LEE ENTERPRISES, INCORPORATED
400 Putnam Building
215 N. Main Street
Davenport, IA 52801-1924
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 20, 1998
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Lee Enterprises, Incorporated, a Delaware
corporation (the "Company"), will be held in the second floor conference room of
the offices of the Company, 215 N. Main Street, Davenport, Iowa, on January 20,
1998, at 9:00 A.M., for the following purposes:
(1) To elect two directors for terms of three years, and two directors for
terms of one year; and
(2) To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed December 1, 1997 as the record date for the
determination of stockholders entitled to notice of and to vote at the meeting.
You are invited to attend this meeting; however, if you do not expect to attend
in person you are urged to execute and return immediately the enclosed proxy,
which is solicited by the Board of Directors. You may revoke your proxy and vote
in person should you attend the meeting.
/s/ C. D. Waterman III, Secretary
Davenport, Iowa
December 29, 1997
<PAGE>
LEE ENTERPRISES, INCORPORATED
1998 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Lee Enterprises, Incorporated (the "Company") to be
voted at the annual meeting of the stockholders of the Company to be held on
Tuesday, January 20, 1998, or at any adjournment thereof, for the purposes set
forth in the foregoing Notice of Annual Meeting.
The principal executive offices of the Company are located at 400 Putnam
Building, 215 N. Main Street, Davenport, Iowa 52801. This Proxy Statement and
the enclosed form of proxy are being mailed to stockholders on or about December
29, 1997, together with a copy of the Company's Annual Report for the fiscal
year ended September 30, 1997.
VOTING PROCEDURES
Stockholders of record at the close of business on December 1, 1997 will be
entitled to vote at the meeting or any adjournment thereof. As of December 1,
1997, there were 33,415,128 shares of Common Stock and 12,028,317 shares of
Class B Common Stock outstanding. Each share of Common Stock is entitled to one
vote at the meeting; each share of Class B Common Stock is entitled to ten votes
at the meeting.
The presence, in person or by proxy, of a majority of the voting power of Common
Stock and Class B Common Stock of the Company issued and outstanding and
entitled to vote is necessary to constitute a quorum at the annual meeting. The
affirmative vote of the holders of a plurality of the voting power of Common
Stock and Class B Common Stock represented in person or by proxy at the annual
meeting is required to elect directors, and the affirmative vote of the holders
of a majority of the voting power of Common Stock and Class B Common Stock is
required to act on any other matter properly brought before the meeting.
Abstentions from voting will be included for purposes of determining whether the
requisite number of affirmative votes are received on any matters submitted to
the stockholders for vote and, accordingly, will have the same effect as a vote
against such matters. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote, and will
have no effect on the vote, in respect to that matter.
In voting by proxy with regard to the election of directors, stockholders may
vote in favor of all nominees, withhold their votes as to all nominees, or
withhold their votes as to specific nominees. Stockholders should specify their
choices on the accompanying proxy card. All properly executed proxy cards
delivered by stockholders to the Company and not revoked will be voted at the
annual meeting in accordance with the directions given. If no specific
instructions are given with regard to the matters to be voted upon, the shares
represented by a signed proxy card will be voted "FOR" the election of all
directors as more fully set forth in this Proxy Statement. If any other matters
properly come before the annual meeting, the persons named as proxies will vote
upon such matters according to their judgment.
Any stockholder delivering a proxy has the power to revoke it as any time before
it is voted by giving written notice to the Secretary of the Company, by
executing and delivering to the Secretary a proxy card bearing a later date, or
by voting in person at the annual meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Two directors are to be elected at the annual meeting to hold office for
three-year terms expiring at the annual meeting of stockholders in 2001, and two
directors are to be elected for one-year terms expiring at the annual meeting of
stockholders in 1999. Each of the individuals named below is a nominee of the
Nominating Committee of the Board of Directors; each is presently a director
whose current term expires January 20, 1998.
Proxies will be voted for the election of these nominees unless the stockholder
giving the proxy withholds such authority. If as a result of circumstances not
now known any of such nominees shall be unable to serve as a director, proxies
will be voted for the election of such other person as management may select.
