<PAGE>
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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TRIBUNE COMPANY
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF TRIBUNE COMPANY]
John W. Madigan Tribune Company
Chairman, President and 435 North Michigan
Chief Executive Officer Avenue
312/222-3123 Chicago, Illinois
60611-4001
fax: 312/222-9670
e-mail:
[email protected]
e-mail:
[email protected]
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Tribune
Company stockholders on Tuesday, May 6, 1997 at 10 a.m. Chicago time. The
meeting will be held at the Hotel Inter-Continental Chicago, 505 North
Michigan Avenue, in Chicago.
The meeting will also be broadcast live via satellite. People with satellite
receivers may watch the meeting by following the tuning instructions on the
next page.
This year Tribune celebrates its 150th anniversary and the Annual Meeting
will include activities to commemorate this historic occasion. During the
meeting, we also will report on the exciting activities of Tribune's past year
and our prospects for the future. You will be asked to elect four directors to
serve until the 2000 Annual Meeting and one to serve until the 1999 Annual
Meeting. We are very pleased that Patrick G. Ryan, Chairman, President and
Chief Executive Officer of Aon Corporation, is a nominee for the first time.
The Board also requests your approval of the Tribune Company 1997 Incentive
Compensation Plan, the details of which are set forth in the proxy statement.
Regardless of your plans for attending in person, it is important that your
shares be represented at the meeting. Therefore please sign, date and return
the enclosed proxy card and/or voting instruction card in the envelope
provided. This will enable you to vote on the business to be transacted
whether or not you attend the meeting.
We hope you can attend the Annual Meeting, but in any event, please vote
your shares by signing, dating and returning your proxy card and/or voting
instruction card.
With all good wishes,
Sincerely,
[SIGNATURE OF JOHN W. MADIGAN]
March 25, 1997
<PAGE>
NOTICE OF TRIBUNE COMPANY
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1997
TO THE STOCKHOLDERS OF TRIBUNE COMPANY:
The Annual Meeting of Stockholders of Tribune Company, a Delaware
corporation, will be held at the Hotel Inter-Continental Chicago, 505 North
Michigan Avenue, Chicago, Illinois at 10 a.m. Chicago time on Tuesday, May 6,
1997, for the purpose of considering and voting on the following matters:
1. Election of five (5) Directors;
2. Approval of the Tribune Company 1997 Incentive Compensation Plan;
3. Ratification of the selection of Price Waterhouse LLP as auditors;
4. A stockholder proposal regarding declassification of the Board of
Directors, if properly presented at the meeting; and
5. Such other matters as may properly come before the meeting.
Only stockholders of record at the close of business on March 11, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
Your attention is directed to the accompanying Proxy Statement. Whether or
not you plan to attend the meeting in person, you are urged to mark, sign,
date and return the enclosed proxy card and/or voting instruction card
promptly in the enclosed postage-paid envelope. The voting instruction card
relates to shares held under certain employee benefit plans. The proxy is
revocable and will not affect the right of stockholders of record attending
the meeting to vote in person.
By Order of the Board of Directors
CRANE H. KENNEY
Vice President, General Counseland Secretary
March 25, 1997
SATELLITE BROADCAST OF ANNUAL MEETING
The meeting will be broadcast live via satellite. It will be
distributed as follows for individuals with satellite
reception:
C Band: Galaxy 9 Transponder 1 Vertical Polarity Frequency
3720 6.2 and 6.8 audio
<PAGE>
TRIBUNE COMPANY
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is provided in connection with the 1997 Annual Meeting
of Stockholders (the "Annual Meeting") of Tribune Company (the "Company") to
be held at the Hotel Inter-Continental Chicago, 505 North Michigan Avenue,
Chicago, Illinois on Tuesday, May 6, 1997, at 10 a.m. Chicago time, or any
adjournment thereof, for the purposes set forth in the accompanying notice.
The principal executive office of the Company is 435 North Michigan Avenue,
Chicago, Illinois 60611. This Proxy Statement and accompanying proxy card are
being mailed to stockholders on or about March 25, 1997.
GENERAL
Stockholders Entitled to Vote. Stockholders of record at the close of busi-
ness on March 11, 1997 (the "Record Date") are entitled to vote at the meet-
ing. On that date there were 122,692,797 shares of the Common Stock, without
par value (the "Common Stock"), and 1,387,624 shares of Series B Convertible
Preferred Stock, without par value (the "Preferred Stock"), of the Company en-
titled to vote. With regard to all matters submitted to a vote at the meeting,
each share of Common Stock is entitled to one vote and each share of Preferred
Stock, voting together as a class with the Common Stock, is entitled to 9.16
votes. Holders do not have the right to cumulate votes in the election of di-
rectors.
Quorum. The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock outstanding on March 11, 1997 will constitute a
quorum to conduct business.
Voting. The enclosed proxy is solicited by the Board of Directors of the
Company. If the proxy is properly executed and returned, the shares will be
voted in accordance with the stockholder's instructions. If no instructions
are given with respect to a matter, the proxy will be voted in accordance with
the recommendations of the Board of Directors set forth herein.
A stockholder may, with respect to the election of directors, (i) vote for
all five nominees named herein, (ii) withhold authority to vote for all such
nominees or (iii) vote for all such nominees other than any nominee with
respect to whom the stockholder withholds authority to vote. Holders do not
have the right to cumulate votes in the election of directors. Directors will
be elected by a plurality of the votes cast at the Annual Meeting. Therefore,
the nominees receiving the highest number of votes cast for the number of
positions to be filled shall be elected. A stockholder may, with respect to
each other matter specified in the notice of the meeting, (i) vote "FOR," (ii)
vote "AGAINST" or (iii) "ABSTAIN" from voting. An affirmative vote of a
majority of the shares present in person or by proxy and entitled to vote at
the Annual Meeting is required for approval of the other matters presented.
Shares represented by proxies that are marked "abstain" on such matters will
be counted as shares present for purposes of determining the presence of a
quorum; such shares also will be treated as shares present and entitled to
vote, which will have the same effect as a vote against such matters. Proxies
relating to "street name" shares that are not voted by brokers on one or more
but less than all matters will be treated as shares present for purposes of
determining the presence of a quorum, but will not be treated as shares
present and entitled to vote at the Annual Meeting as to such matter or
matters.
