LEE ENTERPRISES, INCORPORATED
400 Putnam Building
215 N. Main Street
Davenport, IA 52801-1924
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 23, 2001
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 23, 2001, 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; and
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed December 1, 2000 as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting.
It is important that your shares be represented whether or not you plan
to attend. You may vote by marking, signing and dating the enclosed proxy card
and returning it in the postage paid envelope. Stockholders may also vote by
telephone or via the Internet. If you attend the meeting, you may withdraw your
proxy at that time and vote your shares in person.
/s/ C. D. Waterman, III
-----------------------------
C. D. Waterman III, Secretary
Davenport, Iowa
December 27, 2000
<PAGE>
LEE ENTERPRISES, INCORPORATED
2001 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Company to be voted at the annual
meeting of stockholders to be held at the offices of the Company on Tuesday,
January 23, 2001, at 9:00 a.m., for the purposes set forth in the 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 27, 2000, together with a copy of the Company's Annual Report for the
fiscal year ended September 30, 2000.
PROXIES
Your vote is very important. For this reason, the Board of Directors is
requesting that you use the enclosed Proxy Card to vote your shares. If the
accompanying proxy is executed, the shares represented by the proxy will be
voted as specified below. You may also vote your shares by delivering your proxy
by telephone or via the Internet.
If a broker, bank or other nominee holds your Common Stock, you will
receive instructions from them that you must follow in order to have your shares
voted. If you hold certificate(s) in your own name as a holder of record, you
may vote your Common Stock or Class B Common Stock by signing, dating and
mailing the Proxy Card in the postage paid envelope provided. Of course, you can
always come to the meeting and vote your shares in person.
You may revoke the proxy before the meeting, whether delivered by
telephone, Internet or through the mail, by using the telephone voting
procedures, the Internet voting procedures or by mailing a signed instrument
revoking the proxy to: C. D. Waterman III, Corporate Secretary, Lee Enterprises,
Incorporated, 400 Putnam Building, 215 N. Main St., Davenport, IA 52801-1924; to
be effective, a mailed revocation must be received by the Secretary on or before
January 22, 2001. A stockholder may also attend the meeting in person, withdraw
the proxy and vote in person.
VOTING PROCEDURES
Stockholders of record at the close of business on December 1, 2000
will be entitled to vote at the meeting or any adjournment thereof. As of
December 1, 2000, there were 32,975,540 shares of Common Stock and 10,726,497
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,
with 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 or by using the telephone
or Internet voting procedures. All properly executed proxies 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
on a Proxy Card with regard to the matters to be voted upon, the shares
represented by a signed proxy card will be voted "FOR" the election of all
directors as more fully set forth in this Proxy Statement. If any other matters
properly come before the annual meeting, the persons named as proxies will vote
upon such matters according to their judgment.
<PAGE>
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 2004, and
one director is to be elected for a one-year term expiring at the annual meeting
of stockholders in 2002. Each of the individuals named below is a nominee of the
Nominating Committee of the Board of Directors. Mr. Guerin, Mr. Newman and Mr.
Prichett are presently directors whose current terms expire January 23, 2001.
Ms. Junck's current term expires in 2002, but she is nominated to serve with the
class whose terms expire at the 2004 annual meeting to conform with the
Company's Certificate of Incorporation and By-Laws. Ronald L. Rickman, a
director of the Company since 1986, is retiring at the annual meeting and will
not stand for re-election. The Board of Directors does not currently plan to
fill the vacancy and, effective as of the annual meeting date, the number of
directors will be reduced to ten.
