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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:
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[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 Section 240.14a-11(c) or Section 240.14a-2.
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The McGraw-Hill Companies, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO OF ADDRESS
McGRAW HILL LOGO
March 24, 1998
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 29, 1998, at 11
A.M., at the principal executive offices of the Corporation, 1221 Avenue of the
Americas, New York, New York 10020. In the pages that follow you will find the
Notice of Meeting and Proxy Statement describing the formal business to be
transacted at this Meeting. Please read them carefully.
At the Annual Meeting, there will be a report to shareholders regarding the
operations of The McGraw-Hill Companies, Inc. In addition, time will be made
available for shareholders to discuss the formal business items as well as to
ask other questions about The McGraw-Hill Companies' 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
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LOGO OF ADDRESS
McGRAW HILL LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1998
To the Shareholders of The McGraw-Hill Companies, Inc.:
The Annual Meeting of Shareholders of The McGraw-Hill Companies, 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 29, 1998, at 11 A.M., for the purpose of considering and voting upon the
following:
1. Election of five directors;
2. Proposal to amend the Restated Certificate of Incorporation to increase the
authorized shares of Common Stock;
3. Ratification of the appointment of independent auditors for 1998; and
4. 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 12, 1998 shall be
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors
SCOTT L. BENNETT
Senior Vice President, Associate General
Counsel and Secretary
New York, New York
March 24, 1998
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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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THE MCGRAW-HILL COMPANIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1998
PROXY STATEMENT
To the Shareholders of The McGraw-Hill Companies, Inc.:
This statement is furnished in connection with the solicitation of proxies by
the Board of Directors of The McGraw-Hill Companies, Inc. (the "Corporation")
for use at the Annual Meeting of Shareholders to be held at 11 A.M. on April 29,
1998, at the principal executive offices of the Corporation, 1221 Avenue of the
Americas, New York, New York 10020, 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 24, 1998. A copy of the 1997 Annual Report to Shareholders
was mailed to shareholders on March 17, 1998.
VOTING SECURITIES
The outstanding securities of the Corporation on March 12, 1998 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 3 and 4 must be elected by a plurality of the
votes cast (Proposal One); (B) the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock and $1.20 Convertible Preference
Stock, voting together as a single class, is required to approve the amendment
to the Corporation's Restated Certificate of Incorporation as set forth on pages
17 and 18 (Proposal Two); and (C) the affirmative vote of a majority of the
votes cast is required to ratify the appointment of the auditors as described on
page 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; however, with respect to the proposal
to amend the Restated Certificate of Incorporation (Proposal Two), abstentions
and broker non-votes will have the effect of a negative vote.
Votes at the Meeting will be tabulated by two inspectors of election appointed
by the Board of Directors.
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1. ELECTION OF FIVE 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, Linda Koch Lorimer, Harold W. McGraw III and Alva
O. Way, were elected in 1996 for three-year terms expiring at the 1999 Annual
Meeting. None of these four incumbent directors is standing for re-election at
this Meeting.
Five directors, Vartan Gregorian, John T. Hartley, Paul J. Rizzo, James H. Ross
and Sidney Taurel, were elected in 1997 for three-year terms expiring at the
2000 Annual Meeting. Mr. Rizzo, a director of the Corporation since 1988, will
be retiring from the Board after this Meeting, pursuant to the Board of
Directors' longstanding retirement age policy. None of the other four incumbent
directors is standing for re-election at this Meeting.
Two directors, Pedro Aspe and Robert P. McGraw, were elected in 1996 for
two-year terms expiring at the 1998 Annual Meeting. Three directors, George B.
Harvey, Richard H. Jenrette and Lois Dickson Rice, were elected in 1995 for
three-year terms expiring at the 1998 Annual Meeting. Accordingly, Mrs. Rice and
Messrs. Aspe, Harvey, Jenrette and Robert P. McGraw are to be elected at this
Meeting for three-year terms expiring at the 2001 Annual Meeting.
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 to 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 five 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 five nominees for director who are
being proposed for election at this Annual Meeting and about each of the eight
incumbent directors.
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NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING AT THE 2001 ANNUAL MEETING
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PHOTO OF PEDRO ASPE PEDRO ASPE, age 48, has been Chairman of the Board of Vector Casa de Bolsa,
S.A. de C.V. ("Vector"), an investment banking firm in Mexico providing
financial services to corporations, financial institutions and individual
investors, since 1996. Vector is a subsidiary of Pulsar International, S.A.
de C.V., an industrial and financial company headquartered in Mexico. He has
also been since 1996 Managing Director and a partner of a newly formed
investment banking unit of Vector aimed at attracting capital and technology
to Mexico. Dr. Aspe has been since 1995 a professor at the Instituto
Technologico Autonomo de Mexico, located in Mexico City, and is a member of
its Governing Board. Dr. Aspe has held a number of positions with the Mexican
government and was most recently the Secretary of Finance and Public Credit
of Mexico from 1988 through 1994. Dr. Aspe is a director of Seguros Comercial
America (Mexico) and on the Advisory Board of Marvin & Palmer. Dr. Aspe is
also a member of the Advisory Board of the Massachusetts Institute of
Technology and a member of the Board of Stanford University's Institute of
International Studies. Dr. Aspe has served as a director of the Corporation
since 1996 and is a member of the Audit and Financial Policy Committees.
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PHOTO OF GEORGE B. GEORGE B. HARVEY, age 66, was Chairman, President and Chief Executive Officer
HARVEY of Pitney Bowes Inc., a manufacturer of office equipment and business
supplies and provider of financial services, from 1983 through 1996. Mr.
Harvey was President and Chief Operating Officer of Pitney Bowes from 1981 to
1983. He is a director of Merrill Lynch, Pfizer, Inc. and Massachusetts
Mutual Life Insurance Co. 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, Financial Policy and Nominating and Corporate Governance
Committees.
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PHOTO OF RICHARD H. RICHARD H. JENRETTE, age 68, was Chairman of the Board and Chief Executive
JENRETTE Officer from 1990 to 1996 of The Equitable Companies Incorporated. He was
also Chairman of Equitable's wholly-owned investment banking subsidiary,
Donaldson, Lufkin & Jenrette, Inc. Mr. Jenrette was Chairman of The 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.