Revocation by Proxy. A stockholder returning a proxy may revoke it prior to
exercise of the proxy at the Annual Meeting by executing and delivering a
later-dated proxy that is voted at the Annual Meeting, by voting in person by
ballot at the Annual Meeting or by delivering a written notice of revocation
to the Secretary of the Company. Stockholders whose shares are held in the
name of a broker, bank or other holder of record may not vote in person at the
meeting unless they have first obtained a proxy, executed in the stockholder's
favor, from the holder of record.
1
<PAGE>
Participants in the Tribune Employee Plans. If you are a participant in the
Tribune Company Employee Stock Ownership Plan (the "ESOP"), the Tribune Com-
pany Savings Incentive Plan (the "SIP") or the Tribune Company Employee Stock
Purchase Plan (the "ESPP"), a voting instruction card is enclosed for the pur-
pose of instructing the respective plan trustees or nominee how to cast the
votes related to such shares. Any participant giving instructions to a plan
trustee or nominee may revoke or modify such instructions prior to May 2, 1997
by written notice given to the trustee or nominee. The trustee or nominee will
vote shares under these plans in accordance with instructions that are re-
ceived by May 2, 1997. Shares held by the ESOP and the SIP for which no in-
structions are received by May 2, 1997 will be voted in the same proportion as
the shares in each plan for which instructions were received. Shares related
to the ESPP for which no instructions are received by May 2, 1997 will be
voted in accordance with the voting instructions set forth above. ESOP shares
not allocated to any participant accounts will be voted in the same proportion
as the ESOP shares for which voting instructions are received.
Stock Split. The shares of Common Stock outstanding and per share prices set
forth in this Proxy Statement have all been adjusted to reflect the two-for-
one stock split of Common Stock effected in the form of a stock dividend
distributed on January 15, 1997 (the "Stock Split").
OWNERSHIP INFORMATION
PRINCIPAL STOCKHOLDERS
The following table and footnotes set forth information as of the Record
Date with respect to each person who is known to management of the Company to
be the beneficial owner of more than 5% of any class of the Company's stock:
<TABLE>
<CAPTION>
COMMON STOCK(1) PREFERRED STOCK
------------------- ------------------
NUMBER PERCENT NUMBER PERCENT
NAME AND ADDRESS OF OWNER OF SHARES OF CLASS OF SHARES OF CLASS
------------------------- ---------- -------- --------- --------
<S> <C> <C> <C> <C>
Robert R. McCormick Tribune Foundation 22,590,138 18.41% -- --
Cantigny Foundation(2)
Room 770
435 North Michigan Avenue
Chicago, IL 60611
The Northern Trust Company(3)(4) 14,690,840 10.98 1,387,624 100%
50 South LaSalle Street
Chicago, IL 60675
Putnam Investments, Inc.(5) 6,209,300 5.06 -- --
One Post Office Square
Boston, MA 02109
</TABLE>
- - --------
(1) Share numbers reflect the two-for-one stock split of the Common Stock
effected in the form of a stock dividend distributed on January 15, 1997.
(2) The investment and voting power of each of the Robert R. McCormick
Tribune Foundation and Cantigny Foundation is vested in a board of five
directors, consisting of Charles T. Brumback, Stanton R. Cook, James C.
Dowdle, Jack Fuller and John W. Madigan, each of whom is an officer or former
officer of the Company or a subsidiary thereof.
(3) On the Record Date, The Northern Trust Company ("Northern Trust"), as
ESOP trustee, held 1,341,857 shares of Common Stock on behalf of the ESOP and
is deemed to hold 11,100,992 shares of Common Stock into which the Preferred
Stock is convertible, which shares are included in determining the percent of
class owned. All ownership attributed to Northern Trust in its capacity as
ESOP Trustee is shared with the participants in the ESOP.
(4) Share holdings based upon information contained in a Schedule 13G filed
with the Securities and Exchange Commission (the "SEC") on February 4, 1997 by
Northern Trust, pursuant to which Northern Trust has sole voting power with
respect to 1,715,612 shares; shared voting power with respect to 12,902,928
shares; sole dispositive power with respect to 315,834 shares; and shared
dispositive power with respect to 13,091,008 shares.
(5) All information based upon information contained in a Schedule 13G filed
with the SEC on January 27, 1997 by Putnam Investments, Inc., ("Putnam"), on
behalf of itself and Marsh & McLennan Companies, Inc., Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc. Putnam has shared
voting power with respect to 897,600 shares.
2
<PAGE>
MANAGEMENT OWNERSHIP
Beneficial ownership of the Common Stock and Preferred Stock as of March 1,
1997 by each director, director nominee and executive officer named in the
summary compensation table, and by all directors, director nominees and execu-
tive officers as a group, is set forth in the following table. Except as oth-
erwise noted, the persons named in the table below have sole voting and in-
vestment power with respect to all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
------------------------------- ----------------------
NUMBER OF SHARES OWNED NUMBER OF SHARES
NAME DIRECTLY OR INDIRECTLY(1)(2)(3) OWNED INDIRECTLY(2)(5)
- - ---- ------------------------------- ----------------------
<S> <C> <C>
Joseph D. Cantrell...... 79,485 633
James C. Dowdle......... 422,316(6) 710
Dennis J. FitzSimons.... 145,372 710
Diego E. Hernandez...... 8,400 --
David D. Hiller......... 134,583 587
Robert E. La Blanc...... 26,400 --
John W. Madigan......... 729,752(6)(7) 710
Nancy Hicks Maynard..... 6,600 --
Andrew J. McKenna....... 98,282(4) --
Kristie Miller.......... 372,372(7) --
James J. O'Connor....... 13,000 --
Donald H. Rumsfeld...... 17,684(4) --
Patrick G. Ryan......... 2,000 --
Dudley S. Taft.......... 39,400 --
Arnold R. Weber......... 10,600 --
Twenty-two (22) direc-
tors and executive of-
ficers of the Company
as a group............. 2,457,191(8) 5,717
</TABLE>
- - --------
(1) Share numbers reflect the two-for-one stock split of the Common Stock
effected in the form of a stock dividend distributed on January 15, 1997.
(2) Each amount represents less than 1% of the class, unless otherwise
indicated.
(3) Includes shares of Common Stock which the following directors and
executive officers have the right to acquire within 60 days upon exercise of
stock options: Mr. Cantrell, 62,602 shares; Mr. Dowdle, 79,766 shares; Mr.