Information about the nominees and directors continuing office is set forth
below:
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
Principal Proposed Director
Nominee Occupation Age Term Since
- --------------------------------------------------------------------------------
Andrew E. Newman Chairman and CEO, 53 3 years 1991
Race Rock Inter- (2001)
National (2)
Ronald L. Rickman President- 59 3 years 1986
Publishing Group (2001)
Lloyd G. Schermer Chairman of the 71 1 year 1959
Board (1) (1999)
Richard W. Sonnenfeldt Consultant (3) 74 1 year 1982
(1999)
DIRECTORS CONTINUING IN OFFICE
Principal Remaining Director
Director Occupation Age Term Since
- --------------------------------------------------------------------------------
J. P. Guerin Investor (1) (3) 68 2 years 1985
(2000)
Charles E. Chairman and CEO 69 2 years 1990
Rickershauser, Jr. PS Group Holdings, (2000)
Inc. (3) (4)
Mark Vittert Investor (2) (4) 49 2 years 1986
(2000)
Rance E. Crain President, Crain 59 1 year 1990
Communications (2) (1999)
Richard D. Gottlieb President and 55 1 year 1986
Chief Executive (1999)
Officer (1)
Phyllis Sewell Retired (2) (4) 67 1 year 1977
(1999)
(1) Member of Executive Committee
(2) Member of Executive Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
Mr. Newman is Chairman and Chief Executive Officer of Race Rock International,
St. Louis, MO. He was Chairman of Edison Brothers Stores, Inc. until April,
1995. He is a director of Dave & Buster's Inc., Dallas, TX and Sigma-Aldrich
Corporation, St. Louis, MO. On November 3, 1995, Edison Brothers Stores, Inc.
filed a petition for reorganization under Chapter XI of the United States
Bankruptcy Code in Wilmington, Delaware. On September 26, 1997 following
confirmation of its reorganization plan the proceedings were terminated.
Mr. Rickman was elected President-Publishing Group of the Company on November
18, 1997. For more than 5 years prior thereto, he was Vice President-Newspapers
of the Company.
Mr. Schermer has been Chairman of the Board of the Company for more than the
past 5 years.
Mr. Sonnenfeldt is a business consultant, a director and Chief Executive Officer
of Solar Outdoor Lighting Co., Stuart, FL.
Mr. Guerin is Vice-Chairman of Daily Journal Company, Los Angles, CA and of PS
Group Holdings, Inc., San Diego, CA.
Mr. Rickershauser is Chairman and Chief Executive Officer of PS Group Holdings,
Inc., San Diego, CA. He is also a director of City National Corporation.
Mr. Vittert is a private investor and a director of PremiumWear, Minneapolis, MN
and Dave & Buster's Inc., Dallas, TX.
Mr. Crain is the President and Editorial Director of Crain Communications, a
diversified publishing company with its principal offices in Chicago, IL.
Mr. Gottlieb has been President and Chief Executive Officer of the Company for
more than the past 5 years.
Mrs. Sewell is a director of Pitney Bowes Inc., Stamford, CT and SYSCO
Corporation, Houston, TX.
<PAGE>
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors met four times in fiscal 1997.
The Company's Audit Committee met three times in fiscal 1997; its functions are
to review the scope, timing and other considerations relative to the independent
auditors' annual examination of financial statements and the adequacy of
internal control and the internal audit functions; and to evaluate the
performance of external and internal auditors and the Company's accounting and
financial departments. In addition, the Committee reviews professional services
provided by the Company's independent auditors, in general, prior to rendering
of such services, and the possible effect of any nonaudit-related services upon
the independence of the Company's independent auditors.
The Company's Nominating Committee met two times in fiscal year 1997; its
functions are to consider and recommend to the Board all nominees for possible
election and re-election to the Board, and to consider all matters relating to
the size, composition and governance of the Board and the general subject
matter, size and composition of board committees. The Nominating Committee will
consider nominees recommended by the stockholders. Recommendations should be
sent to Charles E. Rickershauser, Jr., Chairman, Nominating Committee, c/o the
Company, at the address shown on the cover of this Proxy Statement.
The Company's Executive Compensation Committee met three times in fiscal 1997;
its functions are to administer the Company's Retirement Account and
Supplementary Benefit Plans and the 1990 Long Term Incentive Plan; to establish
salary ranges and salaries, bonus formulae and bonuses, and participation in
other benefit plans or programs, for elected officers; to review employment
terminations involving payment to any individual in excess of $150,000, and to
approve employment contracts for executives extending beyond one year; and to
approve the position description, performance standards and key result areas for
bonus criteria for the Chief Executive Officer of the Company and to measure his
performance thereunder. In addition, the Committee recommends to the Board of
Directors significant employee benefit programs and bonus or other benefit plans
affecting individuals on the executive payroll other than elected officers.
No incumbent director attended fewer than 75% of the aggregate of (1) the total
number of meetings of the Board of Directors and (2) the total number of
meetings held by all committees of the Board on which he or she served during
1997.
COMPENSATION OF DIRECTORS
No Company employee receives any remuneration for acting as a director. In
fiscal 1997 Messrs. Newman, Vittert, Crain, Rickershauser, Guerin, Schermer and
Sonnenfeldt and Mrs. Sewell were paid a $24,400 annual retainer, $1,000 for each
Board meeting attended and $700 for each Committee meeting attended. Committee
chairs were also paid $3,000 extra as an annual retainer for acting as such. Mr.