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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PHOTO OF ROBERT P. McGRAW ROBERT P. MCGRAW, age 43, has been Executive Vice President
of the Professional Publishing Group of the Corporation
since 1989. He was Executive Vice President of the
Healthcare Group from 1987 to 1989, and Group Vice President
of that same group from 1985 to 1987. Prior to that he
served in several key positions in the Health Professions
Division: as General Manager from 1983 to 1985; as Editorial
Director from 1982 to 1983; and as Editor from 1979 to 1982.
He joined the Corporation in 1976 as a sales representative
for McGraw-Hill Higher Education, formerly known as the
College Division. Mr. McGraw is a director of McGraw-Hill
Ryerson Limited. Mr. McGraw has served as a director of the
Corporation since 1995 and is a member of the Financial
Policy Committee. (a)
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PHOTO OF LOIS DICKSON RICE LOIS DICKSON RICE, age 65, has been a guest scholar since
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 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 Fleet Financial
Group, International Multifoods, Unum Corporation and the
HSB Group. Mrs. Rice is a Trustee of the Harry Frank
Guggenheim Foundation and Reading Is Fundamental. She is a
member of the President's Foreign Intelligence Advisory
Board and a director of the Public Agenda Foundation. Mrs.
Rice has served as a director of the Corporation since 1988
and is a member of the Audit and Compensation Committees.
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DIRECTORS WHOSE TERMS EXPIRE AT THE 1999 ANNUAL MEETING
PHOTO OF JOSEPH L. DIONNE JOSEPH L. DIONNE, age 64, 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
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, Ryder Systems, 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. (b)
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PHOTO OF LINDA KOCH LORIMER LINDA KOCH LORIMER, age 46, has been Vice President and
Secretary of Yale University since 1995, having returned to
Yale as Secretary of the University in 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 Sprint Corporation. Ms.
Lorimer also serves on the Board of Governors of the Center
for Creative Leadership and is a director of Yale-New Haven
Hospital. Ms. Lorimer has served as a director of the
Corporation since 1994 and is a member of the Compensation
and Nominating and Corporate Governance Committees.
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PHOTO OF HAROLD W. McGRAW HAROLD W. MCGRAW III, age 49, has been President and Chief
III Operating Officer of the Corporation since 1993. He was
Executive Vice President, Operations, of the Corporation
from 1989 to 1993. Prior to that he was President of the
McGraw-Hill Financial Services Company, President of the
McGraw-Hill Publications Company, publisher of McGraw-Hill's
Aviation Week & Space Technology magazine and Vice
President, Corporate Planning. Before joining the
Corporation in 1980, he held several financial positions at
the GTE Corporation. 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)(b)
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PHOTO OF ALVA O. WAY ALVA O. WAY, age 68, is 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 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.
and Eli Lilly and Company. He is Chancellor Emeritus 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 Nominating and
Corporate Governance Committee and is a member of the
Financial Policy and Executive Committees.
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DIRECTORS WHOSE TERMS EXPIRE AT THE 2000 ANNUAL MEETING
PHOTO OF VARTAN GREGORIAN VARTAN GREGORIAN, age 63, has been since July 1997 the
President of Carnegie Corporation of New York, a private
philanthropic and grant-making institution. Prior to that he
was President of Brown University and a Professor of History
at Brown University from 1989 to 1997. 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 American universities. Dr.
Gregorian is a director of the Institute for Advanced Study,
the J. Paul Getty Trust and the Museum of Modern Art (New
York). He has served on the boards of many non-profit
organizations and foundations. Currently he is President
Emeritus of the New York Public Library and Brown
University. He was appointed by President Bush to be a
member of the Fulbright Commission. He is also a member of
the American Philosophical Society and a Fellow of the
American Academy of Arts and Sciences. Dr. Gregorian has
served as a director of the Corporation since 1990 and is a
member of the Audit and Compensation Committees.
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PHOTO OF JOHN T. HARTLEY JOHN T. HARTLEY, age 68, is Chairman of the Executive
Committee and a director of the Harris Corporation, a
supplier of information, communication and semiconductor
systems, products and services to government and commercial
markets worldwide. He was Chairman of the Board and Chief
Executive Officer of the Harris Corporation from 1987 to
1995. Mr. Hartley was elected President and Chief Operating
Officer of the Harris Corporation in 1982, Chief 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 was a member of President
Reagan's and President Bush's National Security
Telecommunications Advisory Committee and is a past Chair-
man of the Defense Policy Advisory Committee on Trade. Mr.
Hartley is also Chairman of the Board of Trustees 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, Compensation and Nominating and Corporate
Governance Committees.
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PHOTO OF JAMES H. ROSS JAMES H. ROSS, age 59, has been since 1996 Chairman of The
Littlewoods Organisation, a private company in Great Britain
operating in the retail, home shopping and leisure
businesses. Mr. Ross was Chief Executive and Deputy Chairman
of Cable & Wireless plc, an international provider of
telecommunications services, between 1992 and 1995. 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 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 director
of Groupe Schneider and Datacard Inc. He is a trustee of the
Cleveland Orchestra and Chairman of the Board of the
Manchester Business School. Mr. Ross has served as a
director of the Corporation since 1989 and is Chairman of
the Financial Policy Committee and is a member of the
Executive and Nominating and Corporate Governance
Committees.
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PHOTO OF SIDNEY TAUREL SIDNEY TAUREL, age 49, has been President and Chief
Operating Officer of Eli Lilly and Company, a pharmaceutical
company, since 1996. He was elected a director of Eli Lilly
and Company in 1991. Mr. Taurel joined Eli Lilly and Company
in 1971 and has held management positions in the company's
operations in Brazil and Europe. He served as president of
Eli Lilly International Corporation from 1986 until 1991, as
Executive Vice President of the Pharmaceutical Division from
1991 until 1993 and as Executive Vice President of Eli Lilly
and Company from 1993 until his appointment in 1996 as
President and Chief Operating Officer. Mr. Taurel is
Chairman of the Board of Directors of the Pharmaceutical
Research and Manufacturers of America. He also serves on the
Board of ITT Industries, Inc. and the Board of Overseers of
the Columbia Business School. Mr. Taurel has served as a
director of the Corporation since 1996 and is a member of
the Compensation and Nominating and Corporate Governance
Committees.