FitzSimons, 46,508 shares; Mr. Hernandez, 4,000 shares; Mr. Hiller, 117,220
shares; Mr. LaBlanc, 4,000 shares; Mr. Madigan, 80,526 shares; Mrs. Maynard,
4,000 shares; Mr. McKenna, 4,000 shares; Ms. Miller, 4,000 shares; Mr.
O'Connor, 2,000 shares; Mr. Rumsfeld, 4,000 shares; Mr. Taft, 2,000 shares;
Mr. Weber, 4,000 shares; and executive officers other than the named officers,
240,914 shares. The individuals do not have voting rights relative to these
shares until the options are executed. Also includes shares beneficially owned
under the SIP and ESOP (including Common Stock into which ESOP Preferred Stock
allocated to the individual's account is convertible). The individual plan
participants have the right to direct the voting of plan shares allocated to
their accounts.
(4) Includes 1,474 shares and 5,666 shares, respectively, for Messrs.
McKenna and Rumsfeld who have elected to defer their cash compensation and to
have the deferred amounts deemed invested in phantom share units. The value of
the units at the time of distribution will equal the market value of an
equivalent number of shares of Common Stock and will be paid in cash. No
voting rights are associated with the phantom share units.
(5) Represents shares allocated to participants' accounts under the ESOP.
(6) Does not include a total of 20,439,738 shares owned by the Robert R.
McCormick Tribune Foundation and 2,150,400 shares owned by the Cantigny
Foundation (see "Principal Stockholders").
(7) Includes shares of Common Stock as to which beneficial ownership is
disclaimed as follows: Mr. Madigan, 41,270 shares; and Ms. Miller, 17,856
shares.
(8) Represents 2% of the class.
3
<PAGE>
EMPLOYEE BENEFIT PLAN VOTING RIGHTS
As of the Record Date, the Northern Trust Company, as trustee for the ESOP,
holds 1,387,624 shares of Preferred Stock, of which 660,792 shares were
allocated to participant accounts and 1,341,857 shares of Common Stock, of
which 1,033,785 shares were allocated to participant accounts. As of the
Record Date, Vanguard Fiduciary Trust Company, as trustee of the SIP, holds
1,952,882 shares of Common Stock. Employee participants of the ESOP and SIP
have the right to instruct the trustee on how the shares allocated to their
accounts are to be voted. The trust agreements direct the trustees to vote all
allocated shares for which no participant instructions are received and all
unallocated shares, if any, in the same proportion as votes cast on behalf of
participants who completed and returned a voting instruction card.
As of the Record Date, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as nominee of the ESPP, holds 1,489,753 shares of Common Stock.
4
<PAGE>
ELECTION OF DIRECTORS
PROPOSAL ONE
The Board of Directors of the Company increased the size of the Board to 12
members in February 1997. The Board is divided into three classes with stag-
gered terms of three years each, so that the term of one class expires at each
Annual Meeting of Stockholders. The By-laws of the Company require that each
class of directors contain an equal number of members, if possible, based on
the number of directors serving the Company. To effectuate a balancing of the
director classes, the Board of Directors has nominated James C. Dowdle, Diego
E. Hernandez, Robert E. La Blanc and Andrew J. McKenna to hold office until
the 2000 Annual Meeting and Patrick G. Ryan to hold office until the 1999 An-
nual Meeting. The nominees receiving the highest numbers of votes cast for the
number of positions to be filled shall be elected.
It is intended that all proxies in the accompanying form, unless contrary
instructions are given thereon, will be voted for the election as directors of
Messrs. Dowdle, Hernandez, La Blanc and McKenna to hold office until the 2000
Annual Meeting and Mr. Ryan to hold office until the 1999 Annual Meeting. Each
of the nominees other than Mr. Ryan is an incumbent director. If any of the
nominees becomes unavailable for election, an event which is not now antici-
pated, the enclosed proxy may be voted for the election of a substitute nomi-
nee as may be selected by the Board.
Additional information regarding each of the nominees and the other direc-
tors continuing in office follows. The descriptions of the business experience
of these individuals include the principal positions held by them from March
1992 to the date of this Proxy Statement. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE ELECTION OF THE NAMED NOMINEES AS DIRECTORS OF THE COMPANY (PRO-
POSAL 1).
[PHOTO OF JAMES C. DOWDLE APPEARS HERE]
JAMES C. DOWDLE (NOMINEE)
Executive Vice President/Media Operations since
August 1994; Executive Vice President of the Com-
pany; President and Chief Executive Officer,
Tribune Broadcasting Company, a subsidiary of the
Company; and President, Tribune Publishing Compa-
ny, a subsidiary of the Company, since April
1994. Director of The Learning Company. Class of
1997. Age: 63. Director since 1985.
[PHOTO OF DIEGO E. HERNANDEZ APPEARS HERE]
DIEGO E. HERNANDEZ (NOMINEE)
Vice Admiral, U.S. Navy (Retired) and President,
Marine Technology Group, Inc., a technical con-
sulting service, since July 1994. Consultant from
July 1992 to July 1994 and from March 1991 to Oc-
tober 1991; Senior Vice President, Right Associ-
ates from December 1991 to July 1992. Class of
1997. Age: 63. Director since 1991.
5
<PAGE>
[PHOTO OF ROBERT E. ROBERT E. LA BLANC (NOMINEE)
LA BLANC APPEARS HERE] President, Robert E. La Blanc Associates, Inc.,
consultants in information technology. Director of
Gilbert Associates, Inc.; Storage Technology,
Inc.; Titan Corporation; a family of Prudential
mutual funds. Class of 1997. Age: 63. Director
since 1982.
[PHOTO OF JOHN W. MADIGAN JOHN W. MADIGAN
APPEARS HERE] Chairman since January 1996, President since May
1994 and Chief Executive Officer since May 1995 of
the Company; Executive Vice President of the Com-
pany until May 1994; Publisher, Chicago Tribune
until May 1994; and President and Chief Executive
Officer, Chicago Tribune Company, a subsidiary of
the Company, until September 1993. Class of 1998.
Age: 59. Director since 1975.