Schermer received an additional stipend of $50,000 for his services as Chairman
of the Board. Directors engaged to provide consultative services are normally
compensated at the rate of $1,500 per diem. The Company in fiscal 1997 paid a
lump sum fee of $165,000 to Mr. Sonnenfeldt for consultative services rendered
to the Company in connection with the disposition of its subsidiary, NAPP
Systems Inc., and paid a per diem fee of $3,000 to Mr. Newman for consultative
services in connection with corporate strategic planning. No other non-employee
director was paid additional compensation for consultative services in fiscal
1997.
In February, 1996 the stockholders of the Company adopted the Stock Plan for
Non-Employee Directors. Under the plan, non-employee directors receive an annual
grant of 500 shares of Common Stock, and may elect to receive all or 50% of the
cash retainer and meeting fees described above in Common Stock of the Company.
The Board of Directors has authorized non-employee directors, prior to the
beginning of any Company fiscal year, to elect to defer receipt of all or any
part of the compensation a director might earn during such year. Amounts so
deferred will be paid to the director upon his or her ceasing to be a director
or upon attaining any specified age between 60 and 70, together with interest
thereon at the average rate of interest earned by the Company on its invested
funds during each year. Alternatively, directors may elect to have deferred
compensation credited to a "rabbi trust" established by the Company with an
independent trustee, which administers the investment of amounts so credited for
the benefit and at the direction of the trust beneficiaries until their accounts
are distributed under the deferred compensation plan.
The Company also matches, on a dollar-for-dollar basis up to $5,000 annually,
charitable contributions made by directors.
<PAGE>
EQUITY SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of December 1, 1997 as to each
person known by the Company to own beneficially more than five (5%) percent of
the Common Stock or Class B Common Stock of the Company.
Percent Class B Percent
Beneficial Owners Common Stock of Class Common Stock of Class
- --------------------------------------------------------------------------------
Harris Associates, L.P. 3,538,651 10.59% --- ---
Two North LaSalle St
Suite 500
Chicago, IL 60602
Journal Limited 2,517,449 7.53% --- ---
Partnership
4230 So. 33rd Street
Lincoln, NE 68506
Reich & Tang 1,682,363 5.03% --- ---
Asset Management, L.P.
600 Fifth Avenue
8th Floor
New York, NY 10020
Lloyd G. Schermer (1) 219,242 .66% 1,182,586 9.83%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
Betty A. Schermer (2) --- --- 1,171,354 9.74%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
(1) Includes (i) 109,222 Common and 403,028 Class B Common shares owned by a
trust as to which Lloyd G. Schermer retains sole voting and investment
powers; (ii) 82,210 Class B Common shares held by a charitable foundation
as to which Lloyd G. Schermer has shared voting and investment power; (iii)
348,838 Class B Common shares held by a charitable trust as to which Lloyd
G. Schermer has sole voting and shared investment power; and (iv) 110,020
Common and 110,020 Class B Common shares held by a trust and 238,490 Class
B Common shares held by a charitable foundation as to which Lloyd G.
Schermer shares voting and investment powers. Lloyd G. Schermer disclaims
beneficial ownership of 110,020 Common and 779,558 Class B Common shares
listed above, and of the Common and Class B Common shares beneficially
owned by Betty A. Schermer listed above and described in footnote (2)
below.
(2) Includes (i) 801,338 Class B Common shares owned by trusts under which
Betty A. Schermer has sole voting and investment powers; (ii) 238,490 Class
B Common shares owned by a charitable trust as to which Betty A. Schermer
shares voting and investment powers, but disclaims all beneficial
ownership; and (iii) 82,210 Class B Common shares held by a charitable
foundation as to which Betty A. Schermer has shared voting and investment
power, but disclaims all beneficial ownership. Betty A. Schermer also
disclaims beneficial ownership of all Common and Class B Common shares
beneficially owned by Lloyd G. Schermer listed and described in footnote
(1) above.
<PAGE>
The following table sets forth information as to the Common Stock and Class B
Common Stock of the Company beneficially owned as of December 1, 1997 by each
director, each of the named executive officers listed in the Summary
Compensation Table below, and by all directors and executive officers as a
group:
Name and
Address of Percent Class B Common Percent
Beneficial Owner Common Stock of Class Stock of Class
- --------------------------------------------------------------------------------
Larry L. Bloom (2) 41,210 * --- ---
1021 Carriage Place Drive
Bettendorf, IA 52722
Rance E. Crain 5,733 * --- ---
220 E. 42nd Street
Room 940
New York, NY 10017
Richard D. Gottlieb (1)(2) 531,912 1.59% 125,505 1.04%
11 Deer Hill Road
Pleasant Valley, IA 52767
J. P. Guerin (1) 1,000 * 106,814 *
355 S. Grand Ave.
34th Floor
Los Angeles, CA 90071
Andrew E. Newman 3,000 * --- ---
8000 Maryland Ave.
St. Louis, MO 63105
Charles E. 3,000 * --- ---
Rickershauser, Jr.
