<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
McGraw-Hill, Inc.
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(Name of Registrant as Specified In Its Charter)
McGraw-Hill, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
McGraw-Hill, Inc. (LOGO)
1221 Avenue of the Americas
New York, New York 10020
March 20, 1995
DEAR SHAREHOLDER:
On behalf of the Board of Directors and management, we cordially invite you to
the Annual Meeting of Shareholders to be held Wednesday, April 26, 1995, at 11
A.M., at the principal executive offices of the Corporation, 1221 Avenue of the
Americas, New York City.
At the Annual Meeting, we are asking shareholders to vote for the election of
directors, for the ratification of the appointment of independent auditors, and
for approval to change the Corporation's name to "The McGraw-Hill Companies,
Inc." These matters, together with two shareholder proposals which may be
brought before the meeting, are more fully described in the accompanying Notice
of Meeting and Proxy Statement. For the reasons set forth in the Proxy
Statement, your Board of Directors recommends a vote FOR Items 1, 2 and 3, and
AGAINST Items 4 and 5 as set forth on the enclosed Proxy Card.
At the Annual Meeting, there will also be a report to shareholders regarding the
operations of McGraw-Hill, Inc. In addition, time will be made available for
shareholders to discuss the formal business items as well as to ask other
questions about McGraw-Hill's operations.
It is important that your shares be voted at the meeting in accordance with your
preference whether or not you plan to attend in person. We urge you to specify
your choices on the matters presented by filling in the appropriate boxes on the
enclosed Proxy Card. Please sign, date and return the Proxy Card in the prepaid
envelope provided. Your cooperation in promptly returning the Proxy Card will
save your Corporation additional solicitation costs and is appreciated. If you
do attend the meeting and wish to vote in person, you may withdraw your Proxy at
that time.
Sincerely,
/s/ Joseph L. Dionne
JOSEPH L. DIONNE
Chairman of the Board and Chief
Executive Officer
<PAGE> 3
McGraw-Hill, Inc. (LOGO)
1221 Avenue of the Americas
New York, New York 10020
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1995
To the Shareholders of McGraw-Hill, Inc.:
The Annual Meeting of Shareholders of McGraw-Hill, Inc. (the "Corporation") will
be held at the principal executive offices of the Corporation, 1221 Avenue of
the Americas, New York, New York 10020, Wednesday, April 26, 1995, at 11 A.M.,
for the purpose of considering and voting upon the following:
1. Election of three directors;
2. An amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc.";
3. Ratification of the appointment of independent auditors for 1995;
4. Shareholder proposal requesting elimination of election of directors by
classes;
5. Shareholder proposal requesting elimination of pension plans for non-employee
directors; and
6. Such other business as may properly come before the Meeting or any
adjournment thereof.
Information relating to the above matters is set forth in the accompanying Proxy
Statement.
In accordance with the By-Laws and resolutions of the Board of Directors, only
shareholders of record at the close of business on March 9, 1995 shall be
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors
ROBERT N. LANDES
Executive Vice President, General Counsel
and Secretary
New York, New York
March 20, 1995
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Please sign and return the enclosed proxy in the envelope provided.
No postage is necessary, if mailed in the United States.
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<PAGE> 4
McGraw-Hill, Inc.
1221 Avenue of the Americas
New York, New York 10020
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1995
PROXY STATEMENT
To the Shareholders of McGraw-Hill, Inc.:
This statement is furnished in connection with the solicitation of proxies by
the Board of Directors of McGraw-Hill, Inc. (the "Corporation") for use at the
Annual Meeting of Shareholders to be held at 11 A.M. on April 26, 1995, at the
principal executive offices of the Corporation, 1221 Avenue of the Americas, New
York, New York, and at any adjournment thereof. A Notice of Meeting is attached
hereto and a form of proxy is enclosed.
THE PROXY
The persons named as proxies were selected by the Board of Directors of the
Corporation and are officers of the Corporation.
When the proxies in the enclosed form are properly executed and returned, the
shares they represent will be voted at the Meeting. If a shareholder
participates in the Corporation's Dividend Reinvestment Plan, any proxy given by
such shareholder will also govern the voting of all shares held for the
shareholder's account under the Dividend Reinvestment Plan, unless contrary
instructions are received. Any shareholder giving a proxy has the power to
revoke it at any time before it is voted at the Meeting by filing with the
Secretary of the Corporation an instrument revoking it or by filing a duly
executed proxy bearing a later date.
The cost of soliciting proxies will be borne by the Corporation. The Corporation
will request banks and brokers to solicit their customers who have a beneficial
interest in the Corporation's shares registered in the names of nominees and
will reimburse such banks and brokers for their reasonable out-of-pocket
expenses of such solicitations. In addition, officers and full-time employees of
the Corporation may solicit proxies by telephone, telegraph or personal
interview. The Corporation has retained Kissel-Blake Inc. to assist in the
solicitation of proxies. It is estimated the Corporation will pay Kissel-Blake a
fee of $16,500 for these services.
These proxy materials are being mailed to shareholders of the Corporation
commencing on March 20, 1995. A copy of the 1994 Annual Report to Shareholders
was mailed to shareholders on March 13, 1995.
VOTING SECURITIES
The outstanding securities of the Corporation on March 9, 1995 were
shares of Common Stock, par value $1 per share, and shares of
$1.20 Convertible Preference Stock, par value $10 per share. Each share of
Common Stock and $1.20 Convertible Preference Stock is entitled to one vote at
the Meeting.
VOTING PROCEDURES
Under the New York Business Corporation Law (the "BCL") and the Corporation's
Restated Certificate of Incorporation, the presence, in person or by proxy, of
the holders of a majority of the outstanding shares of Common Stock and $1.20
Convertible Preference Stock is necessary to constitute a quorum of shareholders
to take action at this Annual Meeting. For these purposes, shares which are
present, or represented by a proxy, at the Meeting will be counted for quorum
purposes regardless of whether the holder of the shares or proxy fails to vote
on any particular matter or whether a broker with discretionary authority fails
to exercise its discretionary voting authority with respect to any particular
matter. Once a quorum of the shareholders is established, under the BCL and the
Corporation's Restated Certificate of Incorporation, (A) the directors standing
for election as set forth on pages 2 and 3 must be elected by a plurality of the
votes cast; (B) the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock and Preference Stock, voting together as a
single class, is required to approve the proposed amendment to the Corporation's
Restated Certificate of Incorporation as described on page 17 to change the
Corporation's name (Proposal Two); and (C) the affirmative vote of a majority of
the votes cast is required to approve the shareholder proposals as set forth on
pages 18 through 20 (Proposals Four and Five) and to ratify the appointment of
the auditors as described on pages 17 and 18 (Proposal Three). For voting
purposes (as opposed to for purposes of establishing a quorum) abstentions and
broker non-votes will not be counted in determining whether the directors
standing for election have been elected or whether any other item has been
approved.
Votes at the Meeting will be tabulated by two inspectors of election appointed
by the Board of Directors.
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<PAGE> 5
1. ELECTION OF THREE DIRECTORS
Under the Corporation's Restated Certificate of Incorporation, there are three
classes of directors which are to be as equal in number as possible. Four
directors, Joseph L. Dionne, Don Johnston, Harold W. McGraw III and Alva O. Way,
were elected in 1993 to terms expiring at the 1996 Annual Meeting. In addition,
Linda Koch Lorimer was elected a director in 1994 for a two-year term expiring
at the 1996 Annual Meeting. Five directors, Vartan Gregorian, John T. Hartley,
Peter O. Lawson-Johnston, Paul J. Rizzo and James H. Ross, were elected in 1994
for three-year terms expiring at the 1997 Annual Meeting. None of these ten
incumbent directors is standing for re-election at this Meeting.
Three directors, George B. Harvey, Richard H. Jenrette and Lois Dickson Rice,
are to be elected at this Meeting for three-year terms expiring at the 1998
Annual Meeting. John L. McGraw, a director of the Corporation since 1964, will
be retiring from the Board after the 1995 Annual Meeting and will not be
standing for re-election.
Harold W. McGraw, Jr., a director of the Corporation from 1954 to 1988, Chairman
of the Board from 1976 to 1988, and Chief Executive Officer of the Corporation
from 1975 until 1983, retired from the Board after the 1988 Annual Meeting
pursuant to the Board's retirement age policy. However, in recognition of Mr.
McGraw's past service and contributions to the Corporation and to assure his
continued close association with the Board and the Corporation, the Board of
Directors several years ago elected Mr. McGraw permanently to the position of
Chairman Emeritus.
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THE BOARD OF DIRECTORS' RECOMMENDATION
Unless otherwise specified by the shareholder, the Board of Directors intends
the accompanying proxy to be voted FOR the election of the named three nominees
as directors.
The Board of Directors does not contemplate that any nominee will be unable or
unwilling to serve as a director. However, if that should occur, the individuals
named as the proxies reserve the right to substitute another person as may be
selected by the Board of Directors when voting at the Annual Meeting.
Following is information about each of the three nominees for director who are
being proposed for election at this Annual Meeting and about each of the ten
incumbent directors.
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NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING AT THE 1998 MEETING
GEORGE B. HARVEY, age 63, has been Chairman, President and
Chief Executive Officer of Pitney Bowes Inc., a
manufacturer of office equipment and business supplies and
provider of financial services, since 1983. Mr. Harvey was
(PHOTO) President and Chief Operating Officer of Pitney Bowes from
1981 to 1983. He is a director of Merrill Lynch, Pfizer,
Inc. and Connecticut Mutual Life Insurance Company. Mr.
Harvey has served as a director of the Corporation since
1985 and is Chairman of the Audit Committee and is a member
of the Executive and Financial Policy Committees.
