LEE ENTERPRISES, INCORPORATED
400 Putnam Building
215 N. Main Street
Davenport, IA 52801-1924
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 26, 1999
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 26,
1999, at 9:00 AM, for the following purposes:
(1) To elect three directors for terms of three years, and one director for a
term of one year;
(2) To take action on a proposal to amend, restate and extend the Company's
1990 Long Term Incentive Plan; and
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed December 1, 1998 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, 1998
<PAGE>
LEE ENTERPRISES, INCORPORATED
1999 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 26, 1999, 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, 1998, together with a copy of the Company's Annual Report for the fiscal
year ended September 30, 1998.
VOTING PROCEDURES
Stockholders of record at the close of business on December 1, 1998 will be
entitled to vote at the meeting or any adjournment thereof. As of December 1,
1998, there were 32,787,354 shares of Common Stock and 11,573,584 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
represented at the meeting 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 other than the
election of directors 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 be considered as present and
entitled to vote, but 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 and the proposal to amend, restate and extend the Company's 1990 Long
Term Incentive Plan 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 at 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
Three directors are to be elected at the annual meeting to hold office for
three-year terms expiring at the annual meeting of stockholders in 2002, and one
director is to be elected for a one-year term expiring at the annual meeting of
stockholders in 2000. 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 26, 1999. Richard W. Sonnenfeldt, a director
of the Company since 1982, is retiring at the annual meeting and will not stand
for re-election. The Board of Directors does not currently plan to fill his
vacancy and, effective as of the annual meeting date, the number of directors
will be reduced to eleven.
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 the Board of Directors
may select. Information about the nominees and directors continuing office is
set forth below:
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
Principal Proposed Director
Nominee Occupation Age Term Since
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rance E. Crain President, Crain 60 3 years 1990
Communications (2) (2002)
Richard D. Gottlieb President and 56 3 years 1986
Chief Executive (2002)
Officer (1)
Phyllis Sewell Retired (2) (4) 68 3 years 1977
(2002)
Lloyd G. Schermer Chairman of the 72 1 year 1959
Board (1) (2000)
DIRECTORS CONTINUING IN OFFICE
Principal Remaining Director
Director Occupation Age Term Since__
Gordon D. Prichett Department Chairman, 57 2 years 1998
Babson College (2001)
William E. Mayer Partner, 58 2 years 1998
Development Capital (2001)
Andrew E. Newman Chairman and CEO, 54 2 years 1991
Race Rock (2001)
International (2)
Ronald L. Rickman President-Publishing 60 2 years 1986
Group (2001)
J.P. Guerin Investor (1) (3) 69 1 year 1985
(2000)
Charles E. Chairman and CEO, 70 1 year 1990
Rickershauser, Jr. PS Group Holdings, (2000)
Inc. (3) (4)
Mark Vittert Investor (2) (4) 50 1 year 1986
(2000)
<FN>
(1) Member of Executive Committee
(2) Member of Executive Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
</FN>
</TABLE>
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.
Mr. Schermer has been Chairman of the Board of the Company for more than the
past 5 years. Mr. Schermer is the father of Gregory P. Schermer, Vice
President-Interactive Media and Corporate Counsel of the Company.
Mr. Prichett is Chairman of Mathematics, Statistics and Information Systems at
Babson College, Babson Park, MA.
Mr. Mayer is a partner in Development Capital, LLC, a private investment firm,
New York, NY. He is also a director of Johns Manville Corporation, Hambrecht &
Quist Group, and a trustee of the Colonial Mutual Funds.
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 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. 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.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors met four times in fiscal 1998.
The Company's Audit Committee met three times in fiscal 1998; 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 1998; 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 one time in fiscal 1998; 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
1998.
COMPENSATION OF DIRECTORS
No Company employee receives any remuneration for acting as a director. In
fiscal 1998 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, $700 for each Committee meeting attended and $350 for
each special telephone meeting. Committee chairs were also paid $3,000 extra as
an annual retainer for acting as such. In fiscal 1998, Mr. Prichett received a
pro rata share of the $24,400 annual retainer and Board and Committee fees for
each meeting attended. Mr. Mayer was not a director in fiscal 1998 and received
no remuneration from the Company during this fiscal year. 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. No non-employee director was paid additional
compensation for consultative services in fiscal 1998.
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.
EQUITY SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of December 1, 1998 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.
<PAGE>
<TABLE>
Percent Class B Percent
Beneficial Owners Common Stock of Class Common Stock of Class
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ariel Capital Management, 1,766,245 5.39% --- ---
Inc.
307 North Michigan Avenue
Chicago, IL 60601
Harris Associates, L.P. 4,538,732 13.85% --- ---
Two North LaSalle St.
Suite 500
Chicago, IL 60602
Journal Limited 2,216,435 6.76% --- ---
Partnership
4230 So. 33rd Street
Lincoln, NE 68506
Reich & Tang 1,682,363 5.13 % --- ---
Asset Management, L.P.
600 Fifth Avenue
8th Floor
New York, NY 10020
Lloyd G. Schermer (1) 219,742 .67% 1,182,586 10.22%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
Betty A. Schermer (2) --- --- 1,171,354 10.12%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
<FN>
(1) Includes (i) 109,722 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) 850,654 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.
</FN>
</TABLE>
<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, 1998 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
- --------------------------------------------------------------------------------
Richard F. Anderson(2) 4,525 * --- ---
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Larry L. Bloom (2) 52,877 * --- ---
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Rance E. Crain 6,233 * --- ---
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Richard D. Gottlieb (1)(2) 510,536 1.56% 119,448 1.03%
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
J. P. Guerin (1) 1,500 * 106,814 *
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
William E. Mayer --- * --- *
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Andrew E. Newman 3,500 * --- ---
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Gordon D. Prichett 1,600 * --- ---
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Charles E. 3,500 * --- ---
Rickershauser, Jr.
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Ronald L. Rickman (2) 272,659 * 79,746 *
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Lloyd G. Schermer (1)(2) 219,742 * 2,033,240 17.57%
c/o Lee Enterprises,
Incorporated
400 Putnam Building
Davenport, IA 52801
Gary N. Schmedding (1)(2) 222,141 * 9,064 *
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Phyllis Sewell 3,400 * 2,900 *
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Richard W. Sonnenfeldt(3) 3,300 * 200 *
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
Mark Vittert 3,500 * --- ---
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg.
Davenport, IA 52801
All present executive 1,683,010 5.14% 2,941,400 25.41%
officers and directors
as a group (20)
<PAGE>
* 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, 18,341 Common Stock, 33,873 Class B Common Stock; Guerin,
2,850 Class B Common Stock; Schmedding, 6,538 Common Stock.
(2) This table includes the following shares of common stock subject to
acquisition within 60 days by the exercise of outstanding stock options:
Gottlieb, 415,100 Common Stock; Rickman, 206,376 Common Stock; Schmedding,
187,652 Common Stock; Bloom, 41,622 Common Stock; and Anderson, 2,400
Common Stock.
(3) Non-employee director who is retiring when his current term expires January
26, 1999.
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, 1998 to the chief executive officer of the Company and to each of the four
other most highly compensated executive officers of the Company.
