, Douglas G. Kiel, Paul M. Bonaiuto and Richard A. Williams are the
Trustees, owned of record 12,960,000 shares or ninety percent (90%) of the
outstanding Journal Stock. The Stock Trust issues units, each unit
representing a beneficial interest in one (1) share of Journal Stock. On
April 28, 1998, the 12,960,000 units of beneficial interest issued by the
Stock Trust were owned as follows: Active Employee Unitholders, 8,889,871;
Retirees and Employee Trusts, 3,854,544; Journal Communications, Inc.,
215,585.
The Trustees are required to deliver to each active employee unitholder a
proxy, with the right of substitution, for the number of shares of Journal
Stock represented by his/her units. The Trustees' Proxy, which is
included with this proxy statement, is subject to certain limitations in
JESTA. Those limitations are set forth in the "Trustees' Proxy to
Unitholders."
Whenever a unitholder ceases to be an employee of the Company for any
reason except retirement, corporate downsizing or restructuring (in which
event special rules apply), the unitholder must offer his/her units for
resale to employees designated by the President of the Company. The
President cannot allocate units to himself. Employees who retire or are
separated from the Company due to downsizing or restructuring may retain a
decreasing percentage of their units for a limited number of years.
Employee benefit trusts are eligible to hold units. All units held by
retirees, separated employees, employee benefit trusts and other trusts
are voted by the Trustees of the Stock Trust. On the record date,
retirees and employee trusts held 3,854,544 units representing twenty-
seven percent (27%) of the outstanding and issued Journal Stock.
All of the Trustees are directors and officers of the Company and receive
no additional compensation for this service. They have no beneficial
interest in the Journal Stock owned by the Trust other than through the
units they own individually.
ELECTION OF DIRECTORS
The Company's By-laws provide that the number of directors shall be no
less than three (3) and no more than twenty-seven (27) and that all
directors shall be elected annually. Twenty-six (26) directors have been
nominated to serve until the next Annual Meeting of Stockholders.
Management intends to vote its proxies for the election of the twenty-six
(26) nominees listed below. Although management expects that each of the
nominees will be available for election, if any of them is not a candidate
at the time the election occurs, the proxies will be voted for the other
nominees and may be voted for substituted nominees. Pursuant to the
Company's By-laws, written notice of other qualifying nominations for
election to the Board of Directors must have been received by the
Secretary by February 1, 1998. As no notice of any such other nominations
was received, no other nominations for election to the Board of Directors
may be made at the Meeting. The nominees for director of the Company are
listed in the following table:
Principal Date Elected Units Owned
Nominee Occupation (1) Age Director (2)
Todd K. Adams Vice President; 39 June 4, 1996 19,495
Senior Vice
President & CFO,
Journal Sentinel
Inc.
Reginald A. Beene Pension Plan 36 June 2, 1998 440
Administrator,
Journal
Communications,
Inc.
Paul M. Bonaiuto Executive Vice 47 June 8, 1993 24,810
President & CFO
Glenn A. Bowman Broadcast 40 June 2, 1998 263
Engineer, Journal
Broadcast Group,
Milwaukee
James J. Ditter Vice President; 36 September 6, 12,099
President, 1995
Norlight
Telecommunica-
tions, Inc.
Robert M. Dye Vice President 50 March 6, 1990 50,370
James L. Forbes President & CEO, 65 September 4, 0
Badger Meter, 1996
Inc., Milwaukee,
WI
Richard J. Gasper Vice President; 54 June 4, 1996 15,532
President,
NorthStar Print
Group, Inc.
Douglas G. Hosking Vice President; 41 September 4, 9,584
President, IPC 1996
Communication
Services, Inc.
Stephen O. Huhta Vice President; 42 June 8, 1993 40,855
President, Add,
Inc.
Robert A. Kahlor Chairman of the 64 March 6, 1973 98,935
Board
Mark J. Keefe Vice President; 38 June 4, 1996 11,815
President,
PrimeNet
Marketing
Services, Inc.
Douglas G. Kiel Executive Vice 49 June 4, 1991 40,249
President;
President,
Journal Broadcast
Group, Inc.
Paul E. Kritzer Vice President & 56 June 5, 1990 45,045
Secretary
Ronald G. Kurtis Vice President; 51 June 8, 1993 63,500
Senior Vice
President & CFO,
Journal Broadcast
Group, Inc.