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RICHARD H. JENRETTE, age 65, has been Chairman of the Board
and Chief Executive Officer since 1992 of The Equitable
Companies Incorporated. He is also Chairman of Equitable's
wholly-owned investment banking subsidiary, Donaldson,
Lufkin & Jenrette, Inc. Mr. Jenrette was Chairman of The
(PHOTO) Equitable Life Assurance Society of the United States, a
mutual life insurance company, prior to its
de-mutualization in 1992. He is a director of Groupe AXA,
S.A. and Alliance Capital Management Corp. He is also a
member of the Business Roundtable. Mr. Jenrette has served
as a director of the Corporation since 1993 and is a member
of the Financial Policy Committee.
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LOIS DICKSON RICE (Mrs. Alfred B. Fitt), age 62, has been a
guest scholar since October 1991 in the Economics Study
Program at The Brookings Institution, a research and
education organization. Prior to that she had been for more
than five years Senior Vice President, Government Affairs,
and a director of Control Data Corporation, which applies
(PHOTO) technology to specialized computer, information and
management needs. She has held various positions with the
College Board, an educational association, and from 1971
through 1981 served as one of its Vice Presidents. Mrs.
Rice is a director of Bell Atlantic of Washington, D.C.,
International Multifoods, Hartford Steam Boiler Inspection
and Insurance Company, Shawmut National Corporation and
Unum Corporation. Mrs. Rice is a Trustee of the Harry Frank
Guggenheim Foundation, Reading Is Fundamental and the
Center for Naval Analysis. She is a member of the
President's Foreign Intelligence Advisory Board. Mrs. Rice
has served as a director of the Corporation since 1988 and
is a member of the Audit and Management Compensation
Committees.
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<PAGE> 7
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DIRECTORS WHOSE TERMS EXPIRE AT THE 1997 ANNUAL MEETING
VARTAN GREGORIAN, age 60, has been President of Brown
University and a Professor of History at Brown University
since 1989. He was President and Chief Executive Officer of
the New York Public Library from 1981 to 1989. Prior to
1981, Dr. Gregorian taught and held administrative posts at
several different American universities. Dr. Gregorian is a
(PHOTO) director of the Institute for Advanced Study, the J. Paul
Getty Trust, the Aaron Diamond Foundation, the Institute
for International Studies, the International League for
Human Rights, and the Fund for Free Expression. Dr.
Gregorian is currently President Emeritus of the New York
Public Library and was appointed by President Bush to be a
member of the Fulbright Commission. He is also a member of
the American Philosophical Society, a fellow of the
American Academy of Arts and Letters, a member of The
Brookings Institute, and a Trustee of the Museum of Modern
Art (New York). Dr. Gregorian has served as a director of
the Corporation since 1990 and is a member of the Financial
Policy Committee.
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JOHN T. HARTLEY, age 65, is Chairman of the Board and Chief
Executive Officer of the Harris Corporation, a supplier of
information, communication and semiconductor systems,
products and services to government and commercial markets
worldwide. Mr. Hartley was elected President and Chief
Operating Officer of the Harris Corporation in 1982, Chief
(PHOTO) Executive Officer in 1986 and Chairman of the Board in
1987. Mr. Hartley is a director of The Equitable Companies
Incorporated and The Equitable Life Assurance Society of
the United States and formerly the Chairman of the National
Association of Manufacturers. He is a member of the
Business Roundtable and the Board of Trustees of the
Manufacturers' Alliance for Productivity and Innovation, as
well as a Trustee of the Committee for Economic
Development. Mr. Hartley is also a Trustee of the Florida
Institute of Technology. Mr. Hartley has served as a
director of the Corporation since 1989 and is a member of
the Audit, Financial Policy and Nominating and Corporate
Governance Committees.
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PETER O. LAWSON-JOHNSTON, age 68, has been for more than
the past five years a general partner in Guggenheim
Brothers, a venture capital partnership. Mr. Lawson-
Johnston is also Chairman of Zemex Corporation, a
diversified industrial minerals and materials company. He
is Chairman and a Trustee of the Solomon R. Guggenheim
(PHOTO) Foundation (which operates the Solomon R. Guggenheim
Museums in New York City and the Peggy Guggenheim
Collection in Venice, Italy), Chairman of the Board and a
Trustee of the Harry Frank Guggenheim Foundation, President
and a Trustee of the Lawrenceville School, and President
and a director of Elgerbar Corporation. Mr. Lawson-Johnston
has served as a director of the Corporation since 1975 and
is a member of the Management Compensation and Nominating
and Corporate Governance Committees.
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PAUL J. RIZZO, age 67, is a partner in Franklin Street
Partners, an investment firm. He was Vice Chairman of the
Board of International Business Machines Corporation, a
manufacturer and distributor of advanced information
technologies, from 1993 to December 1994. He was Dean of
(PHOTO) the Graduate School of Business Administration at the
University of North Carolina from 1987 to 1993. He was Vice
Chairman of the Board of Directors of the IBM Corporation
from 1983 to 1987. Prior to that, Mr. Rizzo was Senior Vice
President of the IBM Corporation from 1971 to 1982. He is a
director of Johnson & Johnson and Ryder Systems, Inc. Mr.
Rizzo has served as a director of the Corporation since
1988 and is the Chairman of the Management Compensation
Committee and is a member of the Audit and Executive
Committees.
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<PAGE> 8
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JAMES H. ROSS, age 56, has been Chief Executive and a
director of Cable & Wireless plc., an international
provider of telecommunications services, since 1992. He was
a Managing Director of British Petroleum plc., which
engages in all phases of the petroleum business, from 1991
to 1992, and Chairman and Chief Executive Officer of BP
(PHOTO) America Inc., a subsidiary of British Petroleum plc., from
1988 to 1991. He was Chief Executive Officer and Managing
Director of BP Oil International Limited from 1986 to 1988.
Prior to that, he was General Manager of Corporate Planning
for British Petroleum plc. from 1982 through 1985. Mr. Ross
is a trustee of the Cleveland Orchestra, a member of the
Advisory Board of the Center for Strategic and
International Studies, Chairman of the Board of the
Manchester Business School and a member of the European
Round Table. Mr. Ross has served as a director of the
Corporation since 1989
and is a member of the Financial Policy and Nominating and
Corporate Governance Committees.
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DIRECTORS WHOSE TERMS EXPIRE AT THE 1996 ANNUAL MEETING
JOSEPH L. DIONNE, age 61, has been Chairman of the Board
and Chief Executive Officer of the Corporation since April
1988. He was President and Chief Executive Officer of the
Corporation from 1983 to April 1988. Mr. Dionne was
President and Chief Operating Officer of the Corporation
(PHOTO) from 1981 to 1983. He was Executive Vice President,
Operations, of the Corporation from 1979 to 1981 and
President of McGraw-Hill Information Systems Company from
1977 to 1979. He is a director of The Equitable Companies
Incorporated, The Equitable Life Assurance Society of the
United States, the Harris Corporation and Alexander &
Alexander Services, Inc. and a Trustee of Hofstra
University. Mr. Dionne has served as a director of the
Corporation since 1981 and is Chairman of the Executive
Committee.
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DON JOHNSTON, age 68, was from 1978 to 1987 Chairman and
Chief Executive Officer of JWT Group, Inc., the parent
company of various advertising agencies and public
relations and market research firms, including the J.
Walter Thompson Advertising Agency. Mr. Johnston is a
(PHOTO) director of The Equitable Life Assurance Society of the
United States. He is a Trustee Emeritus of Johns Hopkins
University and Chairman Emeritus of the International
Executive Service Corps. Mr. Johnston has served as a
director of the Corporation since 1986 and is Chairman of
the Nominating and Corporate Governance Committee and is a
member of the Management Compensation Committee.
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LINDA KOCH LORIMER, age 43, has been Secretary of Yale
University since 1993. She was President of Randolph-Macon
Woman's College from 1987 to 1993 and was Associate Provost
of Yale University from 1983 to 1987. She is a director of
(PHOTO) Sprint Corporation. Ms. Lorimer also serves on the Board of
Governors of Yale University Press and is a director of
Yale-New Haven Hospital. Ms. Lorimer has served as a
director of the Corporation since February 1994 and is a
member of the Financial Policy Committee.
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<PAGE> 9
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HAROLD W. MCGRAW III, age 46, has been President and Chief
Operating Officer of the Corporation since 1993. He was
Executive Vice President, Operations, of the Corporation
from 1989 to 1993. He was President of the McGraw-Hill
Financial Services Company from 1988 to 1989. Prior to that
he was President of the McGraw-Hill Publications Company
from 1987 to 1988. He was the Group Vice President of the
(PHOTO) McGraw-Hill Transportation, Aerospace & Defense Groups, and
the publisher of McGraw-Hill's Aviation Week & Space
Technology and Commercial Space magazines from 1985 to
1987. From 1983 to 1985, Mr. McGraw was Vice President,
Corporate Planning, of the Corporation, and was Assistant
Vice President, Pension Investment between 1980 and 1983.
Prior to joining the Corporation, he held several financial
positions at the GTE Corporation, including Assistant Vice
President, Pension Investment. He is a Trustee of Hartley
House (a New York City community settlement house). Mr.
McGraw has served as a director of the Corporation since
1987 and is a member of the Financial Policy
Committee. (a)
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ALVA O. WAY, age 65, is the Chairman of the Board of IBJ
Schroder Bank & Trust Company and a consultant and a
director of Schroder (PLC) (London). Mr. Way was the
President of the Travelers Corporation, a financial
services organization, from 1983 to 1984. He was President
of the American Express Company from 1981 to 1983 and Vice
(PHOTO) Chairman from 1979 to 1981. Previously, Mr. Way was Senior
Vice President -- Finance for the General Electric Company
from 1977 to 1979 and its Financial Vice President from
1973 to 1977. He is a director of Ryder Systems, Inc.,
Gould, Inc., Guidant Corporation and Eli Lilly and Co. He
is Chancellor of Brown University and a Trustee of the
Committee for Economic Development. Mr. Way has served as a
director of the Corporation since 1983 and is Chairman of
the Financial Policy Committee and is a member of the
Nominating and Corporate Governance and Executive
Committees.
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(a) Harold W. McGraw III is the son of Harold W. McGraw, Jr. John L. McGraw, who
is retiring from the Board after the 1995 Annual Meeting, is the cousin of
Harold W. McGraw, Jr.