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation (1)
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name and Annual Restricted Other
Principal Compen- Stock Stock LTIP Compen-
Position Year Salary($) Bonus($) sation($) Awards($) Options(#) Payouts($) sation($)
(3) (4) (6) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard D. Gottlieb 1998 $570,000 $85,500 $5,000 $76,132 17,500 $157,850 $106,881
President and 1997 535,500 250,000 5,000 111,000 26,794 (5) 148,750 129,022
Chief Executive Officer 1996 510,000 153,000 5,000 60,200 20,000 116,350 108,473
Ronald L. Rickman 1998 345,000 69,000 5,000 50,981 10,500 84563 66,067
President-Publishing 1997 335,000 157,450 5,000 74,370 15,000 79,688 79,496
Group 1996 320,000 102,400 5,000 32,250 10,000 79,431 67,812
Gary N. Schmedding 1998 278,000 69,500 5,000 23,112 7,000 84,563 54,829
President-Broadcast 1997 278,000 30,580 5,000 33,300 8,000 79,688 48,422
Group 1996 265,000 58,300 5,000 32,250 10,000 50,344 51,064
Larry L. Bloom 1998 257,000 64,250 4,000 35,347 11,122 (5) 56,375 50,392
Sr. Vice 1997 247,000 123,620 4,000 51,615 10,000 53,125 58,907
President-Finance 1996 235,000 77,550 4,000 21,500 7,500 15,663 49,247
And Chief Financial
Officer
Richard F. Anderson(2) 1998 220,000 44,000 0 23,791 5,600 0 40,717
President-Pacific 1997 --- --- --- 34,687 8,000 --- ---
Northwest Publishing 1996 --- --- --- --- --- --- ---
Group, Inc.
<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. Anderson became an executive officer of the Company in October 1997 and
became an employee of the Company in September 1997.
(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 1996, 1997 and 1998,
respectively: Mr. Gottlieb, 2,800, 4,000 and 2,800 shares; Mr. Rickman,
1,500, 2,680 and 1,875 shares; Mr. Schmedding, 1,500, 1,200 and 850 shares;
Mr. Bloom, 1,000, 1,860 and 1,300 shares; and Mr. Anderson, 0, 1,250 and
875 shares. The restricted stock awarded in 1996, 1997 and 1998 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, 1998, the number and market value of
shares of restricted stock (including those awarded in November 1998) held
by each of the named executive officers were as follows: Mr. Gottlieb,
9,600 shares ($247,332); Mr. Rickman, 6,055 shares ($157,601); Mr.
Schmedding, 3,550 shares ($88,662); Mr. Bloom, 4,160 shares ($108,462); and
Mr. Anderson, 2,125 shares ($55,117).
(5) Includes replacement (reload) options awarded at exercise of non-qualified
options to Mr. Gottlieb in 1997: 1,794 shares, and Mr. Bloom in 1998: 4,122
shares.
(6) The amounts shown represent the value at the end of the fiscal year of
restricted stock awarded three years prior thereto and vesting within 60
days after the end of the fiscal year.
(7) The amounts shown represent contributions by the Company on behalf of the
named individuals to the Company's Retirement Account Plan and Supplemental
Retirement Account.
</FN>
</TABLE>
<PAGE>
<TABLE>
Option Grants in Last Fiscal Year
Individual Grants
(a) (b) (c) (d) (e) (f)
Name Options % of Total Options Exercise Price Expiration Grant Date Present
Granted Granted to Employees ($/Sh) Date Value($)
in Fiscal Year
(2)
(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Gottlieb 17,500 11.2% $ 27.1875 15-Nov-08 $116,200
Ronald L. Rickman 10,500 6.7% 27.1875 15-Nov-08 69,720
Gary N. Schmedding 7,000 4.5% 27.1875 15-Nov-08 46,480
Larry L. Bloom 7,000 4.5% 27.1875 15-Nov-08 46,480
1,229 (3) 0.8% 32.0625 21-Jul-03 8,333
2,893 (3) 1.9% 32.0625 02-Nov-03 20,048
Richard F. Anderson 5,600 3.6% 27.1875 15-Nov-08 37,184
<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 1998, 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 have 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 by delivering previously awarded restricted
stock or previously awarded 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 using
certain assumptions specified under the Black-Scholes Option Pricing Model.
The assumptions used in calculating the values are as follows:
</FN>
</TABLE>
<PAGE>
Factor Original Option Replacement Option
---------------------------------------
July Nov.
--------------------
Dividend Yield ....................... 2.06% 1.75% 1.75%
Volatility ........................... 16.45% 14.4% 14.4%
Risk-Free Interest Rate .............. 5.12% 5.74% 5.74%
Expected life (years) ................ 8 5.5 5.3
The Company's stock options are not transferable, are subject to a risk of
forfeiture, 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.
(3) Replacement (reload) option awarded at exercise of incentive and
non-qualified options with payment made with previously owned Common 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 options exercised.
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
(a) (b) (c) (d) (e)
Name Shares Acquired Value Number of Unexercised Value of Unexercised
On Exercise (#) Realized ($) Options at FY End (#) In-the-Money Options at
Exercisable /Unexercisable FY End ($) Exercisable/
Unexercisable
(1) (2) (3) (4)
- ------------------------------ ----------------- --------------- --------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard D. Gottlieb 50,000 $625,000 385,600 $4,338,780
72,500 160,125
Ronald L. Rickman -0- -0- 190,876 2,132,022
40,500 80,063
Gary N. Schmedding 5,000 100,625 174,252 2,006,139
30,000 80,063
Larry L. Bloom 6,400 106,800 30,372 204,797
28,250 60,047
Richard F. Anderson -0- -0- -0- -0-
13,600 -0-
<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 1998 for the
fiscal year just concluded.
(4) Market value of underlying securities at September 30, 1998 ($25.9375),
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 1998
which, as to the named executive officers, are shown in the Summary Compensation
Table and the table of Option Grants in Last Fiscal Year. The Committee decided
in November 1992 not to make any performance unit awards in future fiscal years
under the Plan. The Plan, as amended and described in Proposal 2 below,
eliminates performance units in future years.
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 $68,400. 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
1998 under the Retirement Account and Supplementary Benefit Plans to the
accounts of the person listed in the Summary Compensation Table are listed in
column (i) 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, $1,367; Mr. Bloom, none;
and Mr. Anderson, none.
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.
Change of Control Employment Agreements
After approval of the Board of Directors, the Company entered into employment
agreements with its executive officers, including each of the named executive
officers, as of May 7, 1998, which become effective upon a change of control or
in the event of a termination of employment in anticipation of a change of
control. The agreements extend for three years, but renew annually for a new
three year period unless the Company gives prior notice of termination. The
agreements provide that each such officer is to remain an employee for a
three-year period following a change of control of the Company (the "Employment
Period"). During the Employment Period, the officer is entitled to (i) an annual
base salary, payable monthly in an amount at least equal to his or her highest
monthly base salary during the year prior to the change of control, (ii) an
annual bonus in an amount at least equal to his or her highest annual bonus in
the three years prior to the change of control, and (iii) continued
participation in the Company's incentive, savings, retirement and welfare
benefit plans. The officer also is entitled to payment of expenses and fringe
benefits to the extent paid or provided to (a) such officer prior to the change
of control or (b) other peer executives of the Company.