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
Principal Proposed Director
Nominee Occupation Age Term Since
------- ------------------- --- -------- --------
Mary E. Junck President and 53 3 years 1999
Chief Operating (2004)
Officer
Andrew E. Newman Chairman and CEO, 56 3 years 1991
Race Rock (2004)
International (2)
Gordon D. Prichett Partner, Cairnwood 59 3 years 1998
Cooperative and (2004)
Department Chairman,
Babson College (3)
J.P. Guerin Investor (1) (3) 71 1 year 1985
(2002)
DIRECTORS CONTINUING IN OFFICE
Principal Remaining Director
Director Occupation Age Term Since
-------- ------------------ --- --------- ---------
Rance E. Crain President, Crain 62 1 year 1990
Communications (2) (2002)
Richard D. Gottlieb Chairman and 58 1 year 1986
Chief Executive (2002)
Officer (1)
Phyllis Sewell Retired (1) (2) (4) 70 1 year 1977
(2002)
William E. Mayer Managing Partner, 60 2 years 1998
Park Avenue Equity (2003)
Partners (3) (4)
Gregory P. Schermer Vice President- 46 2 years 1999
Interactive Media (2003)
Mark Vittert Investor (2) (4) 52 2 years 1986
(2003)
(1) Member of Executive Committee
(2) Member of Executive Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
Ms. Junck was elected Executive Vice President and Chief Operating
Officer in May 1999 and President in January 2000. From May 1996 to April 1999
she was Executive Vice President of The Times Mirror Company and President of
Eastern Newspapers. She was named Publisher and Chief Executive Officer of The
Baltimore Sun in 1993. The Company anticipates that Ms. Junck will be elected
President and Chief Executive Officer of the Company in January 2001.
Mr. Newman is Chairman and Chief Executive Officer of Race Rock
International, St. Louis, MO. He is a director of Sigma-Aldrich Corporation, St.
Louis, MO.
Mr. Prichett is a partner in Cairnwood Cooperative, a private
investment group, of Boston, MA. He is also Chairman of Mathematics, Statistics
and Information Systems at Babson College, Babson Park, MA.
Mr. Guerin is Vice-Chairman of Daily Journal Company, Los Angles, CA
and Chairman of Tapestry Films, an independent motion picture producer.
Mr. Crain is the President and Editorial Director of Crain
Communications, a diversified publishing company with its principal offices in
Chicago, IL.
<PAGE>
Mr. Gottlieb has been Chairman and Chief Executive Officer of the
Company since January, 2000. For more than 5 years prior thereto he was
President and Chief Executive Officer of the Company. The Company anticipates
that Mr. Gottlieb will retire as Chief Executive Officer in January 2001 and
continue as a non-executive Chairman of the Board of Directors of the Company.
Mrs. Sewell is a director of Pitney Bowes Inc., Stamford, CT and SYSCO
Corporation, Houston, TX.
Mr. Mayer is managing partner of Park Avenue Equity Partners, L.P., a
private equity firm, New York, NY. He is also a director of Johns Manville
Corporation, and a trustee of the Liberty Mutual Funds.
Mr. Schermer was elected Vice President-Interactive Media in November,
1997. From 1989 through November 1997 he was and continues to serve as Corporate
Counsel of the Company.
Mr. Vittert is a private investor.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors met eight times in fiscal 2000.
The Company's Audit Committee met three times in fiscal 2000; its
functions include review of the scope, timing and other considerations relative
to the independent auditors' annual audit of financial statements and the
adequacy of internal control and the internal audit functions, and evaluation of
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 2000;
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 Mark Vittert, 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 two times in fiscal
2000; 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
2000.
COMPENSATION OF DIRECTORS
No Company employee receives any remuneration for acting as a director.
In fiscal 2000 Messrs. Crain, Guerin, Mayer, Newman, Prichett, Rickman and
Vittert 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. 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 2000.
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.
<PAGE>
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, 2000 as to
each person known by the Company to own beneficially more than five (5%) percent
of the Common Stock or Class B Common Stock of the Company.
Percent Class B Percent
Beneficial Owners Common Stock of Class Common Stock of Class
----------------- ------------ -------- ------------ --------
Ariel Capital Management, 7,462,100 22.63% ___ ___
Inc
200 E. Randolph St
Suite 2900
Chicago, IL 60601
Harris Associates, L.P. 1,856,135 5.63% ___ ___
Two North LaSalle St
Suite 500
Chicago, IL 60602
Lloyd G. Schermer (1) 500 ___ 1,182,586 11.02%
3676 E. Placita Lindura
Tucson, AZ 85718
Betty A. Schermer (2) ___ ___ 1,171,354 10.92%
3676 E. Placita Lindura
Tucson, AZ 85718
Gregory P. Schermer (3) 269,594 .82% 583,780 5.44%
c/o Lee Enterprises,
Incorporated
400 Putnam Bldg
215 N. Main St
Davenport, IA 52801-1924
(1) Includes 403,028 Class B Common shares owned by a trust as to which Lloyd
G. Schermer retains sole voting and investment powers; (ii) 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 (iii) 110,020 Common and
110,020 Class B Common shares held by a trust and 320,700 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 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) 320,700 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.