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<PAGE> 10
INFORMATION AS TO COMMITTEES, ATTENDANCE
AND FEES OF THE BOARD OF DIRECTORS
The Corporation's Board of Directors has standing Audit, Management Compensation
and Nominating and Corporate Governance Committees.
The Audit Committee is comprised of Mrs. Lois Dickson Rice and Messrs. John T.
Hartley, George B. Harvey, John L. McGraw and Paul J. Rizzo. During 1994 the
Audit Committee held three meetings. The functions performed by the Audit
Committee include: (a) reviewing and approving the scope and coverage of the
Corporation's annual audit and the division of duties between the Corporation's
independent auditors and internal auditors; (b) discussing any significant
difficulties encountered or significant findings made during the annual audit;
(c) reviewing and approving the annual audit, financial statements and
management letters following completion of the Corporation's annual audit; (d)
reviewing with the Corporation's independent auditors and the Corporation's
management the accounting systems, financial controls and procedures used by the
Corporation; (e) reviewing and approving the scope of the duties of the internal
audit function; (f) reviewing and approving, from time to time, with the
Corporation's senior management the Corporation's Code of Business Ethics to
determine compliance with such Code; (g) reviewing and approving the annual
audit budget and actual fees paid to the Corporation's independent auditors; and
(h) recommending to the Board of Directors each year the firm of independent
auditors to be retained for the following year.
The Management Compensation Committee is comprised of Mrs. Lois Dickson Rice and
Messrs. Don Johnston, Peter O. Lawson-Johnston, John L. McGraw and Paul J.
Rizzo. During 1994 the Management Compensation Committee held six meetings. The
functions performed by the Management Compensation Committee include: (a)
establishing and approving the compensation to be paid to members of the
Corporation's senior management; (b) administering the Corporation's management
incentive plans; (c) administering the Corporation's stock incentive plans; and
(d) authorizing and approving any special compensation arrangements for senior
management.
The Nominating and Corporate Governance Committee is comprised of Messrs. John
T. Hartley, Don Johnston, Peter O. Lawson-Johnston, James H. Ross and Alva O.
Way. During 1994 the Nominating and Corporate Governance Committee held three
meetings. The functions performed by the Committee include: (a) recommending to
the Board of Directors the slate of nominees for election as directors at each
Annual Meeting or for election by the Board of Directors on an interim basis;
(b) recommending to the Board of Directors individuals to fill vacancies on it;
(c) evaluating, on a continuing basis, possible candidates to serve on the Board
of Directors; (d) recommending to the Board of Directors appropriate
compensation to be paid to the directors; (e) administering the Stock Payment
Plan For Directors and the Directors Retirement Plan; (f) determining whether
any relationship exists between an outside director and the Corporation that
might affect the status of the director as independent; and (g) making
recommendations from time to time to the Board of Directors as to matters of
corporate governance and periodically monitoring the Board's performance. The
Nominating and Corporate Governance Committee is willing to consider
recommendations of nominees by a shareholder if the shareholder submits the
nomination in compliance with the advance notice, informational and other
requirements set forth in the Corporation's By-Laws. Shareholders should direct
such recommendations of nominees to the Nominating and Corporate Governance
Committee, c/o the Secretary of the Corporation at 1221 Avenue of the Americas,
New York, New York 10020. The Corporation's By-Laws also contain detailed
procedures, including time limitations, which a shareholder must comply with in
order to introduce an item of business at a meeting of shareholders.
In addition to the above mentioned three committees, the Corporation's Board of
Directors has an Executive Committee and a Financial Policy Committee.
The Board of Directors of the Corporation held a total of nine meetings during
1994. All directors attended at least 75% of (1) all meetings of the Board of
Directors and (2) all meetings of all board committees on which they served,
except for Mr. Richard H. Jenrette who attended 60% of such meetings. The
overall attendance record for all directors as a group during 1994 was 93%.
Outside directors receive from the Corporation an annual fee of $30,000 for
serving on the Board of Directors, plus $1,000 for each board meeting which they
attend. In addition, outside directors receive $800 for each meeting of the
Audit, Management Compensation, Executive, Financial Policy and Nominating and
Corporate Governance Committees which they attend. Inside directors, who are
employees of the Corporation, do not receive any fees for serving on the board
or for attending meetings of board committees. At the 1993 Annual Meeting,
shareholders approved the 1993 McGraw-Hill Stock Payment Plan For Directors.
Accordingly, effective May 1, 1993 and thereafter, twenty percent of the annual
retainer fee is paid to the outside directors in the form of Common Stock in
lieu of cash, together with a cash payment equal to the product of the number of
shares of Common Stock issued to the director for the year as provided above
multiplied by the aggregate cash dividends paid by the Corporation on a share of
Common Stock during the year.
Effective July 1, 1989, the Board of Directors adopted the Directors Retirement
Plan which provides for annual retirement and disability benefits to be paid to
each non-employee director of the Corporation upon retirement at or after age 65
or in the event of disability in an amount equal to 10% of the then annual
retainer fee for each year of service on the Board, provided that the director
shall have been a Board member for at least five years.
Pursuant to the Director Deferred Compensation Plan, the Corporation currently
has agreements with Mrs. Linda Koch Lorimer and Lois Dickson Rice and Messrs.
Vartan Gregorian, George B. Harvey, John T. Hartley, John L. McGraw, Paul J.
Rizzo and Alva O. Way, respectively, to defer payment to them of all or a
portion of their annual cash retainer and board and
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<PAGE> 11
committee meeting fees which would otherwise be due and payable to them in
connection with their service on the Board of Directors. Interest on the
deferred amount is to be based on the average of a corporate bond index for the
previous five calendar years plus an additional amount currently estimated at
6%, except that with respect to new agreements to defer or agreements to defer
added amounts entered into after December 3, 1986, interest will be payable at
the monthly equivalent of a corporate bond index for the preceding year plus 2%
(up to a maximum of 150% of the bond index).
INDEMNIFICATION
Each of the directors and certain of the executive officers have entered into an
indemnification agreement with the Corporation pursuant to which each director
and executive officer shall be indemnified against judgments, fines, amounts
paid in settlement and reasonable expenses, including attorneys' fees actually
and necessarily incurred in any action or proceeding, whether civil or criminal,
or any appeal therein, to the fullest extent permitted by the applicable
provisions of the New York Business Corporation Law. Such indemnification will
be reduced to the extent that a director or executive officer is effectively
indemnified by directors' and officers' liability insurance maintained by the
Corporation. The Corporation has for many years carried directors' and officers'
liability insurance coverage. The Corporation's current insurance coverage was
purchased for the one year period commencing at 12:01 a.m. on June 26, 1994 and
extending through 12:01 a.m. of June 26, 1995, at an annual aggregate premium of
approximately $760,000. This coverage, subject to a number of standard
exceptions, indemnifies the directors and officers of the Corporation, whether
elected or appointed, for liabilities or losses incurred in the performance of
their duties up to an aggregate sum of $65,000,000. This coverage is also
subject to the following deductibles: $5,000 per director or officer per claim;
$50,000 for all directors and officers in the aggregate per claim; and $350,000
per loss for corporate reimbursement. The Corporation has purchased this
insurance coverage from National Union Fire Insurance Company of Pittsburgh,
PA.; Federal Insurance Company; Fidelity & Casualty Company of New York; and
Great American Insurance Companies. No sums have been paid under this coverage
to the Corporation or any directors or officers nor have any claims for
reimbursement been made under this policy.
BENEFICIAL OWNERSHIP OF THE CORPORATION'S COMMON STOCK (A)
The following table indicates the beneficial ownership of the Corporation's
Common Stock as of February 9, 1995, by (1) each of the directors and nominees,
(2) the chief executive officer and the other four most highly compensated
executive officers and (3) all directors, nominees and executive officers of the
Corporation as a group, based upon information supplied by each of the
directors, nominees and officers:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Right to
Sole Shared Acquire
Voting Voting Shares within Total
Power and Power and 60 Number
Sole Shared Days by of Shares Percent of
Investment Invest- Exercise Beneficially Common
Name of Beneficial Owner Power ment Power of Options Owned Stock(a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert J. Bahash 27,880 40,357 68,237 (b)
Joseph L. Dionne(c) 93,802 114,760 208,562 (b)
Vartan Gregorian 325 325 (b)
John T. Hartley 1,124 1,124 (b)
George B. Harvey 797 797 (b)
Michael K. Hehir(d) 14,635 10,592 25,227 (b)
Richard H. Jenrette 124 124 (b)
Don Johnston 2,124 2,124 (b)
Peter O. Lawson-Johnston 2,124 2,124 (b)
As a Trustee of a Trust(e) 4,700(e) 4,700 (b)
Linda Koch Lorimer 561 561 (b)
Harold W. McGraw III 76,425 48,482 124,907 (b)
John L. McGraw 715,448 715,448 1%
Lois Dickson Rice 324 324 (b)
Paul J. Rizzo 1,124 1,124 (b)
James H. Ross 324 324 (b)
Thomas J. Sullivan(f) 21,984 4,330 42,486 68,800 (b)
Alva O. Way 1,124 1,124 (b)
All Directors and Executive Officers of the
Corporation as a group (a total of 22
persons, including those named
above) (g)(h) 987,971 8,480 299,479 1,295,930 3%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 12
(a) To the Corporation's knowledge, no person is the beneficial owner of more
than 5% of the Corporation's Common Stock, other than Delaware Management
Company, Inc. ("Delaware Management"), a registered investment adviser, which in
that capacity through operating subsidiaries manages client accounts. On
February 21, 1995, Delaware Management advised the Corporation by furnishing the
Corporation with its Schedule 13G filed with the Securities and Exchange
Commission that it beneficially owned in the aggregate 3,961,935 shares or 7.98%
of the outstanding Common Stock. Delaware Management has certified in its
Schedule 13G filing that the Corporation's Common Stock was acquired in the
ordinary course of business and was not acquired for the purpose of changing or
influencing control of the Corporation. None of the directors, nominees or
officers owns securities of the Corporation other than Common Stock. The number
of shares of Common Stock outstanding on February 9, 1995 (excluding treasury
shares) was 49,768,165. The percent of Common Stock is based on such number of
shares and is rounded off to the nearest one percent.