If during the Employment Period, the officer's employment is terminated other
than for "Cause" or disability or the officer terminates his or her employment
for "Good Reason", including a detrimental change in responsibilities or a
reduction in salary or benefits, the officer will be entitled to the following
benefits: (i) all accrued and unpaid compensation; (ii) a severance payment
equal to three times the sum of such officer's (a) annual base salary, and (b)
highest recent annual bonus; (iii) payment equal to the retirement contribution
that the officer would have been eligible to receive from the Company under the
terms of the Company's Retirement Account Plan and Supplemental Retirement
Account (or successor plan or program then in effect), determined as if the
officer were fully vested thereunder and had continued (after the date of
termination) to be employed for an additional three years at the officer's
highest recent annual compensation for purposes of determining the basic
contributions and supplemental contributions; (iv) the amount of any forfeited
benefits under the Company's Savings Plan; and (v) any legal fees and expenses
incurred by the officer in asserting legal rights in connection with the
agreement. The officer shall also be entitled to continued welfare benefits for
three years and outplacement services. Subject to certain limits on payments,
the agreement also requires tax "gross-up" payments to the officer to mitigate
any excise tax imposed on the officer under Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), and any penalties and
interest in connection with a change of control. These payments would be in
addition to awards of restricted stock, stock options and stock appreciation
rights or amounts payable in lieu thereof under the Company's 1990 Long Term
Incentive Plan which, in the event of a change of control and subject to certain
limitations contained in the agreements, provides for early exercise and vesting
and issuance or payment of such awards. The officer is entitled to receive such
amounts in a lump-sum payment within 30 days of termination.
A change of control includes certain mergers and acquisitions, liquidation or
dissolution of the Company, changes in the membership of the Company's Board of
Directors and acquisition of securities of the Company.
Performance Presentation
The omitted graphical presentation compared 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, 1998 (with 1993 as the measurement point).
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 data points used for the omitted graph were as follows:
<TABLE>
1993 1994 1995 1996 1997 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lee $100.00 $112.69 $145.03 $156.24 $197.81 $184.26
S&P Publishing/Newspapers-Index $100.00 $100.61 $123.31 $160.01 $242.34 $236.42
S&P 500 $100.00 $103.68 $134.52 $161.87 $227.34 $247.91
</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 of 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.
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 Towers 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 1998 for executive management by 4.0% 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.
The number of stock options granted to each executive officer in 1998 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 stockholders, 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
1998 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 1998 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 1998 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.
The Committee made long term compensation awards of stock options and restricted
stock to Mr. Gottlieb in 1998 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 1998 grants. The Committee did
consider the 1998 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.
PROPOSAL 2
PROPOSAL TO APPROVE THE AMENDMENT, RESTATEMENT AND
EXTENSION OF THE 1990 LONG TERM INCENTIVE PLAN
Introduction. The Company is proposing to amend, restate and extend its 1990
Long Term Incentive Plan ("LTIP") which was approved by the stockholders in
1990. Although the LTIP has no expiration date, no incentive stock options may
be granted under the LTIP after October 1, 1999. The Board of Directors of the
Company believes that the Company's LTIP has proved to be an important means of
attracting, retaining and motivating individuals of exceptional training,
experience and ability. The Board of Directors also believes that it is vitally
important to the success of the Company to continue to provide its key employees
with long-term compensation incentives and equity opportunities linked, of
course, to the success of the Company's operations and a commensurate return to
the stockholders.
In furtherance of this goal, the stockholders are being asked to approve the
amendment, restatement and extension of the LTIP (the "Restated LTIP") effective
October 1, 1999.
Decrease Shares Available for Awards. Under the proposal to adopt the Restated
LTIP, the number of shares available for future grant or issuance would be
reduced to 2,250,000 shares of the Company's Common Stock, which amount will be
adjusted for stock splits and dividends and certain other corporate changes in
accordance with the Restated LTIP and increased by outstanding options or awards
issued under the LTIP which in the future may be forfeited, surrendered or
otherwise terminated, unexercised or not vested, and by shares tendered in
payment of the option exercise price or withholding taxes in respect of which
replacement options are granted. Shares would also be reserved for issuance in
respect of all outstanding stock options and restricted stock awards at the
effective date of the Restated LTIP.
At the 1990 annual meeting, the stockholders authorized the Company to issue
4,000,000 shares of Common Stock (after adjustment for stock splits and
dividends), together with all awards, forfeitures and shares reserved for
issuance under the Company's 1982 Incentive Stock Option Plan (the "1982 Stock
Plan"), under the LTIP. As of December 1, 1998, after giving effect to the 1998
option grants and restricted stock awards under the LTIP, and after taking into
account actual and anticipated forfeitures or other termination of such options
and awards, approximately 1,625,691 shares are subject to outstanding options
and awards. If all of the shares subject to outstanding options under the 1982
Stock Plan (which was replaced by the LTIP in 1989) and awards under LTIP, plus
the 2,250,000 shares to be reserved under the Restated LTIP, were ultimately
acquired by participants out of authorized or unissued shares and retained by
such participants, they would have acquired an additional 3,875,691 shares,
representing 10.57% of the Common Stock and 8.03% of the total of Common and
Class B Common Stock outstanding at December 1, 1998, as adjusted for such
issuance.
Eliminate Performance Units. Unlike the existing LTIP, the Restated LTIP
eliminates the issuance and award of performance units.
The Board's Executive Compensation Committee and the Board believe the reduction
of authorized shares is appropriate and sufficient to satisfy the purposes of
the Restated LTIP during its extension. The Board of Directors believes that it
is essential to the strength of the Company's long-term competitive position for
its management and other key employees to have an ownership interest in a
substantial percentage of its stock, consistent with the sizable employee equity
ownership of the Company's peers. It is expected that, in the normal course of
events, many of such shares will be reintroduced to the market as employees
retire or otherwise sell or dispose of such shares as permitted by the Restated
LTIP.
The closing price of the Company's Common Stock on December 1, 1998 was $28.5625
as reported for New York Stock Exchange-Composite Transactions.
The following summary sets forth the principal features of the Restated LTIP.
This summary is qualified in its entirety by the complete text of the Restated
LTIP set forth in Exhibit A to this Proxy Statement.
The attention of the stockholders is directed to that Exhibit so they may
acquaint themselves fully with all of the terms and conditions of the Restated
LTIP.
Principal Terms of Restated LTIP
The Restated LTIP is to be administered by the Executive Compensation Committee
(the "Committee") of the Board of Directors. No member of the Committee is
eligible to receive any benefits under the Restated LTIP. All management
directors are eligible. The Committee will have broad authority to interpret and
amend the Restated LTIP, to make all determinations necessary or advisable for
the administration of the Restated LTIP, and to issue and reissue awards under
terms and conditions it may deem appropriate. The Restated LTIP places an annual
limit of 200,000 shares of the Company's Common Stock available for stock
options that may be granted to any one participant. All key employees of the
Company, its subsidiaries, and designated affiliates are eligible for awards
under the Restated LTIP. In 1998 there were approximately 123 recipients of LTIP
awards.