(3) Includes (i) 55,010 Common and 55,010 Class B Common shares held by a trust
with respect to which Gregory P. Schermer has beneficial ownership but no
voting or investment power; and (ii) 6,000 Class B Common shares owned by
his spouse, 2,000 Common and 6,000 Class B Common shares held by a trust
for the benefit of his minor son, and 4,000 Class B Common shares held by a
trust for the benefit of a minor daughter, as to which Gregory P. Schermer
disclaims all beneficial ownership and exercises no voting or investment
power.
<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, 2000 by
each director and nominee, 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
---------------- ------------ -------- -------------- --------
Philip E. Blake (2) 31,919 * 1,918 *
Larry L. Bloom (2) 70,834 * ___ ___
Colleen B. Brown (2) 11,582 * ___ ___
Rance E. Crain 9,956 * ___ ___
Richard D. Gottlieb (1)(2) 405,721 1.23% 123,856 1.15%
J. P. Guerin (1) 2,500 * 106,814 1.00%
Mary E. Junck (2) 19,730 * ___ ___
William E. Mayer 2,844 * ___ ___
Andrew E. Newman 4,500 * ___ ___
Gordon D. Prichett 3,100 * ___ ___
Ronald L. Rickman (2) (3) 99,192 * 37,469 *
Gregory P. Schermer (1) (2) 269,594 * 583,780 5.44%
Phyllis Sewell 4,150 * 2,450 *
Mark Vittert 4,500 * ___ ___
All present executive 1,099,068 3.33% 867,144 8.08%
officers and directors
as a group (21)
* 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: G. Schermer, 57,010 Common Stock, 71,010 Class
B Common Stock; Gottlieb, 21,108 Common Stock, 57,996 Class B Common
Stock; and Guerin, 2,850 Class B 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 - 303,406; Rickman - 52,200; G. Schermer - 12,822;
Bloom - 59,422; Brown - 9,000; Junck - 7,500; and Blake - 19,400.
(3) Mr. Rickman retires when his current term expires January 23, 2001.
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, 2000 to the chief executive officer of the Company and to
each of the four other most highly compensated executive officers of the
Company.
<PAGE>
Summary Compensation Table
<TABLE>
Long Term Compensation
-------------------------------------------------------
Annual Compensation Awards Payouts (1)
----------------------------------------------------------- ----------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted LTIP
Annual Stock Payouts($) All Other
Compensation Awards($) Stock Compensation
Name and Principal ($) Options ($)
Position Year Salary($) Bonus($) (3) (4) (#) (6) (7)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard D. Gottlieb 2000 615,000 184,000 5,000 --- 30,000 111,250 130,688
Chief Executive Officer 1999 581,400 174,420 5,000 116,000 25,000 82,075 123,595
1998 570,000 85,500 5,000 76,132 17,500 157,850 106,881
Mary E. Junck (2) 2000 460,000 138,100 5,000 129,690 30,000 --- 42,774
Chief Operating Officer 1999 153,333 125,000 --- 144,690 25,000 --- ---
Colleen B. Brown (2) (8) 2000 285,000 845,000 5,000 --- --- --- 186,627
President-Broadcast 1999 250,000 50,000 --- 29,000 10,000 --- 4,312
Group 1998 62,500 --- --- 81,570 10,000 --- ---
Philip E. Blake (10) 2000 260,000 31,500 5,000 --- 25,000 14,184 44,920
Vice President- 1999 226,300 92,783 5,000 29,000 15,000 28,188 49,787
Publishing 1998 215,500 85,270 5,000 16,314 5,000 87,552 46,931
Larry L. Bloom (9) 2000 276,600 36,000 5,000 --- --- 51,731 48,486
Sr. Vice 1999 264,700 87,351 5,000 29,000 12,000 29,313 55,358
And Chief Financial 1998 257,000 64,250 4,000 35,347 11,122 (5) 56,375 50,392
Officer
<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) Ms. Junck became an employee and executive officer of the Company on May
11, 1999. At the time of her employment, Ms. Junck received a $100,000
hiring bonus, a restricted stock award of 5,000 shares, and a stock option
grant of 25,000 shares. Ms. Brown became an employee of the Company on June
25, 1998 and an executive officer on July 1, 1999. At the time of her
employment, Ms. Brown received a restricted stock award of 3,000 shares and
a stock option grant of 10,000 shares. The long-term incentive awards were
made by the Executive Compensation Committee to compensate Ms. Junck and
Ms. Brown, in part, for comparable benefits from their previous employers
lost upon employment by the Company.