(b) Less than 1%.
(c) Joan F. Dionne, the wife of Joseph L. Dionne, is the beneficial owner of
5,380 shares of Common Stock. These shares have not been included in the above
table.
(d) Michael K. Hehir's children are the beneficial owners of 550 shares of
Common Stock. These shares have not been included in the above table.
(e) The Trustee disclaims any beneficial interest in these shares.
(f) Thomas J. Sullivan, Jr., the son of Thomas J. Sullivan, is the beneficial
owner of 1,964 shares of Common Stock. These shares have not been included in
the above table.
(g) Spouses and children of some members of this group may own other shares in
which the members of this group disclaim any beneficial interest and which are
not included in the above table.
(h) Harold W. McGraw, Jr., Chairman Emeritus of the Corporation, is the
beneficial owner of 1,272,325 shares of Common Stock, which is approximately 3%
of the Corporation's issued and outstanding Common Stock. In addition, Anne P.
McGraw, the wife of Harold W. McGraw, Jr., is the beneficial owner of 40,000
shares of Common Stock. None of these shares has been included in the above
table.
INFORMATION AS TO EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of the
Corporation's chief executive officer and each of the other four most highly
compensated executive officers (the "Named Officers") for services rendered in
all capacities to the Corporation in 1992, 1993 and 1994:
<TABLE>
<CAPTION> SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------------
----------------------------- Awards Payouts
Name Other ---------------------- --------- ALL
and Annual Restricted Securities Long-Term OTHER
Principal Compen- Stock Underlying Incentive COMPEN-
Position Year Salary Bonus sation(a) Awards(b) Options Payouts SATION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph L. Dionne 1994 $800,000 $739,480 $ 63,737 0 19,750 $958,056 $174,607(c)
Chairman and 1993 750,000 669,008 65,689 0 19,750 0 151,377
Chief Executive Officer 1992 710,000 559,125 80,293 0 20,250 0 91,571
Harold W. McGraw III 1994 $528,500 $400,904 $ 36,113 0 11,600 $488,700 $ 82,104(c)
President and 1993 479,167 351,707 142,612 0 10,000 0 71,057
Chief Operating Officer 1992 420,667 283,950 38,275 0 10,375 0 43,920
Robert J. Bahash 1994 $364,000 $274,368 $ 27,378 0 7,000 $422,013 $ 59,547(c)
Executive Vice 1993 340,000 291,284 28,689 0 7,000 0 52,743
President, 1992 321,000 198,619 32,928 0 9,000 0 35,815
Chief Financial Officer
Thomas J. Sullivan 1994 $340,000 $246,934 $ 27,378 0 7,000 $422,013 $ 58,691(c)
Executive Vice 1993 325,500 228,132 28,689 0 7,000 0 54,409
President, 1992 310,000 196,875 33,996 0 9,000 0 38,296
Administration
Michael K. Hehir 1994 $305,000 $178,268 $ 12,904 0 3,250 $125,738 $ 40,133(c)
Executive Vice 1993 264,038 133,399 10,629 0 3,000 102,759 36,821
President, 1992 232,500 138,712 10,958 0 2,690 0 30,954
New Ventures
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 13
(a) Represents dividend equivalents paid on outstanding Long-Term Restricted
Performance Share Awards.
(b) The number and value of Restricted Stock and Restricted Performance Share
holdings at year end were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
1994
-----------------------------------------------
Unearned
Restricted
Restricted Performance Value
Stock Shares Total (at $66.8750)*
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
J. L. Dionne 3,120 27,473 30,593 $2,045,907
H. W. McGraw III 1,420 15,566 16,986 1,135,939
R. J. Bahash 1,200 11,801 13,001 869,442
T. J. Sullivan 1,420 11,801 13,221 884,154
M. K. Hehir 620 5,562 6,182 413,421
- ----------------------------------------------------------------
</TABLE>
* Based on the closing price of McGraw-Hill Common Stock on December 31, 1994
Dividend equivalent payments equal to the dividend paid on the Corporation's
Common Stock were paid in cash on Restricted Stock and Restricted Performance
Shares in 1994.
(c) For 1994, the dollar value reported in this column includes the following
items:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1994 Company
Above Market Contribution
Interest on to Defined
Deferred Contribution
Compensation Plans Total
- --------------------------------------------------------------
<S> <C> <C> <C>
J. L. Dionne $ 36,567 $ 138,040 $174,607
H. W. McGraw III 0 82,104 82,104
R. J. Bahash 3,844 55,703 59,547
T. J. Sullivan 6,238 52,458 58,696
M. K. Hehir 0 40,133 40,133
- --------------------------------------------------------------
</TABLE>
OPTION GRANTS IN 1994
The following table sets forth all grants of stock options made during 1994
pursuant to the 1987 Key Employee Stock Incentive Plan to the Named Officers in
the Summary Compensation Table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term(a)
-------------------------------------------------- ------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in or Base Expiration
Name Granted 1994 Price Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. L. Dionne 19,750 (b) 4.46% $67.9375 1/02/2004(c) $ 843,829 $ 2,138,429
H. W. McGraw III 11,600 (b) 2.62% $67.9375 1/02/2004 $ 495,616 $ 1,255,989
R. J. Bahash 7,000 (b) 1.58% $67.9375 1/02/2004 $ 299,079 $ 757,924
T. J. Sullivan 7,000 (b) 1.58% $67.9375 1/02/2004(c) $ 299,079 $ 757,924
M. K. Hehir 3,250 (b) 0.73% $67.9375 1/02/2004 $ 138,858 $ 351,893
All Shareholders N/A N/A N/A N/A $2,115,918,339(d) $5,362,155,504(d)
All Optionees 442,725 100% $67.9507(e) (e) $ 18,919,322 $ 47,945,302
Optionees' Gain as % of
All Shareholders' Gain N/A N/A N/A N/A 0.89% 0.89%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by the Securities and Exchange Commission for the
maximum option term of 10 years and therefore are not intended to and may not
accurately forecast possible future appreciation, if any, of the Corporation's
Common Stock price.
(b) The awards, which were granted pursuant to the 1987 Key Employee Stock
Incentive Plan, were for nonqualified stock options and provide that one-half of
the option vests on January 3, 1995, the first anniversary of the grant, and the
remaining one-half vests on January 3, 1996, the second anniversary of the
grant. In the event of a change in control of the Corporation, the option
becomes fully vested.
(c) In accordance with the Corporation's normal retirement policy and the
post-retirement exercise period of three years under the 1987 Key Employee Stock
Incentive Plan, these individuals may have an earlier expiration date for their
respective option grant than the date shown above. Accordingly, Mr. Dionne's
option may expire on June 29, 2001 and Mr. Sullivan's option may expire on April
30, 2003.
(d) The amount shown represents the hypothetical return to all shareholders of
the Corporation's Common Stock assuming that all the shareholders purchased the
Corporation's Common Stock at the close of business on January 3, 1994 at a
purchase price of $67.9507, the average price for all optionees, and that all
shareholders hold the Common Stock continuously for a ten-year period. The
number of outstanding shares of Common Stock on January 3, 1994 was 49,513,929.
The hypothetical return presented is not intended as a projection of the future
performance of McGraw-Hill Common Stock, but rather is provided for illustrative
purposes only.
(e) Expiration dates range from January 2, 2004 through July 31, 2004. $67.9507
represents the average exercise price of the grants to all optionees. All grants
were made at the fair market value of the Corporation's Common Stock at the time
of the grant.
10
<PAGE> 14
AGGREGATE OPTION EXERCISES IN 1994 AND 1994 YEAR-END OPTION VALUES
The following table sets forth information with respect to options exercised by
each of the Named Officers during 1994 and the number and value of unexercised
options as of December 31, 1994:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 1994 at December 31, 1994(a)
Shares Acquired Value --------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. L. Dionne 2,703 $88,185 95,010 29,625 $ 847,994 $58,633
H. W. McGraw III 0 0 37,682 16,600 327,618 29,688
R. J. Bahash 649 21,742 33,357 10,500 292,974 20,781
T. J. Sullivan 1,127 37,684 35,486 10,500 310,845 20,781
M. K. Hehir 300 2,606 7,467 4,750 39,470 8,906
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on the closing price of McGraw-Hill Common Stock on December 31, 1994
of $66.8750 as reported on the New York Stock Exchange Composite Transactions
Tape.
LONG TERM INCENTIVE PLAN AWARDS IN 1994
The following table sets forth information concerning long-term incentive awards
granted during 1994 to the Named Officers pursuant to the 1987 Key Employee
Stock Incentive Plan:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Estimated Future Payout
Under Non-Stock Price Based Plans
------------------------------------
Number of Performance Period Threshold Target Maximum
Restricted Until Number of Number of Number of
Name Performance Shares(a) Maturation or Payout Shares Shares Shares
- --------------------- ---------------------- --------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
J. L. Dionne 8,832 shares 3 Years 1,766 8,832 13,248
H. W. McGraw III 5,275 shares 3 Years 1,055 5,275 7,913
R. J. Bahash 3,698 shares 3 Years 740 3,698 5,547
T. J. Sullivan 3,698 shares 3 Years 740 3,698 5,547
M. K. Hehir 2,235 shares 3 Years 447 2,235 3,353
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Restricted Performance Share Awards pursuant to the 1987 Key Employee Stock
Incentive Plan with payment in McGraw-Hill Common Stock based upon the degree of
achievement of a three-year cumulative compound earnings per share growth goal
("the EPS goal") maturing on December 31, 1996. The awards do not provide for
interim payments (other than the payment of dividend equivalents). The threshold
amount will be earned at the achievement of 60% of the EPS goal, the target
amount will be earned at the achievement of 100% of the EPS goal and the maximum
award amount will be earned at the achievement of 120% or more of the EPS goal.