Under the Restated LTIP the Committee will have the power to fix and accelerate
vesting periods. The Committee presently intends to fix such periods in general
so that they are not less than one year.
Purchase Price and other Terms
Incentive and Non-Qualified Stock Options. Incentive stock options are defined
in Section 422 of the Code. Non-qualified stock options granted under the
Restated LTIP are designed so that they do not meet the requirements of Section
422 of the Code. The Committee may grant both types of stock options, except
that incentive stock options can only be granted to participants who are
employees of the Company or a subsidiary.
The option price for incentive and non-qualified stock options will be
determined by the Committee. For incentive stock options, it may not be less
than 100% of the stock's fair market value on the date granted. For
non-qualified stock options, the option price may not be less than 50% of the
stock's fair market value on the date granted.
Fair market value on any given date for this and other purposes of the Restated
LTIP, in the Committee's discretion, will be either i) the average of the high
and low prices of the Common Stock of the Company, or ii) the closing price of
the Common Stock, on the date on which it is to be valued under the terms of the
Restated LTIP, as reported for New York Stock Exchange-Composite Transactions.
The terms and conditions of each award to a participant will dictate the number
of stock options granted and the amount of Common Stock that a participant may
purchase.
Under the terms of the Company's current forms of Incentive and Non-Qualified
Stock Option Agreements, incentive and non-qualified stock options become
exercisable in installments of 30% of the shares subject to the option one year
after the date of grant, an additional 30% after two years and the final 40%
after three years.
If participants do not exercise the options when they become initially
exercisable, the terms of the agreements permit participants to carry them
forward. These options may be exercised at any time prior to ten (10) years from
the original grant date.
The forms of Incentive and Non-Qualified Stock Option Agreements provide that
each participant will forfeit option awards upon termination of employment for
any reason other than death, permanent and total disability or retirement (as
defined in the Agreements), unless otherwise determined by the Committee.
For most participants who are not affiliates of the Company, there are no resale
restrictions with respect to incentive and non-qualified stock options after
exercise, except for limitations imposed by applicable tax laws discussed below.
Restricted Stock. The Committee has the sole authority to determine the number
of shares of restricted stock a participant may receive as an award and the
purchase price, if any, to be paid by a participant for such restricted stock.
Participants have not paid any purchase price for restricted stock awarded under
the LTIP, and the Committee expects to continue this practice under the Restated
LTIP. Prior to the lapse of restrictions on shares of restricted stock, a
participant will have all other rights of a stockholder with respect to the
shares, including all dividends paid in respect thereof, subject to the
conditions and restrictions generally applicable to restricted stock or
specifically set forth in the participant's restricted stock agreement governing
the terms of the award of restricted stock.
The Company's current form of Restricted Stock Agreement requires that each
participant who receives an award of restricted stock must remain in the employ
of the Company for a period of three (3) years or other period as designated by
the Committee before restrictions on transfer lapse. Shares of restricted stock
may not be sold, assigned, transferred, pledged or otherwise encumbered during
the restricted period. At the end of the restricted period, participants (other
than affiliates of the Company) are free to dispose of the formerly restricted
Common Stock and any resale restrictions lapse.
If a participant surrenders currently owned shares of restricted stock issued
under the Restated LTIP as payment of the option exercise price of a
non-qualified stock option, the shares received for surrendered restricted stock
remain restricted in accordance with the original terms of the form of
Restricted Stock Agreement. Any additional Common Stock received upon the
exercise will be subject to the same forfeiture restrictions, unless otherwise
determined by the Committee, in its sole discretion, at or after grant.
During the term of the Restated LTIP a change in the outstanding shares of
Common Stock may occur because of a stock dividend or split, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares or other
corporate change or distribution to holders of the Company's Common Stock other
than cash dividends. In such circumstances, the Committee may make such
substitution or adjustment, if any, as it deems equitable to the number or kind
of shares of Common Stock or other securities available for issuance under the
Restated LTIP. This may include substitution or adjustment of the number of
outstanding stock options or option prices and the number of outstanding awards
of other types.
Stock Appreciation Rights. Stock Appreciation Rights ("SARs") will be issued in
tandem with incentive stock option awards. SARs are exercisable in the
discretion of the participant for a limited period following a "change of
control" for a price based upon the price paid in the transaction (including any
price paid in an initial tender offer that is followed by a merger). The
Restated LTIP provides for the "cash-out" payment to be made in the Company's
Common Stock, as opposed to cash, if necessary to preserve the appropriate
accounting for the transaction. In addition, to protect such change-of-control
benefits, the Restated LTIP precludes adverse amendments to the Restated LTIP
following a change of control.
LTIP Benefits. Awards under the LTIP in 1998 to the Named Executive Officers are
set forth in the columns "Long Term Compensation Awards Payouts" in the Summary
Compensation Table, in the Option Grants in Last Fiscal Year table, and in the
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year- end Option
Values table. The table below sets forth the LTIP awards made to the indicated
groups during 1998 under the LTIP. The executive officer group includes the
Named Executive Officers. Non-employee directors do not participate in the LTIP.
Restricted
Dollar Stock Dollar Stock
Value($) Options(#) Value($) Awards(#)
Executive Officer Group $509,050 76,222 $282,096 10,375
Non-Executive Officer Employee
Group $528,307 79,420 $659,455 23,850
Awards under the Restated LTIP with respect to 1999 and future years are not
determinable.
Payment for Securities Purchased Under the Plan
Stock Options. Payment of the purchase price of Common Stock to be purchased
under the Restated LTIP may be made in cash, by note, by the tender of already
owned shares of Common Stock (valued at the fair market value on the exercise
date) or by a combination of cash and shares of Common Stock.
Payment to exercise vested stock options may be made by delivering previously
awarded restricted stock. Such restricted stock must have been held by a
participant for at least 1 year before it can be used as payment to exercise
stock options. The limitations (e.g. holding period) accompanying the restricted
stock will remain in effect and applicable to the corresponding number of shares
issued upon a stock option exercise until they lapse according to their original
terms.
Any additional Common Stock received upon the exercise of the options and
surrender of the restricted stock as payment will be subject to the same
forfeiture provisions to which the restricted stock is subject, unless otherwise
determined by the Committee, in its sole discretion, at or after grant.
The foregoing forms of payment are all subject to such rules as the Executive
Compensation Committee of the Board of Directors may, from time to time, adopt.
Replacement Stock Options. Under the Restated LTIP, the Committee is authorized
to issue "accelerated ownership non-qualified stock options". A participant may
surrender shares of Common Stock which he or she has owned for at least one year
at the time of stock option exercise to pay for shares purchased under the
option or as payment for applicable withholding taxes. At that time, a new,
non-qualified stock option will be granted to the participant for the number of
shares that were turned in. Shares tendered at the time of exercise will be
available for issuance under future grants.
The new grant, or "replacement" option, is priced at the current fair market
value at the date of exercise of the original option, but is limited to the term
remaining under the original option which the participant exercised.
The "replacement" option may not be exercised for one year after its grant,
which effectively limits its benefit to situations where the exercise of stock
options awarded under the Restated LTIP (which have a ten year term from the
date of grant) occur not later than nine years from the original grant date.