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(a) Harold W. McGraw III and Robert P. McGraw are
brothers and the sons of Harold W. McGraw, Jr.
(b) On January 28, 1998, the Board of Directors announced that Mr. Harold W.
McGraw III shall become the Corporation's Chief Executive Officer effective
April 29, 1998. Mr. Joseph L. Dionne, who shall retire as of July 1, 1998, shall
continue to serve as non-executive Chairman of the Board of Directors.
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INFORMATION AS TO COMMITTEES, ATTENDANCE
AND FEES OF THE BOARD OF DIRECTORS
The Corporation's Board of Directors has standing Audit, Compensation and
Nominating and Corporate Governance Committees.
The Audit Committee is comprised of Ms. Lois Dickson Rice and Messrs. Pedro
Aspe, Vartan Gregorian, John T. Hartley, George B. Harvey and Paul J. Rizzo.
During 1997 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 Compensation Committee is comprised of Ms. Lois Dickson Rice and Linda Koch
Lorimer and Messrs. Vartan Gregorian, John T. Hartley, Paul J. Rizzo and Sidney
Taurel. During 1997 the Compensation Committee held five meetings. The functions
performed by the 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 executive incentive plans; (c) administering
the Corporation's stock incentive plans; and (d) authorizing and approving
special compensation arrangements for senior management.
The Nominating and Corporate Governance Committee is comprised of Ms. Linda Koch
Lorimer and Messrs. John T. Hartley, George B. Harvey, Paul J. Rizzo, James H.
Ross, Sidney Taurel and Alva O. Way. During 1997 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 Director Deferred Stock Ownership 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 eight meetings during
1997. 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. The
overall attendance record for all directors as a group during 1997 was 95.4%.
Outside directors of the Corporation receive an annual retainer comprised of
both cash and, pursuant to the Director Deferred Stock Ownership Plan in order
to more closely align directors' compensation with the financial interests of
shareholders, shares of the Corporation's Common Stock. Effective July 1, 1997,
the cash portion of the outside directors' annual retainer was increased from
$15,000 to $17,000 (or a pro rata portion thereof for any partial year). Under
the Director Deferred Stock Ownership Plan, approximately 50% of an outside
director's total compensation during the year (or a greater percentage should a
director so elect) shall be paid in shares of the Corporation's Common Stock,
which shall be credited on an annual basis to a bookkeeping account maintained
for each
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such non-employee director and which shall be delivered in the form of stock
certificates at the time such director ceases to be a member of the Board.
Likewise, effective July 1, 1997, this 50% share equivalent amount was increased
from approximately $15,000 to approximately $17,000 worth of shares of the
Corporation's Common Stock, thereby making the aggregate outside directors'
annual retainer equal to approximately $34,000. Pursuant to the Director
Deferred Stock Ownership Plan, the Corporation currently has written agreements
with Ms. Linda Koch Lorimer and Messrs. Pedro Aspe and George B. Harvey to
receive all or a portion of their annual cash retainer and board and committee
fees payable in shares of the Corporation's Common Stock.
In addition, effective July 1, 1997, the fees paid to outside directors for each
board meeting which they attended was increased from $1,000 to $1,200, and the
fees paid to outside directors for each meeting of the Audit, Compensation,
Executive, Financial Policy and Nominating and Corporate Governance Committees
which they attended was increased from $800 to $1,000. 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.
Pursuant to the Director Deferred Compensation Plan, the Corporation currently
has written agreements with Ms. Linda Koch Lorimer and Lois Dickson Rice and
Messrs. Vartan Gregorian, John T. Hartley, 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 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 monthly equivalent of a
corporate bond index for the preceding year plus 2% (up to a maximum of 150% of
the bond index), except that with respect to agreements to defer entered into
prior to December 3, 1986, interest will be payable at the average of a
corporate bond index for the previous five calendar years plus an additional
amount currently estimated at 6%.
Further, pursuant to the Directors Retirement Plan (which was amended to provide
that current Board members shall not accrue any additional benefits under said
Plan after June 30, 1996 and any future new Board members after such date shall
not participate in said Plan) annual retirement and disability benefits are 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.
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 three-year period beginning December 31, 1997 and extending
through December 31, 2000, for a three year aggregate premium of approximately
$1,786,500. The Corporation has purchased this insurance coverage from National
Union Fire Insurance Company of Pittsburgh, PA.; Federal Insurance Company; and
Great American Insurance Companies. This coverage, subject to a number of
standard exceptions and certain deductibles, indemnifies the directors and
officers of the Corporation and its subsidiaries, whether elected or appointed,
for liabilities or losses incurred in the performance of their duties up to an
aggregate sum of $65,000,000. 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.
8
<PAGE> 12
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 6, 1998, 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>
Sole Voting Total Director
Power and Shared Voting Right to Acquire Number Deferred
Sole Power and Shares within 60 of Shares Percent of Stock
Investment Shared Invest- Days by Exercise Beneficially Common Ownership
Name of Beneficial Owner Power ment Power of Options Owned Stock(a) Plan(b)
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Pedro Aspe 548 548 (c) 1,738
Robert J. Bahash 68,559 118,800 187,359 (c)
Joseph L. Dionne(d),(e) 299,652 10,204 47,600 357,456 (c)
Vartan Gregorian 907 907 (c) 909
John T. Hartley 2,480 2,480 (c) 909
George B. Harvey 1,945 1,945 (c) 1,533
Richard H. Jenrette 480 480 (c) 909
Linda Koch Lorimer 1,354 1,354 (c) 909
Harold W. McGraw III 181,822 165,950 347,772 (c)
Robert P. McGraw 56,712 9,000 65,712 (c)
Lois Dickson Rice 880 880 (c) 909
Paul J. Rizzo 2,480 2,480 (c) 909
James H. Ross 1,550 1,550 (c) 909
Sidney Taurel 1,000 1,000 (c) 1,175
Kenneth M. Vittor 13,022 22,910 35,932 (c)
Alva O. Way 2,480 2,480 (c) 909
Jeffrey P. Williams 1,543 7,500 9,043 (c)
All Directors and Executive Officers
of the Corporation as a group (a
total of 24 persons, including
those named above)(f)(g) 692,484 11,204 485,580 1,189,268 1.2% 11,718
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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"), which is a registered investment adviser,
and which in that capacity through operating subsidiaries manages client
accounts. On February 17, 1998, Delaware Management advised the Corporation by
furnishing the Corporation with its Schedule 13G filed with the Securities and
Exchange Commission that, as of December 31, 1997, it beneficially owned in the
aggregate 8,702,379 shares or approximately 8.74% of the outstanding Common
Stock of the Corporation. Delaware Management has certified in its Schedule 13G
filings 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 6, 1998 (excluding treasury shares) was
99,317,426. The percent of Common Stock is based on such number of shares and is
rounded off to the nearest one percent.