The awards will be forfeited if the achievement is less than 60% of the EPS
goal. The Restricted Performance Shares are entitled to dividend equivalent
payments and voting rights comparable to the Corporation's Common Stock based
upon the target number of shares awarded.
In the event of a change in control of the Corporation, all of the financial
goals are deemed to have been satisfied, and the recipient will receive the
target amount no later than the normal maturity date of the award.
11
<PAGE> 15
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly percentage change in the
cumulative total shareholder return on the Corporation's Common Stock with the
cumulative total return of the S&P Composite-500 Stock Index and the cumulative
total return for a group of peer companies for the five-year period commencing
on January 1, 1990 and ending on December 31, 1994.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MCGRAW-HILL, S&P 500 INDEX AND PEER GROUP INDEX**
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) MCGRAW- HILL S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100 100 100
1990 97 97 84
1991 110 126 107
1992 122 136 118
1993 139 150 135
1994 142 152 126
</TABLE>
Assumes $100 Invested on December 31, 1989 in McGraw-Hill Common Stock, S&P 500
Index and Peer Group Index
* Total return assumes reinvestment of dividends
** Companies comprising the Peer Group: Dow Jones & Company, Inc., The Dun &
Bradstreet Corporation, Gannett Co., Inc., Houghton Mifflin Company,
Knight-Ridder Inc., Meredith Corporation, The New York Times Company, The
Times Mirror Company, and Tribune Company.
MANAGEMENT COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
INTRODUCTION
The McGraw-Hill executive compensation program (the "Program") is administered
by the Management Compensation Committee of the Board of Directors (the
"Committee") which is composed of the individuals listed below who are
independent non-employee directors of the Corporation. The Committee has sole
responsibility for all compensation matters with respect to the Corporation's
senior management. The Committee regularly reports to the Board of Directors on
its activities and decisions and meets in executive session at year end to
review the CEO's performance.
PHILOSOPHY
The Program has been designed to enable the Corporation to attract, motivate and
retain senior management by providing a fully competitive total compensation
opportunity based on performance. The Program consists of three key elements:
(1) base salaries which reflect competitive marketplace data and evaluated
individual performance; (2) annual incentive opportunities which are payable in
cash for the achievement of annual financial performance goals established by
the Committee; and (3) long-term stock-based incentive opportunities consisting
of annual grants of restricted performance shares, which are
12
<PAGE> 16
payable for the achievement of three-year financial performance goals
established by the Committee, and annual stock option grants. The long-term
stock-based incentive opportunities are intended to align the interests of
senior management with those of the Corporation's shareholders. The
Corporation's executive compensation program is structured so that at higher
management levels a larger portion of annual compensation is variable, based on
company performance, and a larger portion of total compensation is composed of
long-term stock-based compensation. At the CEO level, approximately two-thirds
of Mr. Dionne's total compensation package is at risk depending upon the
Corporation's performance.
The Committee's policy with respect to the tax deductibility of executive
compensation under Section 162(m) of the Internal Revenue Code is to qualify
such compensation for deductibility where practicable. In this regard, the
Corporation has amended the 1993 and 1987 Key Employee Stock Incentive Plans to
impose an individual limit on the maximum number of stock option shares which
may be granted to participants to ensure that any stock option gains realized by
the CEO and the other four most highly compensated proxy-named executives are
tax deductible by the Corporation. In March 1994, to ensure the continued tax
deductibility of long-term incentive award payments, the Committee approved a
written definition of earnings per share for use in determining payments for the
CEO and the other four most highly compensated executives under the 1994
Long-Term Restricted Performance Share Award which matures at the end of 1996.
Further, the Committee plans to defer payment of other non-deductible
compensation to the CEO and the other four highest-paid executives until the
payment of such compensation is deemed to be tax deductible by the Corporation.
Following is a discussion of each of the elements of the Program and a
description of the specific decisions and actions taken by the Committee with
regard to 1994 compensation for the CEO.
PROGRAM COMPETITIVENESS
Each element of the Program is intended to be fully competitive with comparable
elements of competitor companies in the publishing, information and media
industry. Salary ranges are established for each position annually using a
third-party consultant survey of compensation practices in the publishing,
information and media industry, which includes reported data from companies in
the peer group index of the Performance Graph (the "Peer Group"). The midpoints
of the salary ranges are established to be competitive with the median base
salary levels reported in the survey.
The annual incentive award opportunities are established by the Committee based
on recommendations developed by an independent compensation consulting firm
selected by the Committee. These recommended incentive opportunities are also
intended to be competitive with median levels of competitor incentive
opportunities using available incentive opportunity data for the competitor
companies included in the Peer Group and incentive opportunity data from a
third-party media industry compensation survey of other publishing, information
and media companies.
The long-term incentive grant guidelines are intended to provide competitive
long-term compensation opportunities if the assumptions as to goal achievement
and stock price growth are realized. These restricted performance share and
stock option grant guidelines were most recently established by the Committee in
late 1992 and are anticipated to remain in effect for a multiple-year period
until reviewed and reset by the Committee. The grant guidelines are derived from
general industry long-term incentive grant data which is adjusted by an
independent compensation consultant to reflect the median long-term incentive
grant practices of publishing, information and media industry companies
including those in the Peer Group.
ANNUAL SALARY AND INCENTIVE COMPENSATION
Annual total cash compensation for senior management consists of base salary and
the annual incentive awards earned under the Key Executive Short-Term Incentive
Compensation Plan. Base salaries are administered within a system designed to
reflect the competitive marketplace, evaluated position responsibilities and
individual performance. The base salaries for senior executives other than the
CEO are recommended by Mr. Dionne based on the above criteria, and are reviewed
and approved by the Committee.
Target awards established under the Key Executive Short-Term Incentive
Compensation Plan are expressed as a percentage of each participant's base
salary. Mr. Dionne's target annual incentive award for 1994 was 70% of salary.
The maximum payment opportunity is set at 150% of the annual target award.
Payment of the annual incentive awards for Mr. Dionne and the other executives
named in the Summary Compensation Table is based on the Company's actual
performance in relation to pre-established minimum, target and maximum earnings
per share payment goals approved by the Committee at the beginning of the plan
year. Each year, the Committee establishes annual performance goals which, in
its view, represent a significant achievement in relation to the general outlook
and prospects for publishing, information and media com-
13
<PAGE> 17
panies during the coming year and the Corporation's prior performance.
LONG-TERM INCENTIVE COMPENSATION
The long-term incentive compensation program for senior management consists of
two types of annual stock awards -- restricted performance shares and stock
options. Restricted performance shares are granted annually under Committee
approved grant guidelines which relate the size of the awards to salary or
salary range midpoints. The grant guideline for Mr. Dionne is 75% of salary. The
awards vest at the end of a three-year award cycle within a range of 20% to 150%
of the shares awarded based on the achievement of minimum, target and maximum
cumulative compound earnings per share growth goals which are established by the
Committee at the beginning of the award cycle. These restricted performance
share awards are subject to forfeiture if the minimum performance goal is not
attained or if a participant's employment is terminated for certain reasons
before the shares become vested. During the award cycle, participants receive
dividend equivalent payments on the shares and also have the right to vote the
awarded shares.
The second component of the long-term incentive award program consists of stock
options which provide participants with the right to purchase shares of
McGraw-Hill Common Stock at its market value on the date of grant. These grants
are awarded under Committee-approved guidelines which relate the number of
shares to salary grade levels. Each stock option grant becomes exercisable in
two equal annual installments commencing one year after grant, and each grant
has a ten-year maximum term.
The size of the annual restricted performance share awards and stock option
grants provided under the Committee-approved guidelines is not reduced for any
current participant stock holdings or prior awards and is generally not
dependent upon and not adjusted for individual or company performance except in
unusual circumstances.
1994 CEO COMPENSATION AND COMPANY PERFORMANCE
Mr. Dionne's base salary is reviewed annually by the Committee which considers
competitive CEO base salary information from the Peer Group companies, Mr.
Dionne's individual performance and contributions since his last review, and the
merit increase guidelines in effect for other salaried employees during this
period. Effective January 1, 1994, the Committee increased Mr. Dionne's base
salary by 6.7% to $800,000, based on its review and assessment of the factors
and criteria described above.
In January 1994, the 1994 stock-based long-term incentive awards were granted to
Mr. Dionne and the other named executives in accordance with the
Committee-approved grant guidelines. Mr. Dionne's 1994 stock-based awards,
consisting of 8,832 restricted performance shares which will mature on December
31, 1996, subject to the achievement of the earnings per share goal established
for this award, and 19,750 stock option shares, are disclosed in the Long-Term
Incentive Plan Awards Table and the Option Grants Table along with the 1994
awards to the other named executives.
In early 1995, the Committee reviewed and approved the 1994 annual incentive
award payments for Mr. Dionne and the other named executives under the Key
Executive Short-Term Incentive Compensation Plan. These payments are shown in
the Bonus column of the Summary Compensation Table. Based on the earnings per
share of $4.10 for 1994, as measured against the earnings per share payment goal
established by the Committee at the beginning of the Plan Year, the earned
incentive payments to the participants were equal to 132.05% of target
opportunity which resulted in a 1994 short-term incentive payment to Mr. Dionne
of $739,480.
Despite economic unevenness in some of McGraw-Hill's markets, 1994 was a
successful year. Revenue for 1994, which includes $538 million from the School
Publishing Company, increased 25.8% to $2.8 billion. Of the increase, $459
million was attributable to revenue from the School Publishing Company for the
first nine months of 1994. The Corporation acquired its partner's 50% interest
in the School Publishing Company on October 4, 1993 to achieve 100% ownership.
Earnings per share for the year were $4.10 versus $3.50 before unusual charges
during 1993. Additionally, shareholders realized a 1994 total return of 2.29% as
compared to a 1994 total negative return of 6.91% for the Proxy Peer Group.