[PHOTO OF NANCY HICKS NANCY HICKS MAYNARD
MAYNARD APPEARS HERE] Chair, The Freedom Forum Media Studies Center
since March 1996, and President, Maynard Partners
Incorporated (consultants in news media economics)
since December 1992 and Member, Global Business
Network; Deputy Publisher and Co-owner, Oakland
Tribune until November 1992. Class of 1998. Age:
50. Director since 1995.
[PHOTO OF ANDREW J. ANDREW J. MCKENNA (NOMINEE)
MCKENNA APPEARS HERE] Chairman and Chief Executive Officer, Schwarz, an
international distributor of paper packaging and
related products and a printer, producer and con-
verter. Director of Aon Corporation; Dean Foods
Company; The First National Bank of Chicago;
McDonald's Corporation; Skyline Corporation. Class
of 1997. Age: 67. Director since 1982.
[PHOTO OF KRISTIE MILLER KRISTIE MILLER
APPEARS HERE] Author; Journalist, The Daily News-Tribune, Inc.
of LaSalle, Illinois. Class of 1999. Age: 52. Di-
rector since 1981.
6
<PAGE>
[PHOTO OF JAMES O' CONNOR JAMES J. O'CONNOR
APPEARS HERE] Chairman and Chief Executive Officer and Director
of Unicom Corporation, a holding company, since
June 1994, and of Commonwealth Edison Company, an
electric utility. Director of Corning Incorporat-
ed; First Chicago NBD Corporation; The First Na-
tional Bank of Chicago; UAL Corporation. Class of
1998. Age: 60. Director since 1985.
[PHOTO OF DONALD H. DONALD H. RUMSFELD
RUMSFELD APPEARS HERE] Chairman of Gilead Sciences Inc., a pharmaceutical
company, since December, 1996. Chairman of the
Board of Directors, President and Chief Executive
Officer (from October 1990) until August 1993,
General Instrument Corporation, an electronics
company. Previously served as Chief Executive Of-
ficer of G.D. Searle & Company, Secretary of De-
fense and U.S. Ambassador to NATO. Director of ABB
AB; Gulfstream Aerospace Corporation; Kellogg Com-
pany; Metricom, Inc.; Sears, Roebuck and Co. Class
of 1999. Age: 64. Director since 1992.
[PHOTO OF PATRICK G. PATRICK G. RYAN (NOMINEE)
RYAN APPEARS HERE] Chairman, President and Chief Executive Officer of
Aon Corporation, a broad-based insurance holding
company. Director of First Chicago NBD Corpora-
tion; The First National Bank of Chicago. Age: 59.
[PHOTO OF DUDLEY S. TAFT DUDLEY S. TAFT
APPEARS HERE] President and Director, Taft Broadcasting Company,
an owner and operator of television broadcasting
stations. Chairman, President and Chief Executive
Officer of WPHL-TV, Inc., a subsidiary of the Com-
pany, until February 1996. Director of CINergy
Corporation; Fifth Third Bankcorp; Southern Star
Group, Ltd.; The Union Central Life Insurance Com-
pany; U.S. Playing Card Company. Class of 1999.
Age: 56. Director since 1996.
[PHOTO OF ARNOLD R. ARNOLD R. WEBER
WEBER APPEARS HERE] Chancellor, Northwestern University since January
1995, and President, Civic Committee of Commercial
Club of Chicago since March 1995. President,
Northwestern University until December 1994. Di-
rector of Aon Corporation; Burlington Northern
Santa Fe Corporation; Deere & Company; Inland
Steel Industries, Inc.; PepsiCo, Inc. Class of
1998. Age: 67. Director since 1989.
7
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held seven Board meetings during 1996 and each incum-
bent director attended at least 75% of the Board meetings that were held dur-
ing the portion of 1996 that such directors served as a director. Each incum-
bent director (other than Mr. Taft) attended 75% or more of the meetings of
all committees of which such director was a member during the portion of 1996
that such director served as a director. Mr. Rumsfeld was granted a leave of
service from the Board of Directors from July 1996 through November 1996, dur-
ing which period he did not participate in meetings of the Board of Directors
or any related committees.
Audit Committee
The functions of the Audit Committee, presently consisting of Messrs. Weber
(Chairman), Hernandez, La Blanc and Taft and Mrs. Maynard, include making
recommendations concerning the appointment of independent accountants to audit
the books of the Company, reviewing the financial statements audited by the
independent accountants and reviewing recommendations made by the independent
accountants with respect to the accounting methods used, the organization and
operations of the Company and the system of internal control followed by the
Company. The Audit Committee met two times during 1996.
Governance and Compensation Committee
The functions of the Governance and Compensation Committee, presently
consisting of Messrs. McKenna (Chairman), O'Connor and Rumsfeld and Ms.
Miller, include establishing the compensation for the Chief Executive Officer
of the Company and consulting with the Chief Executive Officer with respect to
the compensation of other executives of the Company. The Committee also
identifies and proposes candidates for election to the Board of Directors of
the Company. The Committee will consider nominees recommended by stockholders
if submitted in accordance with procedures set forth under the caption
"Stockholder Proposals For 1998 Annual Meeting." The Committee also has other
responsibilities relating to corporate governance, including studying the
size, composition, committee structure and committee membership of the Board
of Directors. The Committee met five times during 1996.
Incentive Compensation Subcommittee
The functions of the Incentive Compensation Subcommittee of the Governance
and Compensation Committee, presently consisting of Messrs. O'Connor
(Chairman) and Rumsfeld and Ms. Miller, include administering and determining
awards under the Company's 1992 Long-Term Incentive Plan and, if approved by
the Company's stockholders, the 1997 Incentive Compensation Plan, and certain
other employee benefit plans. The Subcommittee met three times during 1996.
Executive Committee
The Company has an Executive Committee, presently consisting of Messrs.
Madigan (Chairman), Dowdle, La Blanc, McKenna, Rumsfeld and Weber. The Commit-
tee met one time in 1996.
Finance Committee
The Company also has a Finance Committee, presently consisting of Messrs. La
Blanc (Chairman), Hernandez, Taft and Weber and Mrs. Maynard. The Committee
met one time during 1996.
Technology Committee
The Company also has a Technology Committee, presently consisting of Messrs.
Rumsfeld (Chairman), Dowdle, Hernandez, La Blanc, Madigan and Taft and Mrs.
Maynard. The Committee met three times during 1996.
8
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive annual stock awards,
stock options and meeting fees. Eligible directors receive a Basic Stock Award
of 1,400 shares of Common Stock each on the day following each Annual Meeting.