355 S. Grand Ave.
34th Floor
Los Angeles, CA 90071
Ronald L. Rickman (2) 257,698 * 79,746 *
2520 Old Freeport Ct.
Bettendorf, IA 52722
Lloyd G. Schermer (1)(2) 219,242 * 2,033,240 16.90%
C/o Lee Enterprises,
Incorporated
400 Putnam Building
215 N. Main Street
Davenport, IA 52801
Gary N. Schmedding (1)(2) 212,316 * 9,064 *
5743 Lewis Court
Bettendorf, IA 52722
Phyllis Sewell 2,900 * 2,900 *
7716 Pinemeadow
Cincinnati, OH 45224
Richard W. Sonnenfeldt 2,800 * 200 *
4 Secor Drive
Port Washington, NY 11050
Greg R. Veon (1)(2) 65,558 * 5,804 *
1718 Pleasant Praire Rd.
Muscatine, IA 52761
Mark Vittert 3,000 * --- ---
750 S. Price Road
Ladue, MO 63124
All present executive 1,770,338 5.30% 2,949,273 24.52%
officers and directors
as a group (18)
* Less than one (1%) percent of the class.
(1) The following directors and officers disclaim beneficial ownership of
the following shares, included above, not owned personally by them or
held for their benefit: Schermer, 110,020 Common Stock, 1,630,212 Class
B Common Stock; Gottlieb, 30,448 Common Stock, 67,286 Class B Common
Stock; Guerin, 2,850 Class B Common Stock; Schmedding, 540 Common
Stock; and Veon, 400 Common Stock.
(2) This table includes the following shares subject to acquisition within
60 days by the exercise of outstanding stock options: Gottlieb, 435,600
Common Stock; Rickman, 190,876 Common Stock; Schmedding, 182,252 Common
Stock; Bloom, 32,650 Common Stock; and Veon, 46,690 Common Stock.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following tables and discussion summarize the compensation which the Company
paid for services rendered in all capacities for the fiscal year ended September
30, 1997 to the chief executive officer of the Company and to each of the four
other most highly compensated executive officers of the Company.
Summary Compensation Table
<TABLE>
Annual Compensation Long Term Compensation (1)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted All Other
Annual Stock Stock LTIP Compen-
Name and Principal Compensa- Awards($) Options Payouts($) sation($)
Position Year Salary($) Bonus($) tion($)(3) (4) (#) (6) (7)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard D. 1997 $535,500 $250,000 $5,000 $111,000 26,794 (5) $148,750 $89,747
Gottlieb 1996 510,000 153,000 5,000 60,200 20,000 116,350 75,323
President 1995 460,000 360,000 5,000 112,000 47,960 (5) 541,420 94,092
and Chief
Executive
Officer
Ronald L. 1997 335,000 157,450 5,000 74,370 15,000 79,688 54,874
Rickman 1996 320,000 102,400 5,000 32,250 10,000 79,431 46,692
President- 1995 304,400 188,728 5,000 60,000 20,000 351,948 55,194
Publishing
Group
Gary N. 1997 278,000 30,580 5,000 33,300 8,000 79,688 32,993
Schmedding 1996 265,000 58,300 5,000 32,250 10,000 50,344 34,899
President- 1995 237,900 198,667 5,000 60,000 20,000 169,791 48,463
Broadcast
Group
Larry L. Bloom 1997 247,000 123,620 4,000 51,615 10,000 53,125 40,376
Sr. Vice 1996 235,000 77,550 4,000 21,500 7,500 15,663 33,620
President- 1995 216,300 141,802 2,500 40,000 15,000 0 39,126
Finance
And Chief
Financial
Officer
Greg R. Veon (2) 1997 184,000 80,960 0 34,688 8,000 49,513 27,802
Vice President 1996 175,100 52,530 0 21,500 7,500 27,029 23,514
Marketing 1995 140,000 117,600 0 20,000 3,000 109,086 27,166
<FN>
(1) The Executive Compensation Committee of the Company meets following the
conclusion of the Company's fiscal year to determine, among other things,
the amount of the annual bonus to be awarded and the long term compensation
grants to be made, if any, for the fiscal year just concluded.
The Summary Compensation Table includes the value of shares of restricted
stock and the number of stock option shares granted by the Executive
Compensation Committee under the Company's 1990 Long Term Incentive Plan in
each of the years indicated for the corresponding fiscal year.
(2) Mr. Veon became an executive officer of the Company in November, 1995.
(3) Represents matching payments made by the Company to charitable organization
designated by the executive officer.