In early 1995, the Committee also reviewed and approved the degree of
achievement and award payments to Mr. Dionne and the other named executives
under the cumulative compound earnings per share growth goal established for the
1992 Long-Term Restricted Performance Share Award which matured on December 31,
1994. For purposes of this Award, the Committee adjusted the earnings per share
growth to exclude (1) the impact of the 1992 adoption of Statement of Financial
Accounting Standards (SFAS) 106 (Employers' Accounting for Post-Retirement
Benefits other than Pensions) and SFAS 112 (Employers' Accounting for
Post-Employment Benefits), (2) the unusual charges associated with the 1993
purchase of the
14
<PAGE> 18
50% interest in the Macmillan/McGraw-Hill School Publishing Company which was
not previously owned by McGraw-Hill, and (3) the increase in corporate federal
tax rates in 1993 under the Omnibus Budget Reconciliation Act which was approved
retroactively to January 1, 1993. The impact of these Committee-approved
adjustments resulted in earnings per share growth for the Award cycle which
exceeded the maximum 150% payment goal established by the Committee for this
Award. As a result, Mr. Dionne received a share payment of 14,115 shares
representing 150% of his target award. The dollar value of Mr. Dionne's 1992
Award payout is shown in the LTIP Payout column of the Summary Compensation
Table.
CLOSING STATEMENT
The Committee believes that the caliber and motivation of the Corporation's key
employees and the quality of their leadership makes a significant difference in
the long-term performance of the Corporation. The Committee further believes
that compensation should vary with the Corporation's financial performance so
that executives are well rewarded when performance meets or exceeds standards
established by the Committee, and commensurately, there should be comparable
downside risks to compensation when performance does not meet these standards.
In its view, the Committee believes that McGraw-Hill's executive compensation
program is meeting and fulfilling the goals contained in the Program's
philosophy.
The foregoing report has been furnished on behalf of the Board of Directors by
the members of its Management Compensation Committee
Paul J. Rizzo (Chairman)
Don Johnston
Peter O. Lawson-Johnston
John L. McGraw
Lois Dickson Rice.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Compensation Committee is comprised of Messrs. Don Johnston,
Peter O. Lawson-Johnston, John L. McGraw, Paul J. Rizzo and Mrs. Lois Dickson
Rice.
Mr. John L. McGraw, a member of the Committee, was Chairman of the Board of
Directors of the Corporation from 1968 to 1974 and was Executive Vice President,
Operating Services, of the Corporation from 1974 to 1978.
Mr. Joseph L. Dionne, the Corporation's Chairman and Chief Executive Officer, is
a director of and chairman of the compensation committee of The Equitable
Companies Incorporated and The Equitable Life Assurance Society of the United
States. Mr. Richard H. Jenrette is Chairman, Chief Executive Officer and a
director of The Equitable Companies Incorporated and The Equitable Life
Assurance Society of the United States as well as being a director of
McGraw-Hill.
Mr. Dionne is a director and a member of the compensation committee of the
Harris Corporation. Mr. John T. Hartley is Chairman of the Board and Chief
Executive Officer of the Harris Corporation and a director of McGraw-Hill.
DEFINED BENEFIT RETIREMENT PLANS
The officers named in the Summary Compensation Table are entitled to retirement
benefits under three defined benefit plans maintained by the Corporation: the
Employee Retirement Plan ("ERP"), the Employee Retirement Plan Supplement ("ERP
Supplement") and the Senior Executive Supplemental Death, Disability and
Retirement Benefits Plan (the "Supplemental Benefits Plan"), except that Mr.
Hehir participates in ERP and ERP Supplement and does not participate in the
Supplemental Benefits Plan. Under the Supplemental Benefits Plan, a participant
is entitled to receive upon normal retirement at age 65, an annual retirement
benefit equal to 55% of the participant's highest rate of annual base salary and
highest target opportunity under the Key Executive Short-Term Incentive
Compensation Plan during the 36-month period before retirement, reduced by the
participant's annual retirement benefits under ERP and ERP Supplement, the
annual annuity value of a hypothetical savings account, the participant's annual
retirement benefit under pension plans of any previous employers and the
participant's annual Social Security retirement benefit.
ERP provides participants with retirement benefits based upon career
compensation. These benefits are subject to limitation under certain provisions
of the Internal Revenue Code. Prior to July 1, 1986, ERP required participants
to make contributions to said Plan. Subsequent to July 1, 1986, ERP was amended
so that the Corporation is to make all of the required contributions to the Plan
and participants are no longer required to make contributions thereto. In
addition, effective as of January 1, 1989, the benefit formula for service after
December 31, 1988 was amended to be 1.4% of each year's earnings for
participants age 45
15
<PAGE> 19
with five years of continuous service as of June 30, 1986 and whose age and
service totalled at least sixty, and 1.0% of each year's earnings for other
participants, and the vesting schedule of ERP was amended to provide that
participants are 100% vested after completion of five years of continuous
service with the Corporation. Under ERP Supplement, participants are provided
with retirement benefits which would have been provided under ERP except for the
limitations imposed by the Internal Revenue Code.
The following table sets forth the annual benefits under ERP, ERP Supplement,
and the Supplemental Benefits Plan (computed based on a straight life annuity)
payable upon retirement at age 65 to each of the Named Officers based upon the
Corporation's contributions and the executive's 1994 compensation (salary and
1994 target opportunity under the Key-Executive Short-Term Incentive
Compensation Plan for purposes of the Supplemental Benefits Plan), which are not
subject to any deduction for Social Security benefits:
ANNUAL RETIREMENT BENEFIT FROM
CORPORATE CONTRIBUTIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Supplemental
ERP and Benefits
Name ERP Supplement Plan Total
- ------------------------------------------------------------ -------------- ------------ ---------
<S> <C> <C> <C>
Joseph L. Dionne $238,000 $342,000 $ 580,000
Harold W. McGraw III $174,000 $264,000 $ 438,000
Robert J. Bahash $113,000 $170,000 $ 283,000
Thomas J. Sullivan $105,000 $ 99,000 $ 204,000
Michael K. Hehir $ 94,000 $ N/A $ 94,000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Pursuant to the Supplemental Benefits Plan, in the event of involuntary
termination of employment without cause or resignation of employment by the
employee for good reason within two years after a change of control of the
Corporation, or resignation by the employee for any reason during the thirty day
period following the first anniversary of such change of control, participants
shall receive a lump sum payment actuarially equivalent to the monthly
retirement benefit they would have received based upon from 44% to 55% of their
final monthly earnings and target opportunity under the Key Executive Short-Term
Incentive Compensation Plan, depending upon their age at the date of
termination. The Supplemental Benefits Plan is administered by the Management
Compensation Committee of the Board of Directors, which Committee approves
participants who are recommended by the Corporation's Chief Executive Officer.
SENIOR EXECUTIVE SEVERANCE PLAN
Effective January 28, 1987, the Board of Directors adopted the Senior Executive
Severance Plan, which Plan provides that if the employment of a participating
senior executive of the Corporation is involuntarily terminated without cause or
the executive resigns for good reason, the executive shall receive a minimum
severance payment of 12 months base salary and a maximum severance payment of 24
months base salary, the actual amount of severance to be based upon 1.6
multiplied by the number of years of continuous service with the Corporation. In
addition, each participant shall continue to participate in the Corporation's
retirement, life, medical and other insurance benefit plans and programs during
the period the participant receives severance payments, or in lieu thereof, each
participant shall receive an additional cash payment equal to 10% of the
severance amount. The receipt of payments by participants pursuant to the Senior
Executive Severance Plan is in lieu of receiving benefits pursuant to the
Corporation's regular separation allowance plan, which plan is applicable to all
full-time employees of the Corporation. On September 28, 1988 the Plan was
amended to provide that benefits will be payable to participants who voluntarily
terminate their employment within a thirty day period one year after a change in
control of the Corporation has occurred. The Senior Executive Severance Plan is
administered by the Management Compensation Committee of the Board of Directors,
which Committee approves participants who are recommended by the Corporation's
Chief Executive Officer.
Mr. Hehir does not participate in the Senior Executive Severance Plan. In lieu
thereof, Mr. Hehir participates in the Executive Severance Plan. The Executive
Severance Plan is similar to the Senior Executive Severance Plan except that the
minimum severance payment is 9 months' base salary and the maximum severance
payment is 18 months' base salary, with the actual amount of severance to be
based upon 0.9 multiplied by the number of years of continuous service with the
Corporation.
16
<PAGE> 20
2. PROPOSAL TO AMEND THE CORPORATION'S RESTATED CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE CORPORATION TO "THE MCGRAW-HILL COMPANIES, INC."
FROM "MCGRAW-HILL, INC."
On January 25, 1995, the Board of Directors unanimously adopted a resolution
recommending that the Corporation's Restated Certificate of Incorporation be
amended to change its name from "McGraw-Hill, Inc." to "The McGraw-Hill
Companies, Inc.", subject to the approval by shareholders at this Annual
Meeting. The Corporation is a multi-media information company which serves
worldwide markets in finance, business, education, law, construction, medical
and health, computers and communications, government, aerospace and defense. As
a multi-media publishing and information company, the Corporation employs a
broad range of media, including books, magazines, newsletters, software, on-line
services, CD-ROMs, facsimile and television broadcasting. The Corporation
produces information in many frequencies -- instantly, daily, weekly, monthly,
annually -- to meet growing and changing customer needs in a global marketplace.
The Board of Directors believes that it is in the best interests of the
Corporation to change its corporate name to reflect the increasing global and
diverse nature of its information products and services. The proposed new
corporate name should enable the Corporation's numerous operating units to
become publicly identified as part of a single, larger, forward-looking
information enterprise. It is the Board of Director's view that such a corporate
name will unify the diverse products and services provided by our operating
companies and allow the Corporation's strength to be more readily attributable
to all units within the organization.
If approved by the shareholders at this Annual Meeting, the new name will become
effective upon the filing of an amendment to the Corporation's Restated
Certificate of Incorporation by the Department of State of the State of New
York. The change of corporate name will be accomplished by amending Article I of
the Corporation's Restated Certificate of Incorporation to read as follows:
"Article I. The corporate name shall be: The McGraw-Hill Companies, Inc."