David G. Meissner Executive 60 June 7, 1988 (4)
Director, The
Public Policy
Forum
John E. Mollwitz Copy Editor, 56 June 2, 1998 18,535
Journal Sentinel
Inc.
Shawn P. O'Neill Distribution 32 June 2, 1998 826
Operations
Coordinator,
Journal Sentinel
Inc.
Roger D. Peirce Corporate 60 September 4, 0
director and 1996
advisor
Steven J. Smith President & Chief 48 June 2, 1987 85,280
Executive Officer
Marc P. Spindt Network 28 June 2, 1998 60
Specialist,
Norlight
Telecommunica-
tions, Inc.
Keith K. Spore Senior Vice 55 September 6, 31,000
President; 1995
President &
Publisher,
Journal Sentinel
Inc.
Mark W. Sukovich Artist/Designer, 29 June 2, 1998 2,245
NorthStar Print
Group, Inc.,
Milwaukee
Richard A. Assistant 60 June 3, 1997 61,145
Williams Secretary &
Manager of
Retirement
Benefits
Paris J. Wright Journeyman, 33 June 2, 1998 1,138
Camera/
Platemaking,
Journal Sentinel
Inc.
Robert T. Zynda Financial 26 June 2, 1998 66
Analyst, Add,
Inc., Waupaca
_____________________________________
(1) All nominees except David G. Meissner, James L. Forbes, Roger D.
Peirce, Douglas G. Hosking, Mark J. Keefe, Richard J. Gasper, Reginald A.
Beene, Glenn A. Bowman, Marc P. Spindt and Robert T. Zynda have been
employed by the Company for over five (5) years at the time of the Annual
Meeting. Messrs. Meissner, Forbes and Peirce are not employed with the
Company. Mr. Meissner has been the Executive Director of the Public
Policy Forum Inc., Milwaukee, since March 29, 1995. Prior to that he had
been President of Morgan&Myers/The Barkin Group, a Milwaukee public
relations firm, since 1992. Mr. Forbes has been the President and Chief
Executive Officer of Badger Meter, Inc., Milwaukee, a marketer and
manufacturer of flow measurement and control products, for more than five
years. He is also a director of Universal Foods Corporation, Blue Cross
and Blue Shield United of Wisconsin, United Wisconsin Services, Inc.,
Firstar Corporation and Firstar Trust Company. Mr. Peirce was an
executive of Super Steel Products Corp., Milwaukee, for more than seven
years and was its Vice Chairman and Chief Executive Officer at the time of
his retirement on January 1, 1994. Subsequently he has been a corporate
director and consultant. He is also a director of W. H. Brady Co. Mr.
Hosking joined IPC Communication Services, Inc. in April 1996 and was
named President of that company in July 1996. Previously, he had been
Vice President for Commercial Development and General Manager of the Food
Fiber division of Opta Food Ingredients, Inc., for two years and Executive
Vice President of Courier Corp., San Francisco, a national book printer.
Mr. Keefe was elected President of PrimeNet Marketing Services, Inc. in
October 1995. Prior to that he had been Vice President and General
Manager of the Computer Services Division of Donnelley Marketing, Inc. in
Minneapolis from January 1994 to September 1995 and a manager in the
Minneapolis office of FDC, Inc. where he was a Vice President from April
1992 to December 1993. Mr. Gasper was elected President of NorthStar
Print Group, Inc. in January 1996. Prior to that, he had been the Vice
President and General Manager of Label Products & Design, Inc. from April
1993 to December 1995 and President of Competitive Advantage, Inc., a
consulting company in Florence, South Carolina, for two years. Mr. Beene
has been the Pension Plan Administrator for Journal Communications, Inc.