(4) The amounts shown represent shares of restricted stock in the following
amounts granted to the named individuals in 1995, 1996 and 1997,
respectively: Mr. Gottlieb, 5,600, 2,800 and 4,000 shares; Mr. Rickman,
3,000, 1,500 and 2,680 shares; Mr. Schmedding, 3,000, 1,500 and 1,200
shares; Mr. Bloom, 2,000, 1,000 and 1,860 shares; and Mr. Veon, 1,000,
1,000 and 1,250 shares. The restricted stock awarded in 1995, 1996 and 1997
will vest on the third anniversary of the grant date. Holders of restricted
stock are entitled to receive all cash dividends paid in respect thereof
during the restricted period. At September 30, 1997, the number and market
value of shares of restricted stock (including those awarded in November,
1997) held by each of the named executive officers were as follows: Mr.
Gottlieb, 12,400 shares ($351,850); Mr. Rickman, 7,180 shares ($203,733);
Mr. Schmedding, 5,700 shares ($161,738); Mr. Bloom, 4,860 shares
($137,903); and Mr. Veon, 3,250 shares ($92,219).
(5) Includes replacement (reload) options awarded at exercise of non-qualified
options with payment made with restricted stock to Mr. Gottlieb in 1995:
7,906 shares; and 1997: 1,794 shares.
<PAGE>
(6) The amounts shown for 1997 and 1996 represent the value at the end of the
fiscal year of restricted stock awarded three years prior thereto and
vesting within 60 days after the end of the fiscal year. The amounts shown
for 1995 represent the aggregate of (a) the value of restricted stock
awarded in November, 1992 and vesting in November, 1995 for Mr. Gottlieb,
$230,669; Mr. Rickman, $121,714; Mr. Schmedding, $93,492; and Mr. Veon,
$17,490; and (b) payments in 1995 to distribute accrued deferred
compensation account balances at September 30, 1995 payable under the
phaseout of the 1962 Deferred Compensation Unit Plan which was discontinued
in 1989. The 1995 deferred compensation distributions, to the named
executive officers and included in column (h) were as follows: Mr.
Gottlieb, $310,751; Mr. Rickman, $230,234; Mr. Schmedding, $76,299; and Mr.
Veon, $91,596.
(7) The amounts shown represent contributions by the Company on behalf of the
named individuals to the Company's Retirement Account Plan and Supplemental
Retirement Account.
</FN>
</TABLE>
Option Grants in Last Fiscal Year
<TABLE>
Individual Grants
(a) (b) (c) (d) (e) (f)
Name Options % of Total Options Exercise Price Expiration Date Grant Date Present
Granted Granted to Employees ($/Sh) Value($)
(1) in Fiscal Year (2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Gottlieb 25,000 11.9% $ 26.63 10-Nov-07 $185,750
1,794 (3) 0.9% 28 81 10-Nov-00 8,128
Ronald L. Rickman 15,000 7.2% 26 63 10-Nov-07 111,450
Gary N. Schmedding 8,000 3.8% 26 63 10-Nov-07 59,440
Larry L. Bloom 10,000 4.8% 26 63 10-Nov-07 74,300
Greg R. Veon 8,000 3.8% 26 5/8 10-Nov-07 59,440
<FN>
(1) The options granted to the named individuals were determined by the
Executive Compensation Committee following review of each individual's
performance in fiscal year 1997, and become exercisable in installments of
30% of the original grant on each of the first and second anniversaries of
the grant date and 40% on the third anniversary. All options are for Common
Stock and have an exercise price equal to the closing market price of the
stock on the grant date. The lesser of 25% or the maximum number of shares
permitted by law are designated as incentive stock options, and the balance
are non-qualified options. All options were granted under the Company's
1990 Long Term Incentive Plan, the provisions of which, among other things,
allow an optionee exercising an option to satisfy the exercise price and
withholding tax obligations by electing to the Company withhold shares of
stock otherwise issuable under the option with a fair market value equal to
such obligations. The Plan also permits an optionee exercising an option to
satisfy the exercise price be delivering previously awarded restricted
stock or Common Stock. The limitations accompanying the restricted stock
remain in effect and apply to the corresponding number of shares issued
upon the stock option exercise until they lapse according to their original
terms.
(2) The "grant date present value" is a hypothetical value determined under the
Black-Scholes Option Pricing Model. It is one of the methods permitted by
the Securities and Exchange Commission for estimating the present value of
options. The Company's stock options are not transferable, and the actual
value of the stock options that an executive officer may realize, if any,
will depend on the excess of the market price on the date of exercise over
the exercise price. The Black-Scholes Option Pricing Model is based on
assumptions as to certain variables such as the volatility of the Company's
stock price and prevailing interest rates, so there is no assurance that an
individual will actually realize the option values presented in this table.
<PAGE>
(3) Replacement (reload) option awarded at exercise of a non-qualified option
with payment made with restricted stock. The exercise price of the
replacement option is the closing market price of the Company's Common
Stock on the award date, and the replacement option has a term equal to the
remaining term of the option exercised.