(b) This amount represents the number of shares of the Corporation's Common
Stock which have been credited to a bookkeeping account maintained for each
non-employee director of the Corporation pursuant to the Director Deferred Stock
Ownership Plan. This Plan is further described on pages 7 and 8.
(c) Less than 1%.
(d) Joan F. Dionne, the wife of Joseph L. Dionne, is the beneficial owner of
11,196 shares of Common Stock. These shares have not been included in the above
table.
(e) Mr. Dionne made a gift of 10,204 shares of Common Stock to a private
charitable foundation. These shares have been included in the above table.
(f) 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.
(g) Harold W. McGraw, Jr., Chairman Emeritus of the Corporation, is the
beneficial owner of 2,421,275 shares of Common Stock, of which 36,095 are held
in Mr. McGraw's name and 2,385,180 are held in the name of the Harold W. McGraw
Jr. Trust. These shares represent approximately 2.4% 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 80,000 shares of Common Stock. None of
these shares has been included in the above table.
9
<PAGE> 13
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 1995, 1996 and 1997:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- ---------------------- ALL
Awards Payouts OTHER
------ ------- COMPEN-
Name Other Long-Term SATION
and Annual Restricted Securities Incentive
Principal Compen- Stock Underlying Payouts
Position Year Salary Bonus sation(a) Awards(b) Options ("LTIP")(c)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne(d) 1997 $1,035,000 $1,288,016 $75,116 0 226,500(e) $2,039,779 $220,065(f)
Chairman and 1996 935,000 908,119 69,714 0 47,600 1,326,456 197,145
Chief Executive Officer 1995 850,000 678,181 66,144 0 39,500 1,234,935 158,698
Harold W. McGraw III(d) 1997 $ 666,000 $ 710,409 $45,328 0 26,000 $1,216,307 $110,278(f)
President and 1996 616,000 512,820 41,989 0 27,800 792,239 93,335
Chief Operating Officer 1995 560,000 382,973 39,430 0 23,200 734,593 89,756
Robert J. Bahash 1997 $ 447,000 $ 437,072 $29,785 0 16,000 $ 844,735 $ 75,157(f)
Executive Vice 1996 417,000 318,223 28,660 0 18,000 555,393 66,365
President,
Chief Financial Officer 1995 390,000 244,487 27,814 0 14,000 529,506 61,574
Jeffrey P. Williams(g) 1997 $ 400,000 $ 391,116 $24,854 0 10,000 $ 188,256 N/A(f)
Executive Vice 1996 100,000 326,313 N/A $507,000(h) 5,000 N/A N/A
President,
Strategic Development 1995 N/A N/A N/A N/A N/A N/A N/A
Kenneth M. Vittor 1997 $ 300,000 $ 268,291 $10,536 0 6,000 $ 192,874 $ 41,289(f)
Senior Vice President 1996 275,000 152,625 7,308 0 6,000 88,460 33,350
and
General Counsel 1995 229,000 92,552 4,997 0 3,000 79,600 25,807
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents dividend equivalents paid on outstanding Long-Term Restricted
Performance Share and Restricted Stock Awards.
(b) The number and value of Restricted Performance Share holdings at year end
was as follows:
------------------------------------------------------------
<TABLE>
<CAPTION>
1997
---------------------------
Unearned
Restricted
Performance Value
Shares (at $74.00)*
- -------------------------------------------------------------
<S> <C> <C>
J. L. Dionne 52,164 $3,860,136
H. W. McGraw III 31,478 $2,329,372
R. J. Bahash 20,684 $1,530,616
J. P. Williams 5,260 $ 389,240
K. M. Vittor 7,317 $ 541,458
- -------------------------------------------------------------
</TABLE>
* Based on a closing price of The McGraw-Hill Companies Common Stock on December
31, 1997 of $74.00.
Dividend equivalent payments equal to the dividend paid on the Corporation's
Common Stock were paid in cash on Restricted Performance Shares in 1997.
Mr. Williams was awarded Restricted Stock in connection with his employment by
the Corporation in accordance with the terms described in footnote (h) below.
(c) The 1997 payment amount is based on a fair market value of $71.5938 for the
Corporation's Common Stock on February 3, 1998.
(d) On January 28, 1998, the Board of Directors announced that Mr. Harold W.
McGraw III shall become the Corporation's Chief Executive Officer effective
April 29, 1998. Mr. Joseph L. Dionne, who shall retire as of July 1, 1998, shall
continue to serve as non-executive Chairman of the Board of Directors.
(e) Includes Restoration Stock Options. The Compensation Committee approved a
new stock option enhancement in 1997 called a Restoration Stock Option ("RSO").
If shares of the Corporation's Common Stock are delivered in payment of the
exercise price of a stock option (as opposed to the use of cash or "cashless
exercises"), an RSO will be granted equal to the number of shares used to
exercise the stock option. The expiration date of these RSO grants (which are
made pursuant to the 1993 Key Employee Stock Incentive Plan) remains the last
day the underlying grant is exercisable. Additionally, if shares are withheld to
satisfy the tax obligation on the realized gain, the RSO will include shares
equal to the number of shares withheld for taxes. RSO grants are non-qualified,
and are first exercisable six months after the date of grant at the market value
at the date of grant of the RSO. Only one RSO will be granted for each original
stock option granted. In the event of a change in control of the Corporation,
all options become fully vested.