The change in corporate name will not affect the validity or transferability of
stock certificates presently outstanding, and the Corporation's shareholders
will not be required to exchange any certificates presently held by them.
APPROVAL AND RELATED MATTERS
Approval by the holders of the majority of the outstanding shares of Common
Stock and $1.20 Convertible Preference Stock, voting together as a single class,
is required to adopt the amendment to Article I of the Corporation's Restated
Certificate of Incorporation.
The following resolution will be offered by the Board of Directors at the Annual
Meeting:
RESOLVED: That the proposal to amend Article I of the Restated Certificate
of Incorporation of the Corporation so as to change the name of the
Corporation to "The McGraw-Hill Companies, Inc." is hereby approved,
authorized and adopted.
THE BOARD OF DIRECTOR'S RECOMMENDATION
Your Board recommends that you vote FOR the approval of the foregoing amendment
to Article I of the Corporation's Restated Certificate of Incorporation. Unless
otherwise specified by the shareholder, the Board intends the accompanying proxy
to be voted for this proposed amendment.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
During the year ended December 31, 1994, Ernst & Young audited the consolidated
financial statements of the Corporation and its subsidiaries.
The Board of Directors, after receiving a favorable recommendation from the
Audit Committee, has again selected Ernst & Young to serve as the Corporation's
independent auditors for 1995. Although not required to do so, the Board is
submitting the selection of this firm for ratification by the Corporation's
shareholders to ascertain their views. Ernst & Young has advised the Corporation
that it has no direct, nor any material indirect, financial interest in the
Corporation or any of its subsidiaries. A representative of Ernst & Young is
expected to be present at the Annual Meeting with the opportunity to make a
statement if the representative desires to do so, and such representative will
be available to respond to appropriate questions.
17
<PAGE> 21
The following resolution will be offered by the Board of Directors at the Annual
Meeting:
RESOLVED: That the selection by the Board of Directors of Ernst & Young as
independent auditors for this Corporation and its subsidiaries for 1995 be,
and hereby is, ratified and approved.
THE BOARD OF DIRECTORS' RECOMMENDATION
Your Board recommends that you vote FOR this resolution. Unless otherwise
specified by the shareholder, the Board intends the accompanying proxy to be
voted for this resolution.
4. SHAREHOLDER PROPOSAL TO ELIMINATE ELECTION OF
DIRECTORS BY CLASSES
An individual shareholder has given notice that he intends to propose the
following resolution at the Annual Meeting. The name and address of the
proponent and the number of shares he owns will be furnished by the Corporation
to any person, orally or in writing as requested, promptly upon the receipt of
any oral or written request made to the Secretary of the Corporation, 1221
Avenue of the Americas, New York, New York 10020-1095, telephone number (212)
512-2324. The proposed resolution and supporting statement, for which the Board
of Directors and the Corporation accept no responsibility, are as follows:
"RESOLVED, that the shareholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to
declassify the Board of Directors so that all directors are elected
annually, such declassification to be effected in a manner that does not
affect the unexpired terms of directors previously elected."
SHAREHOLDER'S SUPPORTING STATEMENT
The election of directors is the primary avenue for stockholders to influence
corporate governance policies and to hold management accountable for its
implementation of those policies. I believe that the classification of the Board
of Directors, which results in only a portion of the Board being elected
annually, is not in the best interests of the Company and its stockholders.
The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. I believe that the Company's classified Board of
Directors maintains the incumbency of the current Board and therefore of current
management, which in turn limits management's accountability to stockholders.
The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an opportunity to
register their views on the performance of the Board collectively and each
director individually. I believe this is one of the best methods available to
stockholders to insure that the Company will be managed in a manner that is in
the best interests of the stockholders.
As a founding member of the Investors Rights Association of America I believe
that concerns expressed by companies with classified boards that the annual
election of all directors could leave companies without experienced directors in
the event that all incumbents are voted out by stockholders, are unfounded. In
my view, in the unlikely event that stockholders vote to replace all directors,
this decision would express stockholder dissatisfaction with the incumbent
directors and reflect the need for change.
I urge your support, please vote for this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL
The current division of the Board into three classes, with one class elected
each year for a three-year term, increases the likelihood that at all times at
least a majority of the directors will have experience and familiarity with the
business, affairs and issues of the Corporation. The Board of Directors believes
that, as such, the classified Board provides continuity and stability in the
membership of the Board and in its policies, permitting new directors to become
familiar with the business of the Corporation and to benefit from the experience
of the continuing directors. Furthermore, Board classification encourages
unsolicited bidders for control of the Corporation to negotiate at arm's length
with management and the Board, who, in the opinion of the Board, are in a
position to best represent the interests of all of the shareholders. Moreover,
the directors of the Corpo-
18
<PAGE> 22
ration are fully accountable to serve the shareholders' interests throughout
their term of office, whether that term is three years or one year.
Election of directors by classes is a common practice that has been adopted by
many companies and currently exists at approximately 295 of the 500 companies
comprising the Standard & Poor's 500 Stock Price Index. It is also specifically
permitted by the laws of many states, including the State of New York.
This shareholder proposal seeks to reverse the action taken by the Corporation's
shareholders at the 1985 Annual Meeting to approve classification of the Board.
Approximately 78% of the votes cast by the Corporation's shareholders at that
meeting were in favor of creating a classified board. Under the corporate law of
the State of New York, the state in which the Corporation is incorporated,
declassification of the Board of Directors can be effected only by the Board
authorizing an amendment to the Corporation's certificate of incorporation and
directing that the amendment be submitted to a vote of the Corporation's
shareholders. With respect to such vote by the Corporation's shareholders, the
affirmative vote of 80% of all outstanding shares is required under the
Corporation's restated certificate of incorporation for approval of such
amendment. Therefore, the adoption of this proposal would not in itself
reinstate the annual election of directors, but would only amount to an advisory
recommendation to the Board that it take steps to initiate such an amendment.
Your Board of Directors urges that shareholders vote AGAINST this shareholder
proposal. Unless otherwise specified by the shareholder, the Board intends the
accompanying proxy to be voted against this resolution.
5. SHAREHOLDER PROPOSAL REQUESTING ELIMINATION OF
PENSION PLANS FOR NON-EMPLOYEE DIRECTORS
An individual shareholder has given notice that he intends to propose the
following resolution at the Annual Meeting. The name and address of the
proponent and the number of shares he owns will be furnished by the Corporation
to any person, orally or in writing as requested, promptly upon the receipt of
any oral or written request made to the Secretary of the Corporation, 1221
Avenue of the Americas, New York, New York, 10020-1095, telephone number (212)
512-2324. The proposed resolution and supporting statement, for which the Board
of Directors and the Corporation accept no responsibility, are as follows:
"RESOLVED, that the shareholders assembled in person and by proxy,
recommend (i) that all future non-employee directors not be granted pension
benefits and (ii) current non-employee directors voluntarily relinquish
their pension benefits."
SHAREHOLDER'S SUPPORTING STATEMENT
Aside from the usual reasons, presented in the past, regarding "double dipping",
that is outside (non-employee) directors who are in almost all cases amply
rewarded with their pension at their primary place of employment, and in many
instances serving as outside pensioned directors with other companies, there are
other more cogent reasons that render this policy as unacceptable.
Traditionally, pensions have been granted in both the private and public sectors
for long term service. The service component usually represents a significant
number of hours per week. The practice of offering pensions for consultants is a
rarity. Outside directors' service could logically fit the definition of
consultants and pensions for this type of service is an abuse of the term.
But more importantly, outside directors, although retained by corporate
management, namely the C.E.O., are in reality representatives of shareholders.
Their purpose is to serve as an impartial group to which management is
accountable. Although outside directors are certainly entitled to compensation
for their time and expertise, pensions have the pernicious effect of
compromising their impartiality. In essence, pensions are management's grants to
outside directors to insure their unquestioning loyalty and acquiescence to
whatever policy management initiates, and at times, serving their own self
interests. Thus, pensions become another device to enhance and entrench
management's controls over corporate policies while being accountable only to
themselves. As a founding member of the Investors Rights Association of America
I feel this practice perpetuates a culture of corporate manage-
19
<PAGE> 23
ment "cronyism" that can easily be at odds with shareholder and company
interest.
A final note in rebuttal to management's contention that many companies offer
their outside directors pensions, so they can attract and retain persons of the
highest quality. Since there are also companies that do not offer their outside
directors pensions, can management demonstrate that those companies that offer
pensions have a better performance record then their non-pensioned peers? In
addition, do we have any evidence of a significant improvement in corporate
profitability with the advent of pensions for outside directors?"
I urge your support, vote for this resolution
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL
The best interests of the Corporation and its shareholders are served by having
the most qualified, talented and experienced individuals serving as outside
directors for the Corporation. To attract and retain these highly sought-after
individuals, the Corporation must provide a competitive total compensation
package for its outside directors. Retirement benefits are a common component of
director compensation packages at large corporations. A recent study conducted
by the independent consulting firm Hewitt Associates indicated that 99, or
70.7%, of the Fortune 150 industrial companies provide retirement benefits for
their outside directors. Additionally, the Corporation's retirement plan is
similar to plans currently in place at companies with which it competes,
including seven out of the nine companies listed in the Peer Group Index.
The retirement plan, which is described on page 7, provides an incentive to
high-caliber individuals to join the Board, to remain for a sufficient time to
gain experience and knowledge of the Corporation's business, and to remain
available to provide advice after retirement. Payment of retirement benefits
also recognizes the ever increasing time commitment, responsibilities, diligence
and risks associated with Board service.
The Board believes that it would be unfair and not in the best interests of the
Corporation and its shareholders to request voluntary forfeiture by the current
outside directors of their retirement benefits. Each director's retirement
benefits have accrued over the span of the director's service to the Corporation
and constitute a key component of the director's overall compensation package,
on which expectations have been based. In any event, such a forfeiture by a
director would be at the director's sole discretion notwithstanding the vote of
the shareholders with respect to the proposal or a request made by the Board.