</FN>
</TABLE>
<TABLE>
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year End Option Values
(a) (b) (c) (d) (e)
Name Shares Value Number of Unexercised Value of Unexercised
Acquired On Realized ($) Options at FY End (#) In-the-Money Options at
Exercise (#) Exercisable /Unexercisable FY End ($) Exercisable/
Unexercisable
(1) (2) (3) (4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard D. Gottlieb 44,700 $733,719 401,600 $5,689,183
64,000 565,250
Ronald L. Rickman 66,500 863,094 167,876 2,379,907
47,000 308,875
Gary N. Schmedding -0- -0- 165,252 $2,384,379
40,000 296,625
Larry L. Bloom -0- -0- 19,900 227,481
34,000 229,469
Greg R. Veon 6,000 $94,875 41,440 601,738
20,900 115,625
<FN>
(1) All options are for Common Stock and were granted under the Company's 1982
Incentive Stock Option Plan or the 1990 Long Term Incentive Plan.
(2) Market value of underlying securities at exercise date minus the exercise
price.
(3) Options granted under the Company's 1990 Long Term Incentive Plan become
exercisable in three installments over a period of three years from the
date of grant. The number of unexercisable options shown includes those
granted by the Executive Compensation Committee in November, 1997 for the
fiscal year just concluded.
(4) Market value of underlying securities at September 30, 1997 ($28.375),
minus the exercise price.
</FN>
</TABLE>
Long Term Incentive Plans - Awards in Last Fiscal Year
The Executive Compensation Committee made restricted stock awards and stock
option grants under the Company's Long Term Incentive Plan in November, 1997
which, as to the named executive officers, are shown in the Summary Compensation
Table and the following tables. The Committee decided in November, 1992 not to
make any performance unit awards in future fiscal years under the Plan. The
Committee made its decision after careful examination of the Plan, the award of
performance and the compensation objectives of the Committee for executive
officers of the Company. The Committee does not intend to make performance unit
awards during fiscal year 1998.
Pension Plans
Under the Company's Retirement Account and Supplementary Benefit Plans, the
Company matches employee contributions up to 5% of employee compensation and, in
addition, contributes 6.2% of a participant's total compensation plus an
additional 5.7% of such compensation in excess of $65,400. These retirement
plans are defined contribution plans and were adopted in 1980 to replace the
Company's Pension Plan, a defined benefit plan. The Company and employee
contributions are invested and the total amount standing to each employee's
credit is paid following his or her retirement. The amounts credited in fiscal
1997 under the Retirement Account and Supplementary Benefit Plans to the
accounts of the person listed in the Summary Compensation Table are listed in
footnote 7 thereto.
The Company's Pension Plan was superseded in 1980 by the Retirement Account
Plan. Annual benefits under the Pension Plan payable upon retirement at age 65
to the individuals listed in the Summary Compensation Table are follows: Mr.
Gottlieb, none; Mr. Rickman, $11,574; Mr. Schmedding, $1,376; Mr. Bloom, none;
and Mr. Veon, $328.
<PAGE>
Executive Agreements
The Company is obliged under written agreements to pay to Messrs. Gottlieb,
Rickman, and Schmedding a multiple of three times the executive officer's base
salary in the event of termination of his employment without cause. The Company
decided in 1991 not to enter into such agreements in the future with its
executive officers.
Performance Presentation
The graphical presentation omitted herein compares the yearly percentage change
in the cumulative total shareholder return of the Company, the Standard & Poor's
(S & P) 500 Stock Index, and the S & P Publishing/Newspapers Index, in each case
for the five years ending September 30, 1997. Total shareholder return is
measured by dividing (a) the sum of (i) the cumulative amount of dividends
declared for the measurement period, assuming dividend reinvestment and (ii) the
difference between the issuer's share price at the end and the beginning of the
measurement period, by (b) the share price at the beginning of the measurement
period.
The following data points were used in the omitted graph.
<TABLE>
1992 1993 1994 1995 1996 1997
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lee ........................... $100.00 $100.72 $113.51 $146.08 $157.37 $199.24
S&P Publishing/Newspapers-Index $100.00 $102.20 $102.82 $126.03 $163.53 $247.68
S&P 500 ....................... $100.00 $113.00 $117.16 $152.01 $182.92 $256.90
</TABLE>
The (S & P) 500 Stock Index includes 500 U.S. companies in the industrial,
transportation, utilities and financial sectors and is weighted by market
capitalization. The S & P Publishing/Newspapers Index, which is also weighted by
market capitalization, includes the following six publishing companies: Gannett
Co., Inc., Knight-Ridder, Inc., The New York Times Company, The Times Mirror
Company, Dow Jones & Company, Inc. and The Tribune Company.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The Committee
The Executive Compensation Committee of the Board of Directors (the "Committee")
is composed of four independent outside directors. No executive officer of the
Company is a member of the board of directors of any company with which a member
of the Committee is affiliated. The Board of Directors has delegated to the
Committee the authority to review, consider and determine the compensation of
the Company's executive officers and other key employees and, in accordance with
Rule 16b-3 of the Exchange Act, make the final determination regarding awards of
stock options, restricted stock, and other stock-based awards to such persons.