(f) For 1997, the dollar value reported in this column includes the following
items:
------------------------------------------------------------
<TABLE>
<CAPTION>
1997 Corporation
Above Market Contribution
Interest on to Defined
Deferred Contribution
Compensation Plans Total
- -----------------------------------------------------------------
<S> <C> <C> <C>
J. L. Dionne $37,179 $182,886 $220,065
H. W. McGraw III -- $110,278 $110,278
R. J. Bahash $ 4,171 $ 70,986 $ 75,157
J. P. Williams -- N/A N/A
K. M. Vittor -- $ 41,289 $ 41,289
- -----------------------------------------------------------------
</TABLE>
(g) Mr. Williams resigned from the Corporation as of January 2, 1998.
(h) On September 24, 1996, in connection with his employment by the Corporation,
Mr. Williams was awarded 12,000 shares of Restricted Stock with a grant value of
$507,000. The value of the 12,000 shares on December 31, 1997 was $889,876.
One-half of the award vested on December 31, 1997. The remaining 6,000 shares,
which were to vest on December 31, 1998, were forfeited upon Mr. Williams'
resignation from the Corporation as of January 2, 1998. Dividend Equivalents
were paid on all unvested shares through January 2, 1998.
10
<PAGE> 14
OPTION GRANTS IN 1997
The following table sets forth all grants of stock options made during 1997
pursuant to the 1993 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
Individual Grants Price Appreciation for Option Term(a)
--------------------------------------------------------------- -------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in or Base Expiration
Name Type Granted 1997 Price Date 5% 10%
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. L. Dionne Annual 47,600(b) 3.48% $45.6250 01/01/2007 $ 1,365,801 $ 3,461,210
Restoration 13,324(c) 0.97% $68.2500 12/08/1998 $ 51,484 $ 103,542
Restoration 21,641(c) 1.58% $68.2500 12/04/1999 $ 160,760 $ 330,733
Restoration 19,926(c) 1.46% $68.2500 01/01/2001 $ 229,458 $ 484,857
Restoration 25,753(c) 1.88% $68.2500 01/01/2002 $ 399,267 $ 865,074
Restoration 25,829(c) 1.89% $68.2500 01/03/2003 $ 509,226 $ 1,132,227
Restoration 27,096(c) 1.98% $68.2500 01/02/2004 $ 653,043 $ 1,490,575
Restoration 26,948(c) 1.97% $68.2500 01/02/2005 $ 773,909 $ 1,814,597
Restoration 18,383(c) 1.34% $68.2500 01/01/2006 $ 616,808 $ 1,486,370
H. W. McGraw III Annual 26,000(b) 1.90% $45.6250 01/01/2007 $ 746,026 $ 1,890,577
R. J. Bahash Annual 16,000(b) 1.17% $45.6250 01/01/2007 $ 459,093 $ 1,163,432
J. P. Williams Annual 10,000(b) 0.73% $45.6250 01/01/2007 $ 286,933 $ 727,145
K. M. Vittor Annual 6,000(b) 0.44% $45.6250 01/01/2007 $ 172,160 $ 436,287
All Shareholders N/A N/A N/A N/A N/A $3,161,401,096(d) $8,011,624,677(d)
All Optionees N/A 1,367,958 100% $50.4055(e) (e) $ 38,353,239 $ 96,144,235
Optionees' Gain
as % of All
Shareholders' Gain N/A N/A N/A N/A N/A 1.21% 1.20%
</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
option term 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 annual awards, which were granted pursuant to the 1993 Key Employee
Stock Incentive Plan, were for non-qualified stock options and provide that one-
half of the option grant vests on January 2, 1998, the first anniversary of the
grant, and the remaining one-half vests on January 2, 1999, the second
anniversary of the grant. In the event of a change in control of the
Corporation, the options become fully vested.
(c) The Compensation Committee approved a new stock option enhancement in 1997
called a Restoration Stock Option ("RSO"). If shares of the Corporation's Common
Stock are delivered in payment of the exercise price of a stock option (as
opposed to the use of cash or "cashless exercises"), an RSO will be granted
equal to the number of shares used to exercise the stock option. The expiration
date of these RSO grants (which are made pursuant to the 1993 Key Employee Stock
Incentive Plan) remains the last day the underlying grant is exercisable.
Additionally, if shares are withheld to satisfy the tax obligation on the
realized gain, the RSO will include shares equal to the number of shares
withheld for taxes. RSO grants are non-qualified, and are first exercisable six
months after the date of grant at the market value at the date of grant of the
RSO. Only one RSO will be granted for each original stock option granted. In the
event of a change in control of the Corporation, all options become fully
vested.
(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 2, 1997 at a
purchase price of $50.4055, 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 2, 1997 was 99,729,685.
The hypothetical return presented is not intended as a projection of the future
performance of the Corporation's Common Stock, but rather is provided for
illustrative purposes only.
(e) Expiration dates range from January 1, 2007 through September 30, 2007.
$50.4055 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.
11
<PAGE> 15
AGGREGATE OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
The following table sets forth information with respect to options exercised by
each of the Named Officers during 1997 and the number and value of unexercised
options as of December 31, 1997:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 1997 at December 31, 1997(a)
Shares Acquired Value --------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. L. Dionne 289,610 $10,378,810 0 250,300 $ 0 $3,107,455
H. W. McGraw III 5,354 $ 189,499 139,050 39,900 $5,799,743 $1,163,002
R. J. Bahash 0 $ 0 101,800 25,000 $4,291,941 $ 729,343
J. P. Williams 0 $ 0 2,500 12,500 $ 79,063 $ 362,813
K. M. Vittor 1,374 $ 22,413 16,910 9,000 $ 690,347 $ 262,031
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on a closing price of the Corporation's Common Stock on December 31,
1997 of $74.00 as reported on the New York Stock Exchange Composite Transactions
Tape.