Your Board of Directors urges that shareholders vote AGAINST this shareholder
proposal. Unless otherwise specified by the shareholder, the Board intends the
accompanying proxy to be voted against this resolution.
6. OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the Annual
Meeting. However, if other matters should properly come before the Meeting, it
is the intention of those named in the solicited proxy to vote such proxy in
accordance with their best judgment.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)") requires
the Corporation's directors, executive officers, and persons who own more than
10% of a registered class of the Corporation's equity securities, to file with
the Securities and Exchange Commission and the New York Stock Exchange reports
on Forms 3, 4 and 5 concerning their ownership of the Common Stock and other
equity securities of the Corporation.
Based solely on the Corporation's review of copies of such reports and written
representations that no other reports were required, the Corporation believes
that all of its directors and executive officers filed all of said reports on a
timely basis during 1994.
20
<PAGE> 24
SHAREHOLDER PROPOSALS FOR 1996
Shareholder proposals which may be submitted for inclusion in the Corporation's
proxy statement and form of proxy for the 1996 Annual Meeting of Shareholders
must be received by the Corporation at its principal executive offices, 1221
Avenue of the Americas, New York, New York 10020, on or before November 21,
1995. Such proposals when submitted must be in full compliance with applicable
laws.
By Order of the Board of Directors
Robert N. Landes
Executive Vice President,
General Counsel and Secretary
New York, New York
March 20, 1995
21
<PAGE> 25
[logo]
MCGRAW-HILL, INC.
The undersigned appoints Robert N. Landes and Thomas J. Sullivan, and
each of them, proxies with full power of substitution, to vote the shares of
stock of McGraw-Hill, Inc., which the undersigned is entitled to vote, at the
Annual Meeting of Shareholders of said Corporation to be held at the principal
executive offices of the Corporation, 1221 Avenue of the Americas, New York,
N.Y. 10020 on Wednesday, April 26, 1995, at 11 A.M., and any adjournment
thereof.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE MATTERS TO BE VOTED UPON AND THE INSTRUCTIONS ARE SET FORTH ON THE REVERSE
SIDE. PLEASE VOTE, SIGN AND RETURN PROMPTLY.
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
- ------------- -------------- -----------------
Common Div. Reinvest. Preference
THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NOT OTHERWISE
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSAL 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 1, 2, AND 3:
1- Election of the following nominees as directors for three-year terms
expiring at the 1998 Annual Meeting:
George B. Harvey, Richard H. Jenrette and Lois Dickson Rice
FOR THE WITHHOLD AUTHORITY
NOMINEES(S) to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee(s) name below.
- --------------------------------------------------------------------------------
2. Amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of independent auditors for 1995:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 4 AND 5:
4. Shareholder Proposal requesting elimination of election of directors by
classes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder Proposal requesting elimination of pension plans for
non-employee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s)
------------------------------------------------------------
Date
---------------------------
NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
<PAGE> 26
[logo]
MCGRAW-HILL, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 26, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER EMPLOYEES INVESTMENT PLAN
OF MCGRAW-HILL BROADCASTING COMPANY, INC. AND ITS SUBSIDIARIES ("EIP")
The Trustee named is hereby instructed to vote all the shares of
Common Stock of McGraw-Hill, Inc. which are credited to the undersigned's
account as of March 9, 1995, at the Annual Meeting of Shareholders to be held
on April 26, 1995, and any adjournment thereof, on the items set forth on the
reverse hereof, as described in the accompanying Proxy Statement and upon such
other business as may properly come before the Meeting.
Voting rights will be exercised by the Trustee as directed, provided
instructions are received by April 19, 1995. Your instructions will be kept
confidential by the Trustee.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS VOTING
INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
- -------------
EIP
THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NOT OTHERWISE
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 1,2, AND 3:
1- Election of the following nominees as directors for three-year terms
expiring at the 1998 Annual Meeting:
George B. Harvey, Richard H. Jenrette and Lois Dickson Rice
FOR THE WITHHOLD AUTHORITY
NOMINEES(S) to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee(s) name below.
- --------------------------------------------------------------------------------
2. Amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of independent auditors for 1995:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 4 AND 5:
4. Shareholder Proposal requesting elimination of election of directors by
classes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder Proposal requesting elimination of pension plans for
non-employee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s)
------------------------------------------------------------
Date
---------------------------
NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
<PAGE> 27
[logo]
MCGRAW-HILL, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 26, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE SAVINGS INCENTIVE PLAN OF
MCGRAW-HILL, INC. AND ITS SUBSIDIARIES ("SIP")
The Trustee named is hereby instructed to vote all the shares of
Common Stock of McGraw-Hill, Inc. which are credited to the undersigned's
account as of March 9, 1995, at the Annual Meeting of Shareholders to be held
on April 26, 1995, and any adjournment thereof, on the items set forth on the
reverse hereof, as described in the accompanying Proxy Statement and upon such
other business as may properly come before the Meeting.
Voting rights will be exercised by the Trustee as directed, provided
instructions are received by April 19, 1995. Your instructions will be kept
confidential by the Trustee.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS VOTING
INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
- ---------------
McGraw-Hill SIP
THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NOT OTHERWISE
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 1, 2, AND 3:
1- Election of the following nominees as directors for three-year terms
expiring at the 1998 Annual Meeting:
George B. Harvey, Richard H. Jenrette and Lois Dickson Rice
FOR THE WITHHOLD AUTHORITY
NOMINEES(S) to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee(s) name below.
- --------------------------------------------------------------------------------
2. Amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of independent auditors for 1995:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 4 AND 5:
4. Shareholder Proposal requesting elimination of election of directors by
classes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder Proposal requesting elimination of pension plans for
non-employee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s)
------------------------------------------------------------
Date
---------------------------
NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
<PAGE> 28
[logo]
MCGRAW-HILL, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 26, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE EMPLOYEE RETIREMENT
ACCOUNT PLAN OF STANDARD & POOR'S ("ERAP")
The Trustee named is hereby instructed to vote all the shares of
Common Stock of McGraw-Hill, Inc. which are credited to the undersigned's
account as of March 9, 1995, at the Annual Meeting of Shareholders to be held
on April 26, 1995, and any adjournment thereof, on the items set forth on the
reverse hereof, as described in the accompanying Proxy Statement and upon such
other business as may properly come before the Meeting.
Voting rights will be exercised by the Trustee as directed, provided
instructions are received by April 19, 1995. Your instructions will be kept
confidential by the Trustee.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS VOTING
INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
- --------------
S&P ERAP
THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NOT OTHERWISE
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 1, 2, AND 3:
1- Election of the following nominees as directors for three-year terms
expiring at the 1998 Annual Meeting:
George B. Harvey, Richard H. Jenrette and Lois Dickson Rice
FOR THE WITHHOLD AUTHORITY
NOMINEES(S) to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee(s) name below.
- --------------------------------------------------------------------------------
2. Amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of independent auditors for 1995:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 4 AND 5:
4. Shareholder Proposal requesting elimination of election of directors by
classes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder Proposal requesting elimination of pension plans for
non-employee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s)
------------------------------------------------------------
Date
---------------------------
NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
<PAGE> 29
[logo]
MCGRAW-HILL, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 26, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE SAVINGS INCENTIVE PLAN OF
STANDARD & POOR'S ("SIP")
The Trustee named is hereby instructed to vote all the shares of
Common Stock of McGraw-Hill, Inc. which are credited to the undersigned's
account as of March 9, 1995, at the Annual Meeting of Shareholders to be held
on April 26, 1995, and any adjournment thereof, on the items set forth on the
reverse hereof, as described in the accompanying Proxy Statement and upon such
other business as may properly come before the Meeting.
Voting rights will be exercised by the Trustee as directed, provided
instructions are received by April 19, 1995. Your instructions will be kept
confidential by the Trustee.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS VOTING
INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
- -------------
S&P SIP
THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NOT OTHERWISE
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 1, 2, AND 3:
1- Election of the following nominees as directors for three-year terms
expiring at the 1998 Annual Meeting:
George B. Harvey, Richard H. Jenrette and Lois Dickson Rice
FOR THE WITHHOLD AUTHORITY
NOMINEES(S) to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee(s) name below.
- --------------------------------------------------------------------------------
2. Amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of independent auditors for 1995:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 4 AND 5:
4. Shareholder Proposal requesting elimination of election of directors by
classes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder Proposal requesting elimination of pension plans for
non-employee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s)
------------------------------------------------------------
Date
---------------------------
NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
<PAGE> 30
[logo]
MCGRAW-HILL, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 26, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE EMPLOYEE RETIREMENT
ACCOUNT PLAN OF MCGRAW-HILL, INC. AND ITS SUBSIDIARIES ("ERAP")
The Trustee named is hereby instructed to vote all the shares of
Common Stock of McGraw-Hill, Inc. which are credited to the undersigned's
account as of March 9, 1995, at the Annual Meeting of Shareholders to be held
on April 26, 1995, and any adjournment thereof, on the items set forth on the
reverse hereof, as described in the accompanying Proxy Statement and upon such
other business as may properly come before the Meeting.
Voting rights will be exercised by the Trustee as directed, provided
instructions are received by April 19, 1995. Your instructions will be kept
confidential by the Trustee.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS VOTING
INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
- ----------------
McGraw-Hill ERAP
THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NOT OTHERWISE
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSALS 1, 2, AND 3:
1- Election of the following nominees as directors for three-year terms
expiring at the 1998 Annual Meeting:
George B. Harvey, Richard H. Jenrette and Lois Dickson Rice
FOR THE WITHHOLD AUTHORITY
NOMINEES(S) to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
that nominee(s) name below.
- --------------------------------------------------------------------------------
2. Amendment to the Corporation's Restated Certificate of Incorporation to
change the name of the Corporation to "The McGraw-Hill Companies, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of independent auditors for 1995:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 4 AND 5:
4. Shareholder Proposal requesting elimination of election of directors by
classes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder Proposal requesting elimination of pension plans for
non-employee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s)
------------------------------------------------------------
Date
---------------------------
NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