(3) Represents matching payments made by Lee Enterprises 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 1998, 1999, and 2000,
respectively and their aggregate market value (including November 2000
awards) at September 30, 2000:
</FN>
</TABLE>
1998 1999 2000 Market Value at
Award Award Award Total September 30, 2000
----- ----- ----- ------ ------------------
Richard D. Gottlieb 2,800 4,000 ___ 6,800 $ 196,350
Mary E. Junck --- 5,000(2) 5,000 10,000 288,750
Philip E. Blake 600 1,000 ___ 1,600 46,200
Larry L. Bloom 1,300 1,000 ___ 2,300 66,412
Colleen B. Brown 3,000(2) 1,000 ___ 4,000 115,500
<PAGE>
(5) Includes replacement (reload) options awarded at exercise of non-qualified
options to 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 or upon retirement from employment
with the Company.
(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.
(8) Ms. Brown terminated employment with the Company on October 1, 2000 when
the Company consummated its agreement to sell its broadcast group
(excluding KMAZ-TV, El Paso, TX) to Emmis Communications Corp. Ms. Brown's
bonus for fiscal year 2000 includes $570,000 paid pursuant to her
Employment Agreement dated as of March 1, 2000, pursuant to which she
agreed to continue her employment with the Company until the consummation
of the transaction for the sale of the Company's broadcast group. Under the
terms of that agreement, all unvested stock options and restricted stock
were deemed vested as of the date the transaction was consummated.
(9) Mr. Bloom resigned as Senior Vice President - Finance and Chief Financial
Officer on October 26, 2000 and his employment with the Company will
terminate on January 31, 2001.
(10) Mr. Blake will retire from the Company on December 31, 2000.
Option Grants in Last Fiscal Year
<TABLE>
Individual Grants
(a) (b) (c) (d) (e) (f)
Options Grant Date Present
Granted % of Total Options Value($)
Granted to Employees Exercise Price Expiration
Name (1) in Fiscal Year ($/Sh) Date (2)
------------------- ---------- --------------------- -------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Richard D. Gottlieb 30,000 9.0% $ 25.9375 11/14/2010 $228,600
Mary E. Junck 30,000 9.0% $ 25.9375 11/14/2010 $228,600
Colleen B. Brown --- 0.0% $ 25.9375 11/14/2010 ---
Philip E. Blake 25,000 7.5% $ 25.9375 11/14/2010 $190,500
Larry L. Bloom --- 0.0% $ 25.9375 11/14/2010 ---
<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 2000, 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 owned 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 range of assumptions used in calculating the values are as follows:
</FN>
</TABLE>
Factor November Options
----------------------- ----------------
Dividend Yield 2.47%
Volatility 23.85%
Risk-Free Interest Rate 5.73%
Expected life (years) 8 years
<PAGE>
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.
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 58,206 $ 900,517 297,644 3,729,819
77,250 131,297
Mary E. Junck --- --- 7,500 ---
47,500 88,125
Colleen B. Brown --- --- 3,000 5,061
17,000 11,809
Philip E. Blake --- --- 12,000 78,656
44,900 82,492
Larry L. Bloom --- --- 49,722 392,043
20,900 17,266
<FN>
(1) All options are for Common Stock and were granted under the Company's 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 2000 for the
fiscal year just concluded.