Dividends, Equivalents, and Voting Rights; Cash Payments. The Committee may
provide that any award of restricted stock or other stock-based awards under the
Restated LTIP may earn dividends, dividend equivalents and voting rights prior
to either vesting or earnout and cash payments in lieu of or in addition to an
award.
Payment of Withholding Taxes. The Company may deduct from all amounts paid in
cash any taxes required by law or other amounts authorized by a participant to
be withheld.
The Committee may permit a participant who receives an award in the form of
Common Stock to satisfy the obligation for such withholding or deduction in
either of two ways. First, the Committee may permit the participant to deliver
shares of Common Stock already owned. Second, the Committee may permit the
Company to retain from the participant's distribution of Common Stock awarded
the number of shares of Common Stock having a fair market value equal to the
amount to be withheld or deducted.
Resale Restrictions. No Restated LTIP award (including stock options or
restricted stock) may be assigned or transferred, and no right or interest of
any participant may be subject to any lien, obligation or liability of the
participant. An exception is permitted for a transfer under a will or according
to the laws of descent or distribution.
Award Agreements. All stock options and restricted stock granted under the
Restated LTIP will be evidenced by written agreements between the Company and
the participant which may include such additional terms and conditions not
inconsistent with the Restated LTIP as the Committee may specify.
Change of Control. The Restated LTIP provides, upon the occurrence of a change
of control: (a) accelerated exercisability and vesting of stock option and
restricted stock awards; (b) cash-outs of non-qualified stock option and
restricted stock awards and, in the case of incentive stock options, any stock
appreciation rights; (c) appropriate adjustments or prorations of awards, and
(d) assumption of the awards by a successor to the Company or the issuance of
substitute awards. These provisions are generally available to participants,
unless the Committee determines otherwise at the time of grant or accounting
treatment necessary to preserve the appropriate accounting for the change-
of-control transaction precludes their use.
Preferred Share Purchase Rights. One preferred share purchase right (a "Right")
for each share of the Company's Common Stock will be issued in connection with
awards of stock options and restricted stock under the Restated LTIP. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Participating Convertible Preferred Stock, without par
value, of the Company at a price of $150 per one one-thousandth of a Preferred
Share, subject to adjustment in a change of control.
Amendment and Termination. The Board of Directors may amend, suspend or
terminate the Restated LTIP or any portion thereof and any award hereunder at
any time, provided that no amendment shall be made without stockholder approval
which shall (i) increase (except as required for stock dividends, splits, etc.)
the total number of shares reserved for issuance pursuant to the Restated LTIP;
(ii) change the class of employees eligible to be participants; (iii) decrease
the minimum option prices stated therein (other than to change the manner of
determining fair market value to conform to any then applicable provision of the
Code and regulations thereunder); (iv) extend the expiration date of the
Restated LTIP as it applies to incentive stock options; or (v) withdraw the
administration of the Restated LTIP from the Committee. The Committee may,
however, amend the Restated LTIP in such manner as may be necessary so as to
have the Restated LTIP conform with applicable law and rules and regulations
thereunder. Also, following a change of control the Board may not amend the
Restated LTIP in a manner that would adversely affect any outstanding award of a
participant without the written consent of such participant.
The Restated LTIP has no fixed termination date, except incentive stock options
may not be issued after October 1, 2009, and may be terminated by the Board at
any time. Termination of the Restated LTIP will not affect the status of any
awards outstanding at the date of termination.
Federal Tax Treatment
Incentive Stock Options. Upon the grant or exercise of incentive stock options,
no income will be realized by the participant for Federal income tax purposes,
and the Company will not be entitled to any deduction. The excess of the fair
market value of the shares as of the date of exercise over the option price will
constitute an "adjustment" to arrive at certain participants' alternative
minimum taxable income for purposes of determining their alternative minimum
tax.
In connection with the exercise of an option, if the shares are not disposed of
within the one-year period beginning on the date of the transfer of such shares
to the participant or within the two-year period beginning on the date of the
grant of option (the "Statutory Holding Periods"), any profit realized by the
participant upon the disposition of such shares will be taxed as capital gain
and no deduction will be allowed to the Company. The income tax rates
attributable to such capital gain will be determined by the applicable holding
period rules.
If the shares are disposed of within the one-year period from the date of
transfer of such shares to the participant or within the two-year period from
the date of the grant of the option (a "Disqualifying Disposition"), the excess
of the fair market value of the shares on the date of exercise or, if less, the
fair market value on the date of disposition, over the exercise price will be
taxable as ordinary income of the participant at the time of disposition, and
the Company will be entitled to a corresponding deduction.
Non-Qualified Stock Options. Upon the grant of a "non-qualified" stock option,
no regular taxable income will be realized by the participant. Upon the exercise
of such an option, the amount by which the fair market value of the shares at
the time of exercise exceeds the exercise price will be taxed as ordinary
compensation to the participant and the Company will be entitled to a
corresponding income tax deduction. The participant will then receive a basis in
the new shares equal to their fair market value at the time of exercise.
Combination Awards. The Committee may award both non-qualified and incentive
stock options to participants of the Restated LTIP. The income tax consequences
generally, in each instance, are measured by the difference between the grant
price set forth in the Stock Option Agreement provided to award recipients and
the price of the Company's Common Stock at the time of exercise. As previously
noted, however, the nature of the tax treatment will depend upon the type of
stock option exercised and applicable holding period rules.
Restricted Stock. Unless a participant elects otherwise, an award of restricted
stock will not be taxed at the time of grant so long as the restricted stock is
not transferable and is subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code. Upon lapse of the risk of forfeiture, a
participant will be taxed at ordinary income tax rates on the current fair
market value of the restricted stock. The participant's basis in the restricted
stock will be equal to the amount taxed as ordinary income and, on subsequent
disposition of the formerly restricted Common Stock, the participant will
realize capital gain or loss. Payroll tax withholding will be required at the
time of the ordinary income recognition. The Company will be entitled to a
corresponding income tax deduction. Within 30 days of receiving the restricted
stock a participant may also make an election pursuant to Section 83(b) of the
Code in which case he would recognize income equal to the value of the stock
when it was received. This amount will also become his basis.
Deferred Cash or Stock Awards. Participants who receive awards which are payable
in cash or Common Stock of the Company at a future date will be taxed at
ordinary income tax rates on the amount of cash and the then fair market value
of the Common Stock at the time of payment or constructive receipt. A
participant's basis in the Common Stock will be equal to the amount taxed as
ordinary income, and on subsequent disposition a participant will realize
capital gain or loss.
Treatment of Restricted Stock. In any year in which a participant recognizes
ordinary income, the Company will receive a corresponding deduction provided
that the applicable withholding and employment tax requirements are met and the
total compensation paid to a participant in that taxable year is reasonable.
The IRS treats dividends received by a participant from his or her restricted
stock during the restricted period as wages to a participant. The dividends are
deductible by the Company unless an election under Section 83(b) of the Code has
been made by a participant.
Because of the broad discretion granted the Committee to deal with the reserved
shares and to fix the terms and conditions of their issuance, it is not possible
to consider all of the various alternatives possible and some tax consequences
may differ from the principles set forth above.
The Restated LTIP is not qualified under Section 401(a) of the Code.