since May 1995. Prior to that he was a Syndicate Associate for Kemper
Securities (now Everen Securities), Milwaukee, from June 1994 to May 1995
and a Corporate Trust Administrator for First Bank, N.A., Milwaukee (now
US Bank, Milwaukee) for the previous ten (10) years. Mr. Bowman has been
employed as a Broadcast Engineer by Journal Broadcast Group, Inc.,
Milwaukee, since November 1994. Prior to that, he was a Broadcast
Engineer with radio stations WLZR and WKLH, Milwaukee. Mr. Spindt joined
Norlight Telecommunications, Inc. as a Network Specialist in the
Applications Engineering Department in April 1996. He graduated in May
1995 from the University of Wisconsin-Milwaukee with a degree in Computer
Science and was employed by Frontier Technologies Corporation, Mequon,
Wisconsin, as a Software Engineer for the following year. Mr. Zynda has
been employed since September 1996 by Add, Inc., Waupaca, where he is now
the Financial Analyst. He graduated in May 1995 from University of
Wisconsin-Stevens Point with a degree in Managerial Accounting. He was
employed as Plant Accounting Manager at Wallace Computer Services, Elk
Grove Village, Illinois, in 1995-1996.
(2) No director or officer beneficially owns one percent (1%) of the
outstanding Journal Stock, except as noted above in "Ownership by
Directors and Officers as a Group."
(3) New nominee for election as director of the Company at the Annual
Meeting.
(4) See "Ownership of Directors and Officers as a Group" above.
Directors' Fees
The Company pays directors' fees only to those directors who are not
employees of the Company. They are eligible to receive an annual retainer
fee of $15,000 a year plus $1,500 for each Board meeting or meeting of the
Compensation, Executive or Audit Committee attended. Mr. Forbes received
$28,500, Mr. Peirce received $27,000 and Mr. Meissner received $13,500 in
directors' fees in 1997. (Mr. Meissner declined the annual retainer fee.)
Of the 26 nominees, 23 are employees and 3 are not. All directors who are
full-time employees of the Company or a subsidiary are compensated in
their capacities as employees.
The Board of Directors and Committees
The Board of Directors met four (4) times in 1997. All of the directors
of the Company during 1997 attended at least 75% of the (a) full meetings
of the Board of Directors and (b) meetings of committees of the Board of
Directors on which the respective directors served.
The Board of Directors has three (3) committees: compensation, executive
and audit. The Compensation Committee held three (3) meetings in 1997.
The Compensation Committee has the responsibility to assure that officers
and key managers are effectively compensated in terms of salary and
benefits that are internally equitable and externally competitive. The
committee's members, none of whom can be an employee, are Messrs.
Meissner, Forbes and Peirce.
The Board of Directors has authorized a nine-member Executive Committee
and delegated certain powers of the Board to it for use for the Company to
act on urgent matters efficiently, quickly and decisively. All members of
the Executive Committee are Directors. Elected as members of the
Executive Committee were Messrs. Kahlor, Smith, Bonaiuto, Kiel, Spore,
Meissner, Forbes, Peirce and Donald L. Jaeschke. The Executive Committee
held no meetings in 1997.
The Board of Directors has authorized a three-member Audit Committee to
assist the Board in fulfilling its responsibility for the Company's
accounting and financial reporting practices and to provide a channel of
communications between the Board and the Company's independent auditors
and internal audit staff. The Audit Committee is comprised of the three
non-employee directors, Messrs. Meissner, Forbes and Peirce. The Audit
Committee held two (2) meetings in 1997.
Executive Compensation
The following table sets forth the 1997 compensation for the Company's
Chief Executive Officer and the four highest-paid executive officers, as
well as the total compensation paid to each individual for the last three
fiscal years:
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation
Name and Principal Position Bonus (Annual Long-term LTIP
(as of December 31, 1997) Year Salary Incentive Comp.) Payments All Other Comp 3
<S> <C> <C> <C> <C> <C>
Robert A. Kahlor, Chairman of the 1997 562,393 356,457 202,400 4,000
Board & Chief Executive Officer 1 1996 522,853 237,725 -0- 3,750
1995 486,971 67,275 -0- 3,750
Steven J. Smith, President and 1997 409,923 203,711 113,850 4,000
Chief Operating Officer 2 1996 385,175 136,145 -0- 3,750
1995 366,468 37,571 -0- 3,750
Douglas G. Kiel, Executive Vice 1997 319,704 132,565 126,500 4,000
President & President of Journal 1996 290,147 121,500 66,799 3,750
Broadcast Group, Inc. 1995 271,678 82,960 -0- 3,750
Paul M. Bonaiuto, Executive Vice 1997 267,523 125,837 45,474 4,000
President & Chief Financial 1996 218,563 83,250 -0- 3,750
Officer 1995 203,155 16,910 -0- 3,750
Keith K. Spore, Senior Vice 1997 292,525 127,276 -0- 4,000
President & President of Journal 1996 254,454 31,850 -0- 3,750
Sentinel Inc. 1995 189,737 8,680 -0- 3,750
1 Relinquished title of Chief Executive Officer as of March 3, 1998.
2 Elected Chief Executive Officer on March 3, 1998.
3 All of the five highest-compensated officers were participants in the
Journal Communications, Inc. Investment Savings Plan. Employer
contributions to the plan on behalf of these officers represent all of the
compensation in the "All Other Compensation" column in the Summary
Compensation Table above.
</TABLE>
Pension Plan and Supplemental Benefit Plan
The following table shows the approximate retirement benefit payable on
retirement at age 65 under the Journal Communications, Inc. Employees'
Pension Trust and the Journal Communications, Inc. Supplemental Benefit
Plan for employees in specified compensation ranges with varying years of
participation in the plan:
Estimated Annual Retirement Benefit
Five Year Years of Plan Participation
Average Compensation 20 30 40
$200,000 $ 48,189 $ 72,287 $ 88,332
$300,000 $ 74,188 $111,288 $135,832
$400,000 $100,188 $150,288 $183,332
$500,000 $126,187 $189,289 $230,831
$600,000 $152,186 $228,289 $278,330
$700,000 $178,186 $267,290 $325,830
The Journal Employees' Pension Trust (Pension Plan) is completely funded
by the Company. Company contributions are accrued based on amounts
required to be funded under provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The amount of accrued benefits is
actuarially determined by Hewitt Associates (Chicago) under the accrued
benefit valuation method. It is a defined benefit pension plan that
provides benefits for employees of Journal Communications, Inc., Journal
Sentinel Inc., Journal Broadcast Corporation, Add Inc. (and its
subsidiaries), Norlight Telecommunications, Inc. and Trumbull Printing,
Inc. who meet minimum age and service eligibility requirements. The
normal monthly retirement benefit under the plan, assuming attainment of
the normal retirement age specified by the plan and payments in the form
of a life annuity, is determined in accordance with a formula that takes
into account the following factors: final average monthly compensation
for the last five years of employment (taking into account gross earnings
and incentive compensation as reported in the Summary Compensation Table),
number of years of active plan participation and an actuarially determined
Social Security offset.
The Journal Communications Supplemental Benefit Plan is an unfunded
defined benefit plan that supplements payments under the Pension Plan.
Benefits payable under the plan are calculated without regard to the
limitations imposed on the amount of compensation that may be taken into
account under the Pension Plan. The Supplemental Plan pays the excess, if
any.
With respect to the officers and directors listed in the "Summary
Compensation Table" above, all five were participants in the Pension Plan.
Mr. Kahlor has 27 years of plan participation, Mr. Smith has 23 years, Mr.
Kiel has 12 years, Mr. Spore has 31 years and Mr. Bonaiuto has 5 years as
of the date of this document.
Compensation Committee Report
The Board of Directors has established a compensation committee to be
comprised of three members, none of whom would be an employee, to develop
and implement compensation plans for senior management. The Board of
Directors charged the Compensation Committee with the responsibility for
assuring that officers and key management personnel of the Company are
effectively compensated in terms of salaries and benefits that are based
on performance as well as being internally equitable and competitive with
the market. Specifically, the Compensation Committee was directed to (1)
independently review and approve the compensation plan proposed by the
Chairman/CEO for the President, the Executive Vice President and the
Presidents of the subsidiaries, and (2) formulate and implement a
compensation plan for the Chairman/CEO. For 1997, senior management
compensation was reviewed by the Compensation Committee, and, where
appropriate, base salaries were adjusted to targets within median ranges
for the industry. The Compensation Committee has established the
following policies for executive base compensation, an annual incentive
program, a long-term incentive program and compensation for the chief
executive officer.
1. Executive Base Compensation Plan
The Compensation Committee adopted the principle that the Company's
executive compensation policy should be based primarily on performance.
Compensation should also reflect the Company's desire to attract and
retain quality talent and the need to be competitive in the marketplace.