(4) Market value of underlying securities at September 30, 2000 ($28.875),
minus the exercise price.
</FN>
</TABLE>
Benefit Plans and Retirement Programs
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 $76,200. 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
2000 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.
Executive Agreements
The Company is obliged under a written agreement to pay to Mr. Gottlieb
a multiple of three times his 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.
<PAGE>
Change-of-Control Employment Agreements
In 1998 the Board of Directors approved employment agreements between
the Company and its executive officers, including each of the named executive
officers, 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 following graph compares the yearly percentage change in the
cumulative total shareholder return of the Company, the Standard & Poor's (S &
P) 500 Stock Index, and the S & P Publishing/Newspapers Index, in each case for
the five years ending September 30, 2000 (with 1995 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:
1995 1996 1997 1998 1999 2000
----------------------------------------------------
Lee $100.00 $107.73 $136.39 $127.05 $136.83 $147.76
S&P Publishing/Newspapers-
Index $100.00 $129.76 $196.53 $191.73 $273.70 $274.46
S&P 500 $100.00 $120.33 $169.00 $184.29 $234.88 $266.08
<PAGE>
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 (until June 12, 2000), 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 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 to
reflect competitive practices and new assignments in 2000 for executive
management by 9.4% on a composite basis. The Committee believes the base salary
levels are reasonable and necessary to retain these key employees.
<PAGE>
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 and restricted stock
awards 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 2000
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 2000 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).
<PAGE>
Compensation of Chief Executive Officer
The Committee determined the 2000 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 2000 was based upon a
subjective evaluation of the performance of the Company in relation to past
years and the performance of comparable media companies, as well as his
accomplishment of certain non-financial performance objectives and the
successful initiation of several long-term and strategic initiatives which the
Committee believes will be of significant benefit to the Company in the future.
The Committee made a long term compensation award of stock options to
Mr. Gottlieb in 2000 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 option grants to Mr. Gottlieb in
determining the amount of his 2000 grant. The Committee did consider the 2000
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.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
OF DIRECTORS REGARDING ANNUAL FINANCIAL STATEMENTS
The Audit Committee of the Board of Directors is comprised of three
directors who are not officers of the Company. All members are independent under
new adopted rules of the New York Stock Exchange. The Board of Directors has a
written charter for the Audit Committee, which is included as an Appendix to
this Proxy Statement.
The Committee held three meetings during fiscal 2000. The meetings were
designed to facilitate and encourage private communication between the Committee
and the internal auditors and the Company's independent public accountants,
McGladrey & Pullen, LLP.
During these meetings, the Committee reviewed and discussed the audited
financial statements with management and McGladrey & Pullen, LLP. The Audit
Committee believes that management maintains an effective system of internal
controls that results in fairly presented financial statements. Based on these
discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K.
The discussions with McGladrey & Pullen, LLP also included the matters
required by Statement on Auditing Standards No. 61. The Audit Committee received
from McGladrey & Pullen, LLP written disclosures and the letter regarding its
independence as required by Independence Standards Board Standard No. 1. This
information was discussed with McGladrey & Pullen, LLP.
Respectfully submitted,
/s/ J. P. Guerin /s/ William E. Mayer /s/ Gordon D. Prichett
---------------------- -------------------- ----------------------
J. P. Guerin, Chairman William E. Mayer Gordon D. Prichett
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, 2001. Said firm has audited the Company's accounts since
1960 and is considered to be well qualified.
Representatives of McGladrey & Pullen, LLP will be present at the 2001
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 2002 ANNUAL MEETING
Proposals of stockholders with regard to nominees for the Board of
Directors or other matters intended to be presented at the 2002 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 August 31,
2001.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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 2000 fiscal year.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all filing requirements applicable to its executive
officers and directors were satisfied.
OTHER MATTERS
The Management of the Company 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
Chairman and Chief Executive Officer
<PAGE>
APPENDIX
AUDIT COMMITTEE CHARTER
The Audit Committee of the Board of Directors of Lee Enterprises,
Incorporated is created pursuant to Section 4 of Article III of the By-Laws of
the Corporation. Its mission is to provide such reasonable oversight as is
likely to assure (1) the reliability and integrity of the Corporation's
financial reporting process; (2) compliance with applicable policies, plans,
procedure, laws and regulations; (3) the independence and performance of
internal and external auditors; and (4) safeguarding of assets of the
Corporation.