Compensation Policies
The Committee operates on the principle that the compensation of the Company's
executive management, including its Chief Executive Officer and the other
executive officers named in the Summary Compensation Table, should be
competitive with compensation of executive management at comparable companies
but should not be at the top of any range derived from such comparisons. The
Committee also follows a policy of basing a significant portion of the cash
compensation of senior executive officers on the operating performance of the
Company, and of other members of the executive management team on the
performance of the enterprises, units or functions over which they exercise
significant management responsibility. The Committee's policies are designed to
assist the Company in attracting and retaining qualified executive management by
providing competitive levels of compensation that integrate the Company's annual
and long term performance goals, reward strong corporate performance, and
recognize individual initiative and achievement. The Committee also believes
that stock ownership by management and stock-based performance compensation
arrangements are beneficial in the linking management's and stockholders'
interest in the enhancement of stockholder value.
The Company's executive compensation program is comprised of three elements: (1)
base salary; (2) annual incentive bonus; and (3) long-term incentive
compensation.
<PAGE>
Base Salary
Salary levels for executive management are set so as to reflect the duties and
level of responsibilities inherent in the position, and to reflect competitive
conditions in the lines of business in which the Company is engaged in the
geographic areas where services are being performed. Comparative salaries paid
by other companies in the industries and locations where the Company does
business are considered in establishing the salary for a given position. The
Company participates annually in the Towers Perrin Media Industry Compensation
Survey (the "Towers Survey"), which is widely used in its industry and gives
relevant compensation information on executive positions. The Company strives to
place fully competent and highly performing executives at the median level of
compensation, as reported annually in the Towers Survey.
The Towers Survey provides annual compensation analyses for executives in the
media industry based on revenues, industry segments including publishing and
broadcasting, and market type and size. The statistical information, including
revenues and compensation levels, provided by survey participants is utilized by
the Towers Survey to develop statistical equations based on revenues, industry
segments and markets. These equations, along with other data, are used by the
Company to determine the median and other levels of compensation of the
executive management of media companies with profiles comparable to that of the
Company. Base salaries for executives named in the Summary Compensation Table
are reviewed annually by the Committee taking into account the competitive level
of pay as reflected in the Tower Survey. In setting base salaries, the Committee
also considers a number of factors relating to the particular executive,
including individual performance, level of experience, ability and knowledge of
the job. These factors are considered subjectively in the aggregate and none of
the factors is accorded a specific weight. Base salaries were increased in 1997
for executive management by 4.9% on a composite basis. The Committee believes
the base salary levels are reasonable and necessary to retain these key
employees.
Annual Incentive Bonus Program
The purpose of the annual incentive bonus program is to motivate and reward
executive management so that they consistently achieve specific financial
targets and are compensated for the accomplishment of certain non-financial
objectives. These targets and objectives are reviewed and approved by the
Committee annually in conjunction with its review of the Company's strategic and
operating plans. A target bonus level, stated as a percent of annual base
salary, is established for each member of the executive management team other
than executive officers, by the executive officer exercising responsibility over
an enterprise unit or function. For executive officers other than the Chief
Executive Officer, the bonus level and achievement targets are determined by the
Chief Executive Officer and approved by the Committee. Similarly, the Committee
determines the annual bonus opportunity and performance objectives of the Chief
Executive Officer. While the annual incentive bonus awards for executives other
than the Chief Executive Officer are generally approved upon the recommendation
of the Chief Executive Officer, the Committee retains the right to adjust the
recommended bonus awards to reflect its evaluation of the Company's overall
performance.
Long Term Incentives
Under the Company's 1990 Long Term Incentive Plan, the Committee is authorized,
in its discretion, to grant stock options, restricted stock awards, and
performance units payable in cash or restricted stock of the Company in such
proportions and upon such terms and conditions as the Committee may determine.
The Committee meets following the end of each year to evaluate the performance
of the Company for the preceding fiscal year and determine long term incentive
awards of executive management of the Company for the fiscal year just ended.
Under the Plan, grants to executives are based on criteria established by the
Committee, including responsibility level, base salary, current market practice
and the market price of the Company's stock at the time of grant. The number of
stock options and/or restricted shares then determined is reviewed by the
Committee and may be increased or decreased to reflect the criteria noted above,
the individual executive's role in accomplishment of the Company's operating
objectives, and that individual's potential for long term growth and
contribution to the Company's strategic objectives. Grant guidelines for stock
options and restricted stock are established for all participants (including the
chief executive officer) with the objective of providing a target total
compensation opportunity, including base salary and the target annual incentive
bonus, equal to the median of the peer group. Depending on stock price
performance and Company performance, actual total compensation for any given
year could be at, above or below the median of the peer group. The number of
options or restricted shares previously granted to or held by an executive is
not a factor in determining individual grants.