In addition, certain of the eligible directors who serve as a chairman of a
standing committee or subcommittee of the Board receive a Supplemental Stock
Award of 200 shares of Common Stock on the same date. Each eligible director
also receives a $1,500 fee for each board meeting attended and a $1,000 fee
for each committee meeting attended. The Company also reimburses directors for
travel expenses incurred in attending meetings. The Basic Stock Awards in 1997
for certain directors will be reduced by 600 shares in each case where the di-
rector in question holds non-vested shares awarded under a previous stock plan
for non-employee directors. The shares of Common Stock awarded and distributed
may not be sold for six months and one day following the date of award.
Directors may defer receipt of all or a portion of their stock awards and
fees. Directors who elect to defer amounts are credited with deemed income,
based on investments they select. Payment of deferred amounts together with
credited income will be made over a series of years in the future.
On the date of each Annual Meeting, each non-employee director is granted an
option to purchase 2,000 shares of Common Stock at the fair market value of
such shares on the date of grant. On May 7, 1996, each non-employee director
was granted an option (adjusted to reflect the Stock Split) to purchase 2,000
shares of Common Stock at $34.63 per share, reflecting the fair market value
of the Common Stock on such date. Each option was granted for a term of 10
years and became exercisable six months and one day after the date it was
granted. In the event of a change in control of the Company, all options
become immediately exercisable. A "change in control" means (a) the
acquisition, other than from the Company, by a person, entity or group of 20
percent or more of the combined voting power of the Company's outstanding
voting securities, (b) individuals who as of April 28, 1992, constitute the
Board of Directors cease to constitute at least a majority of the Board
without approval of the Board, or (c) approval of a merger or reorganization
of the Company where the prior shareholders do not thereafter own more than 60
percent of the reorganized Company. Option exercises may be paid for in cash
or by delivery of Common Stock already owned for at least six months by the
nonemployee director valued at fair market value on the date of exercise. In
the event of a stock dividend or stock split, or combination or other change
in the number of issued shares of Common Stock, a merger, consolidation,
reorganization, recapitalization, sale or exchange of substantially all of the
Company's assets or dissolution of the Company, automatic adjustments are to
be made in the price, number and types of shares subject to options in order
to prevent the dilution or enlargement of rights under options granted.
Options are not transferable, otherwise than by will or by the laws of descent
and distribution. If the director leaves the Board for any reason, the options
that were then exercisable may be exercised by the earlier of (a) the tenth
anniversary of the date of grant or (b) the third anniversary of the date such
individual ceases to be a director.
On March 11, 1997, the closing price of the Company's Common Stock was
$40.375.
OTHER TRANSACTIONS
In February 1996, Tribune Broadcasting Company, a subsidiary of the Company,
purchased the remaining 25 percent of the common stock of WPHL-TV, Inc. from
Taft Broadcasting Partners Limited Partnership for $23 million. Dudley S.
Taft, who was elected a director of the Company in May 1996, is President and
Chief Executive Officer of Taft Broadcasting Company, a general partner in
Taft Broadcasting Partners Limited Partnership. Mr. Taft and members of his
immediate family had a 79.8 percent beneficial interest in the foregoing
transaction.
Tribune Properties, Inc. and Chicago Tribune Company lease office space and
together with other business units of the Company provide services to the
Robert R. McCormick Tribune Foundation. During 1996, the Foundation paid
$295,490 to the Company for the leased space and services.
Subsidiaries of Aon Corporation received brokerage commissions and fees in
1996 of approximately $575,000 for obtaining certain insurance for the Company
and its subsidiaries. Patrick G. Ryan, Chairman, President, and Chief Execu-
tive Officer of Aon Corporation, is a nominee director of the Company.
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APPROVAL OF TRIBUNE COMPANY 1997 INCENTIVE
COMPENSATION PLAN
PROPOSAL TWO
GENERAL
The Board of Directors adopted the Tribune Company 1997 Incentive
Compensation Plan (the "Plan") on December 10, 1996, subject to approval by
the stockholders of the Company. If approved by the stockholders, the Plan
will replace the Company's current 1992 Long-Term Incentive Plan ("1992 Stock
Option Plan") and the Company's Management Incentive Plan ("MIP").
PURPOSE OF PLAN
The purpose of the Plan is to enable the Company to attract, retain and
motivate its management and other key employees and to provide incentives for
such employees to increase the value of the Company's Common Stock. In 1996,
the Company adopted Shareholder Value Added or SVA (defined generally to be
operating profit less taxes and a charge for capital required to generate the
return) as an operating philosophy to increase the return on investment for
the Company's stockholders. With the assistance of compensation experts, the
Company initiated a review of all of its executive compensation programs to
better link management compensation with SVA. As a result, the Plan includes
SVA as a means of measuring the performance of the Company's management, as
well as other provisions to further align the interests of management with
those of the Company's stockholders.
The compensation review revealed the need to focus management's compensation
on creating long-term growth. For many years, the Company has used stock
options as the sole means of aligning the interests of key employees with the
long-term appreciation of the Company's stock. The proposed Plan retains the
current 10 year exercise period for stock options, but includes the ability to
modify the vesting schedule, currently anticipated to increase to 4 years from
2 years, thereby requiring longer periods of service to the Company for
recipients to benefit from option grants. Additionally, the proposed Plan uses
an equity award program to reward the achievement of performance goals over
intermediate periods, currently anticipated to be 3 year cycles of SVA growth
above historic levels.
The Plan also addresses issues created by the Company's stock repurchase
program and significant growth through acquisitions and the increasingly
competitive marketplace for talented media employees. The Company's current
1992 Stock Option Plan makes an amount equal to .9% of the Company's
outstanding Common Stock available for stock option grants each year. As a
result of the Company's repurchase of approximately 15 million shares (as
adjusted for the Stock Split) over the past two years, the number of available
options has been reduced. This has occurred at the same time that the Company
has made significant acquisitions, thereby increasing the number of
participants in the current 1992 Stock Option Plan by approximately 64% since
its inception. In order to attract and retain key employees in the competitive
media marketplace, the Plan does not limit the number of available options
based on the size of the Company's Common Stock base, but instead fixes a
"pool" of 10 million shares of Common Stock, which may be adjusted as herein
provided, with respect to which options can be granted over the life of the
Plan.
DESCRIPTION OF PLAN
The Plan authorizes the grant and issuance of awards that may take the form
of Stock Options, Performance Equity Program Awards and Annual Management
Incentive Program Awards (any such option or award, an "Award"). The following
summary of the principal features of the Plan is qualified in its entirety by
the complete text of the Plan, which is set out as Exhibit A to this Proxy
Statement.