COMPOSITION OF COMMITTEE
The Committee shall consist of three or more members of the Board of
Directors who satisfy the standards of independence and qualification applicable
to the Committee (as determined by the Board of Directors from time to time in
the exercise of its business judgment and in compliance with applicable rules
and regulations), one of whom shall be designated as the Chairman thereof. The
members of the Committee shall serve at the pleasure of the Board of Directors
of the Corporation. Any member of the Committee may be replaced by another
qualified member of the Board of Directors and the number of members thereof may
be increased or decreased from time to time (but not less than three members) by
the Board of Directors. The Committee may establish rules and regulations for
the conduct of its meetings and duties. The Chairman of the Committee at each
meeting of the Board of Directors shall inform the directors of any action taken
by the Committee since the last meeting of the directors.
<PAGE>
OBJECTIVES AND RESPONSIBILITIES
The objective of the Audit Committee is to provide adequate oversight
of the processes, plans and systems employed by management of the Corporation so
as to best accomplish the mission of the Committee. To attain this objective,
the Committee shall have the following responsibilities:
I. Review of financial reporting process.
A. Auditor's report of interim financial statements.
B. Review of draft quarterly reports on Form 10-Q and annual report on
Form 10-K.
C. Review of new accounting standards, proposed changes in accounting
policies and opinions obtained from independent accountants
concerning significant accounting issues.
D. Review of management reports on significant transactions,
contingencies or inquiries from regulatory agencies regarding
accounting matters which may materially affect the financial
statements.
E. Review of debt covenant compliance.
II. Review of auditing, review and compliance process.
A. Reports from internal auditor on activity and adequacy of internal
accounting controls.
B. Review of proposed internal audit scope for the forthcoming year and
coordination of plan with outside auditors.
C. Review of management's program to monitor compliance with the
corporate code of conduct.
D. Report from Corporate Counsel on regulatory compliance monitoring
program.
III. Special matters.
A. Accounting.
1. Review of the appropriateness of the carrying value and the
amortization period of intangibles.
2. Review of reserves and management's assessment of adequacy.
3. Status of income tax returns and revenue agents' reviews.
4. Review of retirement plans.
5. Review of Lee Foundation.
6. Review of legal contingencies which may materially affect the
financial statements.
7. Review of insurance coverage and costs.
B. Auditing.
1. Review of outside auditors' written statement delineating
relationships between the Corporation and the auditor, review and
assess any disclosed relationships for impact on independence and
make recommendations to the Board.
2. Review of outside auditors' fees and other services rendered.
3. Recommend appointment of outside auditors to Board of Directors.
4. Review of external audit plan.
5. Review of external audit results, including internal control
recommendations.
6. Review of division responses to external auditor's
recommendations.
7. Review of airplane, Lee Lodge, and Adler Haus usage.
8. Review of the CEO Team expense reports.
9. Review of competency and size of financial staff.
<PAGE>
IV. Quarterly private meeting with independent auditors, internal auditor,
or chief financial officer.
V. Review and approve any changes in the position description and approve
the standards of performance (key result areas) for the internal
auditor.
VI. Annual review of this Charter and the Audit Committee's duties and
responsibilities hereunder.
VII. Prepare report required by SEC rules to be included in the Corporation's
annual proxy statement.
VIII.Perform such other duties as may be assigned to the Committee from time
to time by the Board of Directors.
AUTHORITY
I. The outside auditors are ultimately accountable to the Board of Directors
and the Committee and the Board of Directors and the Committee shall have
the ultimate authority and responsibility for selecting, evaluating and,
where appropriate, replacing the outside auditors.
II. The Committee, by delegation of the Board of Directors, shall exercise such
authority as may be necessary and appropriate to carry out its duties and
responsibilities. The Corporation shall furnish to the Committee, upon
request, such resources as the Committee may determine necessary in order to
discharge its responsibilities.