The affirmative vote of a majority of the voting power of all Common Stock and
Class B Common Stock present in person or by proxy, voting as a single class, a
quorum being present, will be required for the approval of the foregoing
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
ADOPTION OF THE AMENDMENT, RESTATEMENT AND EXTENSION OF THE 1990 LONG TERM
INCENTIVE PLAN.
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, 1999. 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 1999 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.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders with regard to nominees for the Board of Directors or
other matters intended to be presented at the 2000 annual meeting of the Company
must be received by the Company to be considered for inclusion in its proxy
statement and form of proxy relating to that meeting by October 1, 1999.
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 Exchange 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 1998 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, except that Mr. Gregory P. Schermer was late in filing
one report of a single transaction and Mr. C.D. Waterman, III was late in filing
one report of a single transaction involving a third-party gift of shares to a
trust of which he is a co-trustee but has no beneficial ownership.
OTHER MATTERS
The Management of the Company knows 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, electronic transmission, facsimile or by telegram. 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
EXHIBIT A
<PAGE>
LEE ENTERPRISES, INCORPORATED
1990 LONG-TERM INCENTIVE PLAN
(Amended, Restated and Extended
Effective October 1, 1999)
Section 1: GENERAL PROVISIONS
1.1 Purposes
The purposes of the 1990 Long-Term Incentive Plan, as amended, restated
and extended (the "Plan") of Lee Enterprises, Incorporated (the "Company") are
to promote the interests of the Company and its stockholders by (i) attracting
and retaining executives and other key employees of outstanding ability; (ii)
strengthening the Company's capability to develop, maintain and direct a
competent management team; (iii) motivating executives and other key employees,
by means of performance-related incentives, to achieve longer-range performance
goals; (iv) providing incentive compensation opportunities which are competitive
with those of other major corporations; and (v) enabling such employees to
participate in the long-term growth and financial success of the Company.
1.2 Definitions
"Affiliate" - means any corporation or other entity (i) which is not a
Subsidiary but as to which the Company possesses a direct or indirect ownership
interest and has representation on the board of directors or any similar
governing body; and (ii) which is designated by the Board of Directors as an
"Affiliate" for purposes of this Plan.
"Award" - means a grant or award under Sections 2 through 3, inclusive,
of the Plan.
"Board of Directors" - means the board of directors of the Company.
"Code" - means the Internal Revenue Code of 1986 as amended from time
to time.
"Committee" - means the Executive Compensation Committee of the Board
of Directors.
"Common Stock" - means the Common Stock, $2.00 par value, of the
Company, which may be authorized and unissued shares or may be reacquired shares
of such Common Stock, together with a Preferred Share Purchase Right.
"Corporation" - means the Company, its divisions, Subsidiaries and
Affiliates.
"Class B Common Stock" - means the Class B Common Stock, $2.00 par
value, of the Company.
"Common Shares" - means the shares of Common Stock and Class B Common
Stock treated as one class.
"Disability Date" - means the date on which a Participant is deemed
disabled under the employee benefit plans of the Corporation applicable to the
Participant.
"Employee" - means any key employee of the Corporation.
"Fair Market Value" - means, as the Committee shall determine, either
(i) the average of the high and low prices of the Common Stock, or (ii) the
closing price of the Common Stock, on the date on which it is to be valued
hereunder as reported for New York Stock Exchange-Composite Transactions.
"Non-Employee Director" - has the meaning set forth in Rule 16b-3(3)(i)
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, or any successor definition adopted by the Commission.
"Normal Retirement Date" - has the meaning set forth in the pension or
retirement plan of the Corporation applicable to the Participant, or such other
date as may be mutually agreed upon in writing by the Committee and the
Participant.
"Participant" - means an Employee who is selected by the Committee to
receive an Award under the Plan.
"Preferred Share Purchase Right" - means the right to the holders of
"Common Stock" issued pursuant to the Plan to purchase from the Company one
one-thousandth of a share of Series A Participating Convertible Preferred Stock,
without par value, of the Company at a price of $150.00 per one one-thousandth
of a Preferred Share, subject to adjustment in a "Change of Control".
"Restricted Period" - means a period of three (3) years, or such other
period of years selected by the Committee, during which a grant of Restricted
Stock may be forfeited to the Company.
"Restricted Stock" - means shares of Common Stock contingently granted
to a Participant under Section 3 of the Plan.
"Stock Appreciation Rights" - shall have the meaning specified in
Section 1.6(b).
"Subsidiary" - means any corporation in which the Company possesses
directly or indirectly fifty percent (50%) or more of the total combined voting
power of all classes of its stock having voting power; provided that with
respect to incentive stock options granted hereunder, the term "subsidiary"
shall be as defined in Section 425(f) or any successor provision of the Code.
1.3 Administration
The Plan shall be administered by the Committee, which shall at all
times consist of three (3) or more members, each of whom shall be a Non-Employee
Director. The Committee shall have sole and complete authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time deem advisable, and to
interpret the terms and provisions of the Plan. The Committee may delegate to
one or more executive officers of the Company the power to make Awards to
Participants who are not executive officers or directors of the Company,
provided the Committee shall fix the maximum amount of such Awards for the group
and a maximum amount for any one Participant. The Committee's decisions are
binding upon all parties.
1.4 Eligibility
All Employees who have demonstrated significant management potential or
who have contributed, or are deemed likely to contribute, in a substantial
measure to the successful performance of the Corporation, as determined by the
Committee, are eligible to be Participants in the Plan.
1.5 Shares Reserved
(a) There shall be reserved for issuance pursuant to the Plan a total
of two million two hundred fifty thousand (2,250,000) shares of Common Stock,
together with sufficient shares to cover outstanding grants under (i) the
Company's 1982 Incentive Stock Option Plan and (ii) the Plan as of October 1,
1999. In the event that (x) a stock option expires or is terminated unexercised
as to any shares covered thereby, (y) shares are forfeited for any reason under
the Plan, or (z) shares are tendered as consideration for the exercise of
options under Section 2.3 or for withholding of taxes under Section 1.7, such
shares shall thereafter be again available for issuance pursuant to the Plan. In
the event that a stock option is surrendered for payment pursuant to Section
1.6(b) hereof, the shares covered by the stock option shall not thereafter be
available for issuance pursuant to the Plan.
(b) In the event of any change in the outstanding shares of Common
Stock by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other corporate
change, or any distributions to common shareholders other than cash dividends,
the Committee shall make such substitution or adjustment, if any, as it deems to
be equitable to accomplish fairly the purposes of the Plan and to preserve the
intended benefits of the Plan to the Participants and the Corporation, as to the
number (including the number specified in Section 1.5(a) above) or kind of
shares of Common Stock or other securities issued or reserved for issuance
pursuant to the Plan, including the number of outstanding stock options, the
option prices thereof, and the number of outstanding Awards of other types.
1.6 Change of Control
(a) Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change of Control:
any stock options and Stock Appreciation Rights outstanding
as of the date such Change of Control is determined to have occurred,
and which are not then exercisable and vested, shall become fully
exercisable and vested to the full extent of the original grant; and
the restrictions and deferral limitations applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become
free of all restrictions and become fully vested and transferable to
the full extent of the original grant; provided, that, if payment of
cash under this paragraph would make a Change of Control transaction
ineligible for pooling-of-interests accounting under APB No. 16 that
but for such cash payment would otherwise be eligible for such
accounting treatment, the Committee shall have the ability to
substitute for the cash payable pursuant to this paragraph, Common
Stock with a Fair Market Value equal to the cash that would otherwise
be payable hereunder.