Eligibility
Any employee of the Company or any of its subsidiaries is eligible to be
selected as a recipient of an Award (a "Participant") under the Plan. The
Committee (defined below) has not yet determined how many individuals are
ultimately to participate in the Plan. While it is generally expected that
executives and senior middle managers will be eligible to participate, Awards
may from time to time be granted to employees who are not in these groups, but
who have otherwise distinguished themselves for their contributions to the
Company. Currently, there are approximately 200 executives and senior middle
managers covered under the Plan.
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Administration
The Plan will be administered by the Incentive Compensation Subcommittee or
one or more other committees (any such committee, a "Committee") of the Board
of Directors of the Company. To the extent that the Company determines that it
is necessary, the Committee may consist of two or more directors meeting the
requirements necessary for Awards to be exempt from Section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act") pursuant to Rule 16b-3
and/or for Awards to qualify as "performance based compensation" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). In the
event that the Company does not deem it necessary, the Committee may delegate
all or any of its responsibilities to one or more directors or officers of the
Company, including individuals who participate in the Plan.
Subject to the express provisions of the Plan, the Committee has broad
authority to administer and interpret the Plan, including, without limitation,
authority to (i) determine who is eligible to participate in the Plan and to
whom, and when, Awards are granted under the Plan, (ii) determine the number
of shares of Common Stock subject to Awards and the exercise or purchase price
of such shares under an Award, (iii) verify the extent of satisfaction of any
performance goals applicable to Awards, (iv) prescribe and amend the terms of
the agreements evidencing Awards made under the Plan and (v) make all other
determinations deemed necessary or advisable for the administration of the
Plan.
Stock Subject to the Plan
If the Plan is approved by the Company's stockholders, the aggregate number
of shares of the Common Stock that can be issued under the Plan may not exceed
10,000,000 plus (i) shares of Common Stock subject to awards under the Plan or
any prior stock incentive plan of the Company if there is a lapse, expiration,
termination or forfeiture, (ii) shares of Common Stock exchanged by an
optionee as full or partial payment to the Company of the exercise price of a
stock option, (iii) shares of Common Stock retained by the Company under the
Plan or any prior stock incentive plan of the Company in satisfaction of a
participant's tax withholding obligation and (iv) shares of Common Stock
purchased by the Company with cash obtained upon the exercise of options
granted under the Plan or any prior stock incentive plan of the Company and
shares of Common Stock repurchased with tax savings resulting from tax
deductions exceeding the Company's reported compensation expense. The number
of shares of Common Stock subject to the Plan and to outstanding Awards under
the Plan will be appropriately adjusted by the Board if the Common Stock is
affected through a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than quarterly cash
dividends) or other distribution, stock split, spin-off or sale of
substantially all of the Company's assets. For purposes of calculating the
aggregate number of shares of Common Stock issued under the Plan, only the
number of shares of Common Stock actually issued upon exercise or settlement
of an Award and not returned to the Company upon cancellation, expiration or
forfeiture of an Award or in payment or satisfaction of the purchase price,
exercise price or tax withholding obligation of an Award shall be counted.
Awards
The Plan authorizes the grant and issuance of the following types of Awards:
Stock Options, Performance Equity Program Awards and Annual Management
Incentive Program Bonuses.
Stock Options. Awards of stock options under the 1992 Stock Option Plan, the
Company's current stock option program, will be discontinued upon stockholder
approval of the Plan. Subject to the express provisions of the Plan and as
discussed in this paragraph, the Committee has discretion to determine the
eligible employees to whom options are granted, the timing of any grant of
Stock Options, the vesting schedule of Stock Options, the events causing Stock
Options to expire, the number of shares subject to any Stock Option, the
restrictions on transferability of Stock Options, and such further terms and
conditions, in each case not inconsistent with the Plan, as may be determined
from time to time by the Committee. Stock Options granted under the Plan may
be either incentive Stock Options qualifying under Code Section 422
("Incentive Stock Options") or Stock Options which are not intended to qualify
as Incentive Stock Options ("nonqualified options"), as determined by the
Committee in its discretion. No more than 4,000,000 Shares may be issued
pursuant to the exercise of Incentive Stock Options under the Plan. The
exercise price for Stock Options may not be less than 100% of the fair market
value of the Common Stock on the date the Stock Option is granted. The
exercise price of a Stock Option may
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be paid through various means specified by the Committee, including in cash or
check, by delivering to the Company shares of Common Stock, by certification
of ownership of previously acquired shares or by delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
deliver sale or loan proceeds to the Company in payment of the exercise price
and withholding taxes. Replacement Options (as defined in the Governance and
Compensation Committee Report on Executive Compensation) may be granted under
the Plan in connection with a Participant's payment of part or all of the
exercise price of a Stock Option with previously acquired shares of Common
Stock. The grant of Replacement Options does not result in an increase in the
total combined number of shares of Common Stock and Stock Options held by the
Participant and, therefore, does not increase the amount paid by the Company.
Annual Management Incentive Program Bonuses. Awards of annual management
incentive bonuses under the MIP, the Company's current bonus plan, will be
discontinued upon stockholder approval of the Plan. The Plan authorizes the
grant of Annual Management Incentive Program Bonuses pursuant to which a
Participant may become entitled to receive an amount based on satisfaction of
such performance criteria as are specified by the Committee. Subject to the
express provisions of the Plan and as discussed in this paragraph, the
Committee has discretion to determine the terms of any Annual Management
Incentive Program Bonus, including the target and maximum amount payable to a
Participant as an Annual Incentive Program Bonus, the performance criteria
(which may be based on financial performance and/or personal performance
evaluations) and level of achievement with respect to such criteria which
determines the amount payable under an Annual Management Incentive Program
Bonus, the fiscal year as to which performance will be measured for
determining the amount of any payment, the timing of any payment earned by
virtue of performance, restrictions on the alienation or transfer of an Annual
Management Incentive Program Bonus prior to actual payment, forfeiture
provisions, and such further terms and conditions, in each case not
inconsistent with the Plan, as the Committee may determine from time to time.