<PAGE>
As noted above, the Committee determined in 1992 not to award any further
performance units, and did not make any such awards in 1997.
The number of stock options granted to each executive officer in 1997 was
determined by dividing a specified dollar amount of the target award for the
grant by a hypothetical fair market value of the stock option as of the grant
date, based upon the Black-Scholes Option Pricing Model. All stock options
granted have an exercise price equal to the fair market value of the Common
Stock at time of grant and are exercisable within a 10 year period. In order to
assure the retention of high level executives and to tie the compensation of
those executives to the creation of long term value for shareholders, the
Committee has provided that stock options generally vest in specified portions
over a three year period.
The awards of restricted stock to executive officers and other key employees in
1997 represent shares of Common Stock which the recipient cannot sell or
otherwise transfer until the applicable restriction period lapses. The number of
shares of restricted stock awarded was determined by dividing a specified dollar
amount of the target award by the fair market value of the Company's Common
Stock on the date the awards are approved. Restricted stock awards are also
intended to increase the ownership of executives in the Company, through which
the value of long term stockholder ownership and growth can be enhanced.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction
to public companies for compensation over $1 million paid to certain executive
officers in any taxable year beginning on or after January 1, 1994.
Performance-based compensation and payments in respect of binding obligations
entered into prior to February 17, 1993 are not subject to the deduction limit
if certain requirements are met. The Company has structured the
performance-based portion of the compensation of its executive officers in a
manner that complies with section 162(m).
Compensation of Chief Executive Officer
The Committee determined the 1997 base salary for the Company's Chief Executive
Officer, Richard D. Gottlieb, in a manner consistent with the base salary
guidelines applied to executive officers of the Company as described above. The
annual bonus paid to Mr. Gottlieb for 1997 was based upon a subjective
evaluation of the performance of the Company in relation to past years and the
performance of comparable media companies, and to a lesser extent, his
accomplishment of certain non-financial performance objectives. Consistent with
the philosophy expressed above, the Committee awarded a bonus below the target
determined at the beginning of the year because the Company did not achieve its
planned performance targets. In making that evaluation, the Committee did note
the favorable performance of the Company in several categories in relation to
peer group companies for the current and past three years.
The Committee made long term compensation awards of stock options and restricted
stock to Mr. Gottlieb in 1997 by applying the same criteria described for the
determination of such awards to other executive officers of the company. The
Committee did not consider past stock options and restricted stock grants to Mr.
Gottlieb in determining the amount of his 1997 grants. The Committee did
consider the 1997 performance of the Company, as more particularly described
above, in the final determination of such grants.
Executive Compensation Committee Participation
The current members of the Executive Compensation committee are Phyllis Sewell,
Chairman, Mark Vittert, Rance E. Crain and Andrew E. Newman.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen LLP, Certified Public Accountants, has been
designated by the Board of Directors of the Company to audit the financial
statements of the Company, its divisions and subsidiaries, for the fiscal year
to end September 30, 1998. Said firm has audited the Company's accounts since
1960 and is considered to be well qualified.
Representatives of McGladrey & Pullen will be present at the 1998 annual meeting
and will be afforded the opportunity to make a statement, if they desire to do
so, and will be available to respond to appropriate questions.
<PAGE>
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders with regard to nominees for the Board of Directors or
other matters intended to be presented at the 1999 annual meeting of the Company
must be received by the Company for inclusion in its proxy statement and form of
proxy relating to that meeting by August 15, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires the
Company's directors and executive officers and persons who own more than ten
percent of the Company's Common Stock or Class B Common Stock to file initial
reports of ownership and reports of changes in that ownership with the
Securities and Exchanges Commission and the New York Stock Exchange. Specific
due dates for these reports have been established, and the Company is required
to disclose in its proxy statement any failure to file by these dates during the
Company's 1997 fiscal year.
Based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, the Company
believes that all filing requirements applicable to its executive officers and
directors were satisfied.
OTHER MATTERS
The Management of the Company know of no matters to be presented at the meeting
other than those set forth in the Notice of Annual Meeting. However, if any
other matters properly come before the meeting, your proxy, if signed and
returned, will give discretionary authority to the persons designated in it to
vote in accordance with their best judgment.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, some of the officers and regular employees of
the Company may, without extra remuneration, solicit proxies personally or by
telephone or telegraph. The Company may also request brokerage houses, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial owners
of stock held of record and will reimburse such persons for their expenses. The
Company has retained Morrow & Co., Inc. to aid in the solicitation of proxies,
for which the Company will pay an amount that it has estimated will not exceed
$7,000 plus expenses.
/s/ Richard D. Gottlieb
-------------------------------------
RICHARD D. GOTTLIEB
President and Chief Executive Officer