(b) Notwithstanding any other provision of the Plan to the contrary,
during the 60-day period from and after a Change of Control (the "Exercise
Period"), unless the Committee shall determine otherwise at the time of grant
(or, with respect to Stock Options outstanding as of May 7, 1998, on May 7,
1998), an optionee shall have the right, whether or not the Stock Option is
fully exercisable and in lieu of the payment of the exercise price for the
shares of Common Stock being purchased under the Stock Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all or
part of the Stock Option to the Company and to receive cash, within 30 days of
such notice, in an amount equal to the amount by which the Change of Control
Price per share of Common Stock on the date of such election shall exceed the
exercise price per share of Common Stock under the Stock Option multiplied by
the number of shares of Common Stock granted under the Stock Option as to which
the right granted under this Section 1.6(b) shall have been exercised ("Stock
Appreciation Rights"). Notwithstanding the foregoing, if any right granted
pursuant to this Section 1.6(b) would make a Change of Control transaction
ineligible for pooling-of-interests accounting under APB No. 16 that but for the
nature of such grant would otherwise be eligible for such accounting treatment,
the Committee shall have the ability to substitute for the cash payable pursuant
to such right Common Stock with a Fair Market Value equal to the cash that would
otherwise be payable hereunder or, if payment of such Common Stock would
similarly make such transaction ineligible for pooling of interests accounting,
eliminate such right.
(c) For purposes of the Plan, "Change of Control Price" means the
higher of (i) the highest reported sales price, regular way, of a share of
Common Stock in any transaction reported on the New York Stock Exchange
- -Composite Tape or other national exchange on which such shares are listed or on
NASDAQ during the 60-day period prior to and including the date of a Change of
Control or (ii) if the Change of Control is the result of a tender or exchange
offer or a Business Combination, the highest price per share of Common Stock
paid in such tender or exchange offer or Business Combination; provided,
however, that in the case of incentive stock options and Stock Appreciation
Rights relating to incentive stock options, the Change of Control Price shall be
in all cases the Fair Market Value of the Common Stock on the date such
incentive stock option or Stock Appreciation Right is exercised. To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other noncash consideration, the value of such
securities or other noncash consideration shall be determined in the sole
discretion of the Board.
(d) For purposes of this Plan, a "Change of Control" means:
(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of the Common Shares; provided,
however, that for purposes of this subsection (1), the following
acquisitions shall not be deemed to result in a Change of Control: (A)
any acquisition directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any corporation
pursuant to a transaction that complies with clauses (A), (B) and (C)
of subsection (3) below; or
(ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company or the acquisition of assets of another
corporation ("Business Combination") unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners of the Common Shares
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of the Common Shares or, with
respect to an entity other than the Company, the combined voting power
of the then outstanding voting securities entitled to vote generally in
the election of directors of the corporation resulting from such
Business Combination (including, without limitation, a corporation that
as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Common Shares, (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company or any corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of
the Common Shares or, with respect to an entity other than the Company,
the combined voting power of the then outstanding voting securities of
such corporation, except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination will have been members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
1.7 Withholding
The Corporation shall have the right to deduct from all amounts paid in
cash (whether under this Plan or otherwise) any taxes required by law or other
amounts authorized by a Participant to be withheld therefrom. In the case of
payments of Awards in the form of Common Stock, at the Committee's discretion
the Participant may be required to pay to the Corporation the amount of any
taxes required to be withheld with respect to such Common Stock, or, in lieu
thereof, the Corporation shall have the right to retain (or the Participant may
be offered the opportunity to elect to tender) the number of shares of Common
Stock whose Fair Market Value on the date such taxes are required to be withheld
equals the amount required to be withheld.
1.8 Nontransferability
No Award shall be assignable or transferable, and no right or interest
of any Participant shall be subject to any lien, obligation or liability of the
Participant, except by will or the laws of descent and distribution.
1.9 No Right to Employment
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Corporation. Further, the Corporation expressly
reserves the right at any time to dismiss a Participant free from any liability,
or from any claim under the Plan, except as provided herein or in any agreement
entered into with respect to an Award.
1.10 Construction of the Plan
The validity, construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of Delaware, without
regard to conflict of law principles.
1.11 Amendment
(a) The Board of Directors may amend, suspend or terminate the Plan or
any portion thereof and any Award hereunder at any time, provided that no
amendment shall be made without stockholder approval which shall (i) increase
(except as provided in Section 1.5(b) hereof) the total number of shares
reserved for issuance pursuant to the Plan; (ii) change the class of Employees
eligible to be Participants; (iii) decrease the minimum option prices stated
herein (other than to change the manner of determining Fair Market Value to
conform to any then applicable provision of the Code or regulations thereunder);
(iv) extend the expiration date of the Plan as it applies to incentive stock
options; or (v) withdraw the administration of the Plan from a committee
consisting of three or more members, each of whom is a Non-Employee Director.
Notwithstanding anything to the contrary contained herein, the Committee may
amend the Plan in such manner as may be necessary so as to have the Plan conform
with applicable law and rules and regulations thereunder. Notwithstanding
anything in this Plan to the contrary, following a Change of Control the Board
may not amend the Plan in a manner that would adversely affect any outstanding
Award of a Participant without the written consent of such Participant.
(b) The Committee with the Participant's consent may amend, modify or
terminate any outstanding Award at any time prior to payment or exercise in any
manner not inconsistent with the terms of the Plan, including without
limitation, to change the date or dates as of which (i) a stock option becomes
exercisable; (ii) or a Restricted Stock becomes nonforfeitable; or (iii) to
cancel and reissue an Award under such different terms and conditions as it
determines appropriate.
1.12 Dividends, Equivalents and Voting Rights; Cash Payments
Awards may provide the Participant with (i) dividends or dividend
equivalents and voting rights prior to either vesting or earnout; and (ii) to
the extent determined by the Committee, cash payments in lieu of or in addition
to an Award.
1.13 Effective Date
The Plan shall be effective on October 1, 1999, subject to ratification
by the stockholders of the Company. No incentive stock options may be granted
under the Plan after October 1, 2009.
Section 2: STOCK OPTIONS
2.1 Authority of Committee
Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom stock options shall be
granted, the number of shares to be covered by each stock option and the
conditions and limitations, if any, in addition to those set forth in Section
2.3 hereof, applicable to the exercise of the stock option. The number of shares
of Common Stock with respect to which stock options may be granted to any
Participant during any fiscal year shall not exceed 200,000 (subject to
adjustment as provided in Section 1.5(b) hereof). The Committee shall have the
authority to grant stock options that are intended to be, and qualify as,
incentive stock options under ss.422A of the Code, or to grant non-qualified
stock options, or to grant both types of stock options, except that incentive
stock options can only be granted to Participants who are Employees of the
Company or a Subsidiary. In the case of incentive stock options, the terms and
conditions of such grants shall be subject to and comply with such grant and
vesting limitations as may be prescribed by Section 422A(d) of the Code, as from
time to time amended, and any implementing regulations. Unless the Committee
provides otherwise at the time of grant, or at anytime as provided in Section
1.6, an incentive stock option shall be issued in tandem with a Stock
Appreciation Right and exercisable except as otherwise provided in the Plan.