The Compensation Committee reviewed the Company's historical performance,
current salary levels and media industry marketplace information. With
that information, the Committee received recommendations from management
and approved executive pay grade levels that took into consideration
market salary medians for 1997.
2. Executive Annual Incentive Plan
The Compensation Committee designed the Management Annual Incentive Plan
to reward key individuals for achieving pre-established financial and non-
financial goals that support the Company's annual business objectives and
mission to enhance the value of employee-owners' investment. This annual
incentive plan rewards executive performance as measured by net return on
invested capital and annual growth in revenue, factors that primarily
determine unitholders' value. For executives of Journal Communications,
Inc., the annual incentives are based eighty percent (80%) on corporate
financial performance and twenty percent (20%) on non-financial goals.
For subsidiary presidents and other key managers, the annual incentives
are based sixty percent (60%) on subsidiary performance, twenty percent
(20%) on corporate performance and twenty percent (20%) on non-financial
goals. Participation in this plan is limited to key employees of the
Company and its subsidiaries whose job responsibilities have a direct
impact on the strategic goals of the Company. The goals established for
each participant shall determine the minimum, median and maximum payments
receivable annually under the plan. Each participant is apprised annually
of the financial performance matrix and other goals that will determine
the potential incentive payment the participant can receive.
In 1997, annual bonus targets were compared to bonuses received in the
marketplace and were found to be within median ranges.
3. Executive Long-Term Incentive Plan
The Compensation Committee established a Management Long-Term Incentive
Plan (LTIP) to motivate and drive management behavior to achieve results
that will enhance the employee-owner's investment over the long term. The
incentive plan approved by the Committee is based on net return on equity
over a three-year period. Corporate executives will be rewarded one
hundred percent (100%) on Journal Communications' performance while
subsidiary presidents will be rewarded sixty percent (60%) on subsidiary
performance and forty percent (40%) on corporate performance.
Participation in this incentive plan is limited to key employees of the
Company and its subsidiaries whose job responsibilities have a direct
impact on the strategic goals of the Company. The initial participants in
this plan were limited to the Chairman/CEO, President, Executive Vice
President and the Presidents of the subsidiaries. Payment amounts are
listed in the Summary Compensation Table above. Payments were made for
1997 under the plan early in 1998 to Messrs. Kahlor, Smith, Kiel and
Bonaiuto.
The following table shows the Threshold, Target and Maximum awards which
are potentially payable to the named executive officers in 2001 for the
performance period of 1998-2000 under the LTIP. Payouts of awards are
tied to the three-year average return on shareholder's equity of Journal
Communications and the three-year average return of invested capital for
the subsidiary companies. Performance measures and goals for the
corporation and subsidiaries are recommended by the CEO and approved by
the Compensation Committee of the Board for each eligible participant.
Each participant's award is determined based on the degree to which three
year performance at the corporate and/or subsidiary level is achieved at
the conclusion of the performance cycle.
Management Long-Term Incentive Plan
Potential Payments in 2001 as a Percentage
of Base Salary for Performance Period 1998-2000
Name Threshold Target Maximum
Robert A. Kahlor 22% 88% 132%
Steven J. Smith 16.5% 66% 99%
Douglas G. Kiel 11.5% 46% 69%
Paul M. Bonaiuto 11.5% 46% 69%
Keith K. Spore 11.5% 46% 69%
4. Chairman/CEO's Compensation
The Chairman/CEO's total yearly compensation in 1997 was determined by the
Compensation Committee, based primarily upon the Company's overall
performance and growth of shareholder value. Factors influencing the
committee's determination of the Chairman/CEO base compensation for 1997
included the continued growth of the Company, the increased growth in the
value of Journal Communications' stock units, the protection of the best
interests of the employee-owners, the chairman's continued efforts to
diversify the Company's business and recognition that his current
compensation is below competitive norms within the industry. Based on the
Company's performance in 1997, the Chairman/CEO was awarded an annual
incentive bonus of $356,457 which was paid in 1998. Based on the
Company's aggregate performance for the three-year period of 1995-1997,
the Chairman/CEO was awarded a long-term incentive compensation bonus of
$202,400 which was paid in 1998. The Compensation Committee continues to
review the effect of Section 162(m) of the Revenue Code. In the past,
this has not had a material effect due to the officers' compensation
levels.