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
The following table sets forth information concerning long-term incentive awards
granted during 1997 to the Named Officers pursuant to the 1993 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 17,014 shares 3 Years 3,403 17,014 25,521
H. W. McGraw III 10,218 shares 3 Years 2,044 10,218 15,327
R. J. Bahash 6,368 shares 3 Years 1,274 6,368 9,552
J. P. Williams 5,260 shares 3 Years 1,052 5,260 7,890
K. M. Vittor 2,959 shares 3 Years 592 2,959 4,439
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Restricted Performance Share Awards pursuant to the 1993 Key Employee Stock
Incentive Plan with payment in the Corporation's Common Stock are based upon the
degree of achievement of a three-year cumulative compound earnings per share
growth goal ("the EPS goal") maturing on December 31, 1999. 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.
12
<PAGE> 16
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, 1993 and ending on December 31, 1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THE MCGRAW-HILL COMPANIES, S&P 500 INDEX AND PEER GROUP INDEX**
THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) MCGRAW-HILL S&P 500 PEER GROUP
<S> <C> <C> <C>
1992 100 100 100
1993 114 110 115
1994 117 112 107
1995 157 153 137
1996 171 189 161
1997 282 252 246
</TABLE>
Assumes $100 Invested on December 31, 1992 in The McGraw-Hill Companies 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. One of the members of the Peer
Group, The Dun & Bradstreet Corporation ("D&B"), spun-off two subsidiaries in
November 1996, as a result of which shareholders of the original D&B ("Old
D&B") became holders of shares in reorganized D&B ("New D&B") and in each of
the spun-off subsidiaries (the "Spin-Offs"). In calculating the total
shareholder return for D&B, the shares of the Spin-Offs received by the Old
D&B shareholders were deemed to be reinvested in shares of New D&B.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
INTRODUCTION
The McGraw-Hill Companies' executive compensation program (the "Program") is
administered by the 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 with all
non-employee directors at year-end to review the CEO's performance and
compensation.
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 in-
13
<PAGE> 17
centive opportunities which are payable 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 payable for the achievement of three-year financial
performance goals established by the Committee, and annual stock option grants.
The 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
stock-based compensation. 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 1996
Key Executive Short-Term Incentive Plan and the 1993 Key Employee Stock
Incentive Plan have been approved by the Corporation's shareholders pursuant to
the requirements of Section 162(m) of the Internal Revenue Code. Therefore, the
awards earned under these plans will qualify for tax deduction by the
Corporation when paid.
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 1997 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. Base salaries are determined within the framework of position
responsibility, individual performance and the external marketplace. Competitive
market data are derived annually using a third-party consultant survey of the
publishing, information and media industry, which includes reported data from
companies in the peer group index of the Shareholder Return Performance Graph
(the "Peer Group").
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
competitive with median levels of 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 provide competitive long-term
compensation opportunities in the form of restricted performance share and stock
option grants. The grant guidelines for these awards are derived from general
industry long-term incentive grant data and are adjusted by an independent
compensation consultant to reflect median long-term incentive grant practices of
publishing, information and media industry companies including those in the Peer
Group. Further, these grant guidelines are established on a regular basis by the
Committee and are anticipated to remain in effect for multiple-year periods
until reviewed and reset by the Committee.
ANNUAL SALARY AND INCENTIVE
COMPENSATION
Annual compensation for senior management consists of base salary and the annual
incentive awards earned under the 1996 Key Executive Short-Term Incentive
Compensation Plan. Base salary increases for senior executives other than the
CEO are recommended annually by Mr. Dionne and are reviewed and approved by the
Committee.
Target awards established under the 1996 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 1997 was 70% of salary.
The maximum payment opportunity is set at 200% 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 Corporation's
performance in relation to minimum, target and maximum diluted earnings per
share goals which are approved by the Committee at the beginning of the plan
year.
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
14
<PAGE> 18
for certain reasons before the shares become vested. During the award cycle,
participants receive dividends on and have the right to vote the awarded shares.
The second component of the long-term incentive compensation program consists of
stock options which provide participants with the right to purchase shares of
The McGraw-Hill Companies 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 and individual performance
considerations for senior management. 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.
In support of the Committee's philosophy to encourage key employees to increase
their ownership of company stock, the Committee approved a new stock option
enhancement in 1997 called a Restoration Stock Option. This feature permits
participants in the 1993 Key Employee Stock Incentive Plan, and predecessor
plans, to exercise valuable stock options before the end of the stock option
term, using already owned shares instead of cash. A new stock option is granted
to restore the number of owned shares that were delivered to exercise the
original stock option.
1997 CEO COMPENSATION
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, 1997, the Committee increased Mr. Dionne's base
salary by 10.7% to $1,035,000, based on its review and assessment of the factors
and criteria described above.
In January 1997, 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 1997 stock-based awards consist of 17,014
restricted performance shares which will mature on December 31, 1999, subject to
the achievement of the Committee-approved earnings per share performance goals
established for this award, and 47,600 stock option shares. These awards are
disclosed in the Long-Term Incentive Plan Awards Table and the Option Grants
Table along with the 1997 awards to the other named executives.
In early 1998, the Committee reviewed and approved the 1997 annual incentive
award payments for Mr. Dionne and the other named executives under the 1996 Key
Executive Short-Term Incentive Compensation Plan. These payments are shown in
the Bonus column of the Summary Compensation Table. Based on the diluted
Earnings Per Share for 1997, 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 177.78% of target
opportunity which resulted in a 1997 short-term incentive payment to Mr. Dionne
of $1,288,016.
In early 1998, 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
1995 Long-Term Restricted Performance Share Award which covered the years 1995,
1996 and 1997 and matured on December 31, 1997. The cumulative compound earnings
per share growth for the three-year award cycle exceeded the maximum 150%
payment goal established by the Committee for this Award. As a result, Mr.
Dionne received a share payment of 28,491 shares representing 150% of his target
award. The dollar value of Mr. Dionne's 1995 Long-Term Restricted Performance
Share 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, there should be comparable downside risks to
compensation when performance does not meet these standards.