An Annual Management Incentive Program Bonus may be designed to qualify as
"performance based compensation" that is exempt from the limit on compensation
deductible by the Company, under Section 162(m) of the Code (see "Federal
Income Tax Consequences" below). The performance criteria for any Annual
Management Incentive Program Bonus that is intended to satisfy the
requirements for "performance based compensation" will be a measure based on
one or more "Qualifying Performance Criteria," as that term is defined below.
Notwithstanding satisfaction of any performance goals, the amount paid under
an Annual Management Incentive Program Bonus may be adjusted by the Committee
on the basis of such further considerations as the Committee in its sole
discretion shall determine. However, the Committee may not increase the amount
earned upon satisfaction of any performance goal by any Participant who is a
"covered employee" within the meaning of Section 162(m) of the Code. The
Committee may permit selected recipients of Annual Management Incentive
Program Bonuses to elect to defer any Annual Management Incentive Program
Bonus payment.
Performance Equity Program Awards. A Performance Equity Program Award is an
award of the right to receive shares of Common Stock, the grant, issuance,
retention and/or vesting of which is subject to such performance and other
conditions as are specified by the Committee. Subject to the express
provisions of the Plan and as discussed in this paragraph, the Committee has
discretion to determine the terms of any Performance Equity Program Award,
including the number of shares of Common Stock subject to a Performance Equity
Program Award or a formula for determining such, the performance criteria and
level of achievement related to these criteria which determine the number of
shares of Common Stock granted, issued, retainable and/or vested, the period
as to which performance shall be measured for determining achievement of
performance (a "performance period"), which period may not be less than 2
years, the timing of delivery of any shares of Common Stock earned, forfeiture
provisions, the effect of termination of employment for various reasons, and
such further terms and conditions, in each case not inconsistent with the
Plan, as may be determined from time to time by the Committee. The performance
criteria upon which Performance Equity Program Awards are granted, issued,
retained and/or vested may be based on financial performance and/or personal
performance evaluations, except that for any Performance Equity Program Award
that is intended by the Committee to satisfy the requirements for "performance
based compensation" under Code Section 162(m), the performance criteria shall
be a measure based on one or more Qualifying Performance Criteria (as defined
below). Notwithstanding
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satisfaction of any performance goals, the number of Shares granted, issued,
retainable and/or vested under a Performance Equity Program Award may be
adjusted by the Committee on the basis of such further considerations as the
Committee in its sole discretion shall determine. However, the Committee may
not increase the amount earned upon satisfaction of any performance goal by
any Participant who is a "covered employee" within the meaning of Section
162(m) of the Code.
Qualifying Performance Criteria and Section 162(m) Limits. Subject to
stockholder approval of the Plan, the performance criteria for any Annual
Management Incentive Program Bonus or any Performance Equity Program Award
that is intended to satisfy the requirements for "performance based
compensation" under Code Section 162(m) shall be any one or more of the
following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or
subsidiary, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target,
to previous years' results or to a designated comparison group, in each case
as preestablished by the Committee under the terms of the Award: (a)
shareholder value added, (b) cash flow, (c) earnings per share, (d) earnings
before interest, taxes, depreciation and amortization ("EBITDA"), (e) return
on equity, (f) return on capital, (g) return on assets or net assets, (h)
revenue growth, (i) income or net income, (j) cost control, (k) operating
income or net operating income, (l) operating profit or net operating profit,
(m) operating margin, (n) return on operating revenue and (o) market share or
circulation. The aggregate number of shares of Common Stock subject to options
granted under the Plan during any 5-year period to any one Participant may not
exceed 1,000,000. The aggregate number of shares of Common Stock issuable
under any Performance Equity Program Award granted under the Plan for any
performance period to any one Participant that is intended to satisfy the
requirements for "performance based compensation" under Section 162(m) of the
Code shall not exceed 30,000. The maximum amount payable pursuant to an Annual
Management Incentive Program Bonus granted for any fiscal year to any person
that is intended to satisfy the requirements for "performance based
compensation" under Section 162(m) shall not exceed the lower of 0.2 percent
of the Company's EBITDA for the fiscal year or $2 million.
Change of Control
Upon the grant of an award or as otherwise provided by the Committee, upon a
Change of Control, options will become exercisable and Performance Equity
Program Awards and Annual Management Incentive Program Bonuses will be
delivered or paid as if the applicable performance goals had been fully
achieved. A "change in control" means (a) the acquisition, other than from the
Company, by a person, entity or group of 20 percent or more of the combined
voting power of the Company's outstanding voting securities, (b) individuals
who as of May 6, 1997, constitute the Board of Directors cease to constitute
at least a majority of the Board without approval of the Board, or (c)
approval of a merger or reorganization of the Company where the prior
shareholders do not thereafter own more than 50 percent of the reorganized
Company. The Committee may provide in any Award that, if any amount payable
under the Plan is deemed to be an "excess parachute payment" under Section
280G of the Code, the Company will pay an additional amount to the
participant, sufficient (after payment of all federal, state and local taxes
on such additional amount) to pay any excise tax imposed on the excess
parachute payment under Section 4999 of the Code.
Transferability of Awards
Generally, Awards granted under the Plan may not be sold, assigned,
conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner
prior to the vesting or lapse of any and all restrictions applicable thereto,
other than by will or the laws of descent and distribution, except that the
Committee may permit an Award to be transferable to a member or members of the
Participant's family or to entities owned or established for the benefit of a
Participant's family.
Amendments and Termination
The Board of Directors, may alter, amend, suspend or terminate the Plan or,
with the consent of the Participant or such other persons who may then have an
interest therein, any Award theretofore granted under the Plan, with or
without approval of the Company's stockholders. However, no amendment of the
Plan shall be
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made without stockholder approval, if such amendment increases the number of
shares of Common Stock reserved under the Plan or the maximum number of shares
for which Stock Options may be granted to any Participant in any five year
period. All Stock Options and Performance Equity Program Awards granted under
the Plan are subject to, and may not be exercised before the approval of the
Plan by a majority of the Company's stockholders prior to the first
anniversary date of the Board's adoption of the Plan. No Stock Option granted
under the Plan shall have a term of more than ten years from the date it is
granted.
Federal Income Tax Consequences
The following is a brief summary of the principal United States Federal
income tax consequences under current Federal income tax laws related to
Awards under the Plan. This summary is not intended to be exhaustive and,
among other things, does not describe state or local tax consequences.