Stock Performance Graph
The following graph shows a comparison of cumulative total returns for the
Company's Common Stock ("JCI"), the Standard & Poor's 500 Stock Index
("S&P 500") and a "Peer Group" comprised of ten (10) corporations that
concentrate on newspapers and broadcast operations (but do not include the
Company's blend of other diversified businesses, such as
telecommunications, printing, production and distribution of materials and
services for the computer industry and direct mail which, in the
aggregate, provide about 42.5% of the Company's annual revenues).
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
Among Journal Communications, Inc., S&P 500 and a Peer Group
Proxy Stock Performance Graph
1993 1994 1995 1996 1997
JCI 100 109 117 127 137 169
S&P 500 100 110 112 153 188 251
Peer Group 100 115 109 134 171 249
The total cumulative return on investment (change in the year-end stock
price plus reinvested dividends) (the "Total Return") for Journal Stock is
based on a $100 investment as of January 1, 1993. The price of Journal
Stock is calculated thirteen (13) times a year, or every four (4) weeks,
using a formula that is based on the Company's earnings over a five (5)
year period and book value at the time of calculation. The formula is
stated in Section 25 of JESTA. The Total Return for the S&P 500 is based
on a $100 investment as of January 1, 1993. The Total Return for the Peer
Group is based on a $100 investment in the ten (10) companies included in
the Index, as of January 1, 1993. Companies in the Peer Group are: A.H.
Belo Corporation, Gannett, Inc., Knight Ridder, Inc., Lee Enterprises,
Inc., McClatchy Newspapers, Inc., The New York Times Company, Pulitzer
Publishing Company, The E.W. Scripps Company, Tribune Company and The
Washington Post Company.
Relationship with Independent Auditors
The Board of Directors of Journal Communications, Inc. appointed Ernst &
Young LLP ("Ernst & Young"), 111 E. Kilbourn Avenue, Milwaukee, Wisconsin
53202, as the independent auditor for the year 1997 and is expected to
reappoint the firm for 1998 at the Annual Meeting. In accordance with
past Company practice, it is not expected that a representative of Ernst &
Young will attend the Annual Meeting. The 1997 Annual report, which was
mailed to all stockholders during March of this year, will be officially
accepted at the annual meeting on June 2, 1998. Any shareholder or
unitholder having a question about the 1997 Annual Report or the Company's
relationship with Ernst & Young should direct it to Paul M. Bonaiuto,
Executive Vice President/CFO, P. O. Box 661, Milwaukee, Wisconsin 53201
(333 W. State Street, Milwaukee, Wisconsin 53203). Mr. Bonaiuto will
forward questions to Ernst & Young, and it will respond to such questions
as soon as possible.
Ernst & Young has served as the Company's independent auditor for at least
73 years. During 1997, it performed an audit examination of the
consolidated financial statements of the Company for inclusion in the
Annual Report to stockholders and required filings with the Securities and
Exchange Commission. Additionally, Ernst & Young performed the annual
audits of Journal Employees' Stock Trust, the Journal Communications, Inc.
Investment Savings Plan and the Journal Communications Pension Trust.
Other Matters
A copy of the Company's Annual Report on Form 10-K as filed with the
Securities & Exchange Commission on March 31, 1998, will be furnished
without charge to stockholders or unitholders upon written request
directed to Paul E. Kritzer, Secretary, Journal Communications, Inc., P.O.
Box 661, Milwaukee, Wisconsin 53201 (333 W. State Street, Milwaukee,
Wisconsin 53203), or e-mail at [email protected].
A stockholder or unitholder wishing to include a proposal in the Company's
proxy statement for the 1999 Annual Meeting of Stockholders in accordance
with Securities and Exchange Commission rules must forward the proposal to
the Secretary so it is received by Monday, February 1, 1999. In addition,
the Company's By-laws establish procedures for nominations for elections
of directors of the Company and for bringing business before any annual
meeting of stockholders of the Company. Any such notice must be timely
and must contain certain information about the proposed business or the
nominee and the party making the proposal.
Company management does not intend to present to the meeting any matters
not referred to in the foregoing Notice of Annual Meeting and does not
know of any matters that will be presented to the meeting by others.
By Order of the Board of Directors
Paul E. Kritzer, Vice President &
Secretary
May 12, 1998