In its view, the Committee believes that The McGraw-Hill Companies' executive
compensation program is meeting 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 Compensation Committee
Paul J. Rizzo (Chairman)
Vartan Gregorian
John T. Hartley
Linda Koch Lorimer
Lois Dickson Rice
Sidney Taurel
15
<PAGE> 19
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 Messrs.
Vittor and Williams participate in ERP and ERP Supplement and do 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 1996 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 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 1997 compensation (salary and
1997 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>
ERP and Supplemental
Name ERP Supplement Benefits Plan Total
---- -------------- ------------- -----
<S> <C> <C> <C>
Joseph L. Dionne $265,000 $510,000 $775,000
Harold W. McGraw III $213,000 $ 91,000 $304,000
Robert J. Bahash $131,000 $ 81,000 $212,000
Jeffrey P. Williams $ N/A(a) $ 0 $ N/A(a)
Kenneth M. Vittor $ 97,000 $ 0 $ 97,000
</TABLE>
- --------------------------------------------------------------------------------
(a) Due to Mr. Williams' resignation on January 2, 1998, he is not eligible for
retirement benefits.
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 30 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 1996 Key-Executive
Short-Term Incentive Compensation Plan, depending upon their age at the date of
termination. The Supplemental Benefits Plan is administered by the 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
The Senior Executive Severance Plan provides that if the employment of a
participating senior executive of the Corporation is involuntarily terminated
without
16
<PAGE> 20
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. The Plan was amended to provide that
benefits will be payable to participants who voluntarily terminate their
employment within a 30 day period one year after a change in control of the
Corporation has occurred. The Senior Executive Severance Plan is administered by
the Compensation Committee of the Board of Directors, which Committee approves
participants who are recommended by the Corporation's Chief Executive Officer.
Mr. Vittor does not participate in the Senior Executive Severance Plan. In lieu
thereof, he 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 on 0.9 multiplied by the number of years of continuous service with the
Corporation.
2. PROPOSAL TO INCREASE AUTHORIZED COMMON STOCK TO 300,000,000 SHARES FROM
150,000,000 SHARES
On February 25, 1998, the Board of Directors unanimously adopted a resolution
recommending that the Corporation's Restated Certificate of Incorporation be
amended to increase the number of shares of authorized Common Stock, par value
$1 per share, of the Corporation to 300,000,000 shares from 150,000,000 shares,
subject to the approval of the Corporation's shareholders. The proposed increase
in the authorized Common Stock would be effected by amending the first paragraph
of Article III of the Corporation's Restated Certificate of Incorporation in the
manner set forth in Exhibit A to this Proxy Statement.
There are no present plans or agreements which would require the issuance of the
additional shares of Common Stock. Nonetheless, the Board believes that this
increase in authorized shares is advisable at this time because it would give
the Corporation greater flexibility in negotiating future acquisitions using
Common Stock, in addition to providing a resource for future financings,
possible stock dividends, stock splits or other distributions to shareholders,
and for other general corporate purposes. Moreover, this increase could save the
Corporation the expense and delay of having to hold a special shareholders'
meeting when a specific need arises. These shares of authorized Common Stock
would be available for issuance in the future, from time to time, by action of
the Board of Directors without shareholder approval, unless otherwise required
by law or by a regulation of the New York Stock Exchange, on which the
Corporation's Common Stock is listed. Depending on the circumstances, however,
any issuance of additional shares of Common Stock could affect the existing
holders of shares of Common Stock by diluting the voting power and earnings per
share of the Common Stock.
The additional shares would be identical to the shares of Common Stock now
authorized and outstanding, and this proposal would not affect the rights of
holders of the Common Stock. The shareholders of the Corporation's Common Stock
do not have pre-emptive rights to purchase any shares of authorized capital
stock of the Corporation. As of February 6, 1998, 99,317,426 shares of Common
Stock were issued and outstanding.
APPROVAL AND RELATED MATTERS
Approval by the holders of a 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 III 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 III of the Restated
Certificate of Incorporation of the Corporation in the form of Exhibit A
appended to this Proxy Statement so as to increase the aggregate number of
shares of Common Stock, par value $1 per share, which the Corporation is
authorized to issue, to 300,000,000 shares from 150,000,000 shares is
hereby approved, authorized and adopted.
17
<PAGE> 21
THE BOARD OF DIRECTORS' RECOMMENDATION
Your Board recommends that you vote FOR the approval of the foregoing amendment
to Article III of the Corporation's Restated Certificate of Incorporation
increasing the authorized shares of Common Stock to 300,000,000 shares from
150,000,000 shares. 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, 1997, Ernst & Young LLP 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 LLP to serve as the
Corporation's independent auditors for 1998. 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 LLP 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 LLP 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.
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 LLP
as independent auditors for this Corporation and its subsidiaries for 1998
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. OTHER MATTERS
The Board of Directors knows of no other matters which may properly 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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 1997, except for Barbara A. Munder, who inadvertently filed
one late report on Form 4 disclosing one transaction, due to administrative
error by the Corporation.
SHAREHOLDER PROPOSALS FOR 1999
Shareholder proposals which may be submitted for inclusion in the Corporation's
proxy statement and form of proxy for the 1999 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 24,
1998. Such proposals when submitted must be in full compliance with applicable
laws.
By Order of the Board of Directors
Scott L. Bennett
Senior Vice President,
Associate General Counsel and Secretary
New York, New York
March 24, 1998
18
<PAGE> 22
EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE III OF THE CORPORATION'S
RESTATED CERTIFICATE OF INCORPORATION
"ARTICLE III. The aggregate number of shares which the Corporation shall have
authority to issue shall be 302,891,256 [152,891,256] shares, 891,256 shares of
which shall have a par value of $10 per share and 302,000,000 [152,000,000]
shares of which shall have a par value of $1 per share. All of these shares are
to be classified and the designations, number of shares in each class and the
par value of the shares shall be as follows: $1.20 Convertible Preference Stock,
891,256 shares of the par value of $10 per share; Series Preferred Stock,
2,000,000 shares of the par value of $1 per share; and Common Stock, 300,000,000
[150,000,000] shares of the par value of $1 per share." [Proposed changes are
underlined and proposed deletions are in brackets.]