2.2 Option Price
The Committee shall establish the option price at the time each stock
option is granted, which price shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of grant in the case of incentive stock
options or 50% of the Fair Market Value in the case of non-qualified stock
options. The option price shall be subject to adjustment in accordance with the
provisions of Section 1.5(b) hereof.
2.3 Exercise of Options
(a) The Committee may determine that any stock option shall become
exercisable in installments and may determine that the right to exercise such
stock option as to such installments shall expire on different dates or on the
same date. Incentive stock options may not be exercisable later than ten years
after their date of grant.
(b) In the event a Participant ceases to be an Employee with the
consent of the Committee, or upon the occurrence of his or her death, Normal
Retirement Date (or, if approved in writing by the Committee, his or her actual
retirement date) or Disability Date, his or her stock options shall be
exercisable at any time prior to a date established by the Committee at the date
of grant. Except as otherwise provided by the Committee, if a Participant ceases
to be an Employee for any other reason, his or her rights under all stock
options shall terminate no later than the thirtieth (30th) day after such
cessation of employment.
(c) Each stock option shall be confirmed by a stock option agreement
executed by the Company and by the Participant. The option price of each share
as to which an option is exercised shall be paid in full at the time of such
exercise. Such payment shall be made in cash, by tender of shares of Common
Stock owned by the Participant valued at Fair Market Value as of the date of
exercise, subject to such limitations on the tender of Common Stock as the
Committee may impose, or by a combination of cash and shares of Common Stock. In
addition, the Committee may provide the Participant with assistance in financing
the option price and applicable withholding taxes, on such terms and conditions
as it determines appropriate.
(d) Stock options granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant contains an AO, and if a Participant pays all or part of the purchase
price of the option with shares of Common Stock held by the Participant for at
least one (1) year, then upon exercise of the option the Participant shall be
granted the additional option to purchase, at the Fair Market Value as of the
date of the AO grant, the number of shares of Common Stock equal to the number
of whole shares of Common Stock used by the Participant in payment of the
purchase price and the number of whole shares of Common Stock, if any, withheld
by the Company as payment for applicable withholding taxes. An AO may be
exercised no earlier than one (1) year after its grant and no later than the
date of expiration of the option to which the AO is related.
(e) Stock options may be exercised during the option term (as specified
in the option agreement), by giving written notice of exercise to the Company
specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by check, note or
such other type of instrument as may be determined from time to time to be
acceptable by the Committee or in accordance with procedures established by the
Committee. As determined by, or in accordance with procedures established by,
the Committee, in its sole discretion, at or after grant, payment in full or in
part may also be made in the case of the exercise of a non-qualified stock
option in the form of Restricted Stock subject to an Award hereunder (based, in
each case, on the Fair Market Value of the Common Stock on the date the option
is exercised, as determined by the Committee). If payment of the option exercise
price of a non-qualified stock option is made in whole or in part in the form of
Restricted Stock, such Restricted Stock (and any replacement shares relating
thereto) shall remain (or be) restricted, as the case may be, in accordance with
the original terms of the Restricted Stock award in question, and any additional
Common Stock received upon the exercise shall be subject to the same forfeiture
restrictions, unless otherwise determined by, or in accordance with procedures
established by, the Committee, in its sole discretion, at or after grant.
Section 3: RESTRICTED STOCK
3.1 Authority of Committee
Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom shares of Restricted
Stock shall be granted, the number of shares of Restricted Stock to be granted
to each Participant, the duration of the Restricted Period during and the
conditions under which the Restricted Stock may be forfeited to the Company, the
purchase price, if any, to be paid by a Participant for such Restricted Stock,
and the terms and conditions of the Award in addition to those contained in
Section 3.2. Such determinations shall be made by the Committee at the time of
the grant.
3.2 Terms and Conditions
Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as provided in Section 2.3(e), during
the Restricted Period. Certificates issued in respect of shares of Restricted
Stock shall be registered in the name of the Participant and deposited by him or
her, together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or his or her legal representative.
3.3 Termination of Employment
Unless otherwise provided by the Committee at the time of the
grant of Restricted Stock, in the event a Participant voluntarily terminates his
or her employment with the Corporation during the Restricted Period, or upon the
occurrence of his or her death, during the Restricted Period, Normal Retirement
Date (or, if approved in writing by the Committee, his or her actual retirement
date) or Disability Date during the Restricted Period, the restrictions imposed
hereunder shall lapse with respect to such shares of Restricted Stock. In the
event a Participant ceases to be an Employee for any other reason during the
Restricted Period, unless otherwise provided by the Committee, all shares of
Restricted Stock shall thereupon be forfeited to the Company.
[ X ] Please mark your
vote as in this
Example
LEE ENTERPRISES, INCORPORATED
PROXY FOR ANNUAL MEETING--JANUARY 26, 1999
COMBINED PROXY FOR COMMON STOCK AND CLASS B COMMON STOCK
Lloyd G. Schermer and Richard D. Gottlieb, or either of them, each with
power of substitution, are authorized to vote all shares of Common Stock and
Class B Common Stock which the undersigned is entitled to vote at the annual
meeting of stockholders of Lee Enterprises, Incorporated to be held January 26,
1999 and at any adjournment thereof, on the following matters:
1. Election of Directors:
Nominee Term
Rance E. Crain 3 years
Richard D. Gottlieb 3 years
Phyllis Sewell 3 years
Lloyd G. Schermer 1 year
2. To amend, restate and extend the Company's 1990 Long Term Incentive Plan as
described in Proposal 2 in the Proxy Statement.
3. In their discretion, upon such other matters as may properly come before
the meeting.
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The above-named proxies cannot
vote your shares unless you sign and return this card.
FOLD AND DETACH HERE
<PAGE>
Please mark your
Votes as in this
Example.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. EVERY PROPERLY SIGNED PROXY
WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, PROXIES WILL BE VOTED FOR
ITEMS 1 AND 2 , AND IN THE DISCRETION OF THE BOARD OF DIRECTORS IN CONNECTION
WITH ITEM 3.
The Board of Directors Recommends a vote FOR:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS 3. In their discretion, upon such other
matters as may properly come before
the meeting.
FOR all nominees [ ] WITHHOLD
meeting. AUTHORITY For Against Abstain
listed on the reverse to vote for all
(except as marked nominees listed [ ] [ ] [ ]
to the contrary on the reverse.
below).
</TABLE>
For, except vote withheld from the following nominee(s):
- ------------------------------------------------
2. To amend, restate and extend the Company's 1990 Long Term Incentive Plan as
described in Proposal 2 in the Proxy Statement; and
For Against Abstain
[ ] [ ] [ ]
(PLEASE sign exactly as your name appears hereon.
Executors, administrators, trustees, custodians, etc. should
give full title. If shares are registered in joint names, each
owner should sign.)
__________________________199_____
SIGNATURE(S) DATE
__________________________199_____
SIGNATURE(S) DATE
FOLD AND DETACH HERE