A-1
<PAGE> 23
THE MCGRAW-HILL COMPANIES, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 29, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE 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 The McGraw-Hill Companies, Inc. which are credited to the undersigned's
account as of March 12, 1998, at the Annual Meeting of Shareholders to be
held on April 29, 1998, 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 22, 1998. 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)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 24
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.
Please mark
your votes /X/
like this
- ---------------------------------------------------------------------
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 2001 Annual Meeting:
Pedro Aspe, George B. Harvey, Richard H. Jenrette, Robert P. McGraw
and Lois Dickson Rice
FOR ALL WITHHOLD
NOMINEE(S) AUTHORITY
except as set FOR ALL
forth below NOMINEES
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write that nominee(s) name below.
- --------------------------------------------------------------------------
2. Proposal to amend Restated Certificate of Incorporation to increase
authorized Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of independent auditors for 1998.
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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 25
THE MCGRAW-HILL COMPANIES, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 29, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE
EMPLOYEE RETIREMENT ACCOUNT PLAN
OF THE MCGRAW-HILL COMPANIES, INC. AND ITS SUBSIDIARIES ("ERAP")
The Trustee named is hereby instructed to vote all the shares of Common Stock
of The McGraw-Hill Companies, Inc. which are credited to the undersigned's
account as of March 12, 1998, at the Annual Meeting of Shareholders to be
held on April 29, 1998, 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 22, 1998. 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)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 26
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.
Please mark
your votes /X/
like this
- ---------------------------------------------------------------------
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 2001 Annual Meeting:
Pedro Aspe, George B. Harvey, Richard H. Jenrette, Robert P. McGraw
and Lois Dickson Rice
FOR ALL WITHHOLD
NOMINEE(S) AUTHORITY
except as set FOR ALL
forth below NOMINEES
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write that nominee(s) name below.
- --------------------------------------------------------------------------
2. Proposal to amend Restated Certificate of Incorporation to increase
authorized Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of independent auditors for 1998.
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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 27
THE MCGRAW-HILL COMPANIES, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 29, 1998
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 The McGraw-Hill Companies, Inc. which are credited to the undersigned's
account as of March 12, 1998, at the Annual Meeting of Shareholders to be
held on April 29, 1998, 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 22, 1998. 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)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 28
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.
Please mark
your votes /X/
like this
- ---------------------------------------------------------------------
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 2001 Annual Meeting:
Pedro Aspe, George B. Harvey, Richard H. Jenrette, Robert P. McGraw
and Lois Dickson Rice
FOR ALL WITHHOLD
NOMINEE(S) AUTHORITY
except as set FOR ALL
forth below NOMINEES
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write that nominee(s) name below.
- --------------------------------------------------------------------------
2. Proposal to amend Restated Certificate of Incorporation to increase
authorized Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of independent auditors for 1998.
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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 29
THE MCGRAW-HILL COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Scott L. Bennett and Kenneth M. Vittor, and each of
them, proxies with full power of substitution, to vote the shares of stock of
The McGraw-Hill Companies, 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 29, 1998, at 11 A.M., and any
adjournment thereof.
THE MATTERS TO BE VOTED UPON AND THE INSTRUCTIONS ARE SET FORTH ON THE REVERSE
SIDE. PLEASE VOTE, SIGN AND RETURN PROMPTLY.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 30
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
PROPOSALS 2 AND 3.
Please mark
your votes /X/
like this
- ---------------------------------------------------------------------
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 2001 Annual Meeting:
Pedro Aspe, George B. Harvey, Richard H. Jenrette, Robert P. McGraw
and Lois Dickson Rice
FOR ALL WITHHOLD
NOMINEE(S) AUTHORITY
except as set FOR ALL
forth below NOMINEES
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write that nominee(s) name below.
- --------------------------------------------------------------------------
2. Proposal to amend Restated Certificate of Incorporation to increase
authorized shares of Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of independent auditors for 1998.
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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 31
THE MCGRAW-HILL COMPANIES, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 29, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE NORTHERN TRUST COMPANY, AS TRUSTEE UNDER THE SAVINGS INCENTIVE PLAN
OF THE MCGRAW-HILL COMPANIES, INC. AND ITS SUBSIDIARIES ("SIP")
The Trustee named is hereby instructed to vote all the shares of Common Stock
of The McGraw-Hill Companies, Inc. which are credited to the undersigned's
account as of March 12, 1998, at the Annual Meeting of Shareholders to be
held on April 29, 1998, 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 22, 1998. 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)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 32
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.
Please mark
your votes /X/
like this
- ---------------------------------------------------------------------
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 2001 Annual Meeting:
Pedro Aspe, George B. Harvey, Richard H. Jenrette, Robert P. McGraw
and Lois Dickson Rice
FOR ALL WITHHOLD
NOMINEE(S) AUTHORITY
except as set FOR ALL
forth below NOMINEES
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write that nominee(s) name below.
- --------------------------------------------------------------------------
2. Proposal to amend Restated Certificate of Incorporation to increase
authorized shares of Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of independent auditors for 1998.
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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 33
THE MCGRAW-HILL COMPANIES, INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 29, 1998
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
The McGraw-Hill Companies, Inc. which are credited to the undersigned's account
as of March 12, 1998, at the Annual Meeting of Shareholders to be held on April
29, 1998, 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 22, 1998. 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)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 34
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.
Please mark
your votes /X/
like this
- ---------------------------------------------------------------------
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 2001 Annual Meeting:
Pedro Aspe, George B. Harvey, Richard H. Jenrette, Robert P. McGraw
and Lois Dickson Rice
FOR ALL WITHHOLD
NOMINEE(S) AUTHORITY
except as set FOR ALL
forth below NOMINEES
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write that nominee(s) name below.
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2. Proposal to amend Restated Certificate of Incorporation to increase
authorized Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of independent auditors for 1998.
FOR AGAINST ABSTAIN
/ / / / / /
And, in their discretion, in the transaction of such other business as may
properly come before the Meeting.
Signature(s) Date
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NOTE: Please sign exactly as your name appears on this card and return the
card in the enclosed envelope.
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