Nonqualified Options. The recipient of a nonqualified option does not
recognize income at the time the option is granted. When the nonqualified
option is exercised, the grantee recognizes ordinary income equal to the
difference between the fair market value on the exercise date of the number of
shares of Common Stock issued and their exercise price. The Company receives a
deduction equal to the amount of ordinary income recognized by the optionee.
The optionee's basis in the shares of Common Stock acquired upon exercise of a
nonqualified option is equal to the exercise price therefor plus the ordinary
income recognized by the optionee upon exercise. Upon subsequent disposition
of the shares of Common Stock, the optionee will recognize capital gain or
loss, which will be short-term or long-term, depending upon the length of time
the shares of Common Stock were held since the date the nonqualified option
was exercised.
Incentive Stock Options. In general, the recipient of an Incentive Stock
Option will not be subject to tax at the time the Incentive Stock Option is
granted or exercised. However, the excess of the fair market value of the
shares of Common Stock received upon exercise of the Incentive Stock Option
over the exercise price therefor is potentially subject to the alternative
minimum tax. Upon disposition of the shares of Common Stock acquired upon
exercise of an Incentive Stock Option, long-term capital gain or loss will be
recognized in an amount equal to the difference between the sales price and
the aggregate exercise price for those shares of Common Stock provided that
the optionee has not disposed of the shares of Common Stock within two years
of the date the Incentive Stock Option was granted or within one year from the
date the Incentive Stock Option was exercised. If the optionee disposes of the
shares of Common Stock without satisfying both holding period requirements (a
"Disqualifying Disposition"), the optionee will recognize ordinary income at
the time of such Disqualifying Disposition to the extent of the difference
between the option exercise price and the lesser of the fair market value of
the shares of Common Stock on the date the Incentive Stock Option is exercised
or the amount realized in such Disqualifying Disposition. Any remaining gain
or loss is treated as a short-term or long-term capital gain or loss,
depending upon how long the shares of Common Stock have been held. The Company
is not entitled to a tax deduction upon either the exercise of an Incentive
Stock Option or upon disposition of the shares of Common Stock acquired
pursuant to such exercise, except to the extent that the optionee recognizes
ordinary income in a Disqualifying Disposition.
Special Option Rules. To the extent an optionee pays all or part of the
option exercise price of a nonqualified option by tendering shares of Common
Stock already owned by the optionee, the tax consequences described above
apply except that the number of shares of Common Stock received upon such
exercise which is equal to the number of shares of Common Stock surrendered in
payment of the option exercise price shall have the same basis and tax holding
period as the shares of Common Stock surrendered. The additional shares of
Common Stock received upon such exercise have a tax basis equal to the amount
of ordinary income recognized on such exercise and a holding period which
commences on the date of exercise. If an optionee exercises an Incentive Stock
Option by tendering shares of Common Stock previously acquired on the exercise
of an Incentive Stock Option, a Disqualifying Disposition may occur if the
holding period requirements described above have not been satisfied with
respect to such shares of Common Stock at the time of such exercise, and the
optionee may recognize income and be subject to other basis allocation and
holding period requirements.
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Annual Management Incentive Program Bonuses. A Participant will recognize
compensation taxable as ordinary income (and subject to income tax
withholding) in respect of Annual Management Incentive Program Bonuses at the
time such bonuses are paid and the Company will be entitled to a corresponding
deduction, except to the extent the limit of Section 162(m) of the Code
applies.
Performance Equity Program Awards. A Participant will not recognize taxable
income upon a Performance Equity Program Award of the right to receive shares
of Common Stock and the Company will not be entitled to a tax deduction at
such time. Upon subsequent distribution of shares of Common Stock, the
Participant will recognize compensation taxable as ordinary income (and
subject to income tax withholding) in an amount equal to the fair market value
of any shares of Common Stock delivered and any cash paid by the Company, and
the Company will be entitled to a corresponding deduction, except to the
extent the limit of Section 162(m) of the Code applies.
Section 162(m). As described above, Stock Options granted under the Plan may
qualify as "performance based compensation" under Section 162(m) of the Code
in order to preserve the Company's Federal income tax deductions with respect
to any compensation required to be taken into account under Section 162(m) of
the Code that is in excess of $1 million and paid to a "covered employee" (as
defined in Code Section 162(m)). To so qualify, Stock Options must have an
exercise price at least equal to the fair market value of the underlying
shares of Common Stock on the date of grant, be awarded by a Committee
consisting of two or more "outside directors" (as defined in Code Section
162(m)) and satisfy the 1,000,000 share limit on the total number of shares of
Common Stock subject to Stock Options that may be awarded to any one
participant during any five-year period.
VOTE REQUIRED
Adoption of this proposal requires the affirmative vote of a majority of the
votes of all shares present and entitled to vote on the matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE TRIBUNE COMPANY
1997 INCENTIVE COMPENSATION PLAN.
RATIFICATION OF SELECTION OF AUDITORS
PROPOSAL THREE
The Board of Directors has selected Price Waterhouse LLP to serve as the
Company's independent certified public accountants for 1997. Price Waterhouse
LLP has audited and rendered its opinion on the financial statements of the
Company for many years. Representatives of Price Waterhouse LLP will be pres-
ent at the 1997 Annual Meeting and will be available to respond to appropriate
questions and to make a statement if they desire to do so.
Approval of this proposal requires the affirmative vote of a majority of the
votes of all shares present and entitled to vote on the matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
STOCKHOLDER PROPOSAL
The Company has been notified that the following proposal may be presented
at the Annual Meeting by the International Brotherhood of Teamsters General
Fund (the "Teamsters"), 25 Louisiana Avenue, N.W. Washington, D.C. 20001,
which has represented to the Company that as of September 30, 1996 it owned 80
shares of Common Stock (adjusted for the Stock Split). For the reasons set
forth below under "Statement of the Board of Directors and Management in
Opposition to Stockholder Proposal," the Board of Directors recommends a vote
AGAINST the proposal.
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STOCKHOLDER PROPOSAL
RESOLVED: That the Tribune Company's stockholders urge the Board of
Directors take the necessary steps, in compliance with state law, to
declassify the Board for the purpose of director elections. The board
declassification shall be completed in a manner that does not affect the
unexpired terms of directors previously elected.
SUPPORTING STATEMENT: Tribune Company's board is divided into three classes
of directors serving staggered three-year terms. This means an individual
director faces election only once every three years, and shareholders only
vote on roughly a third of the board each year. Some companies have argued
that classified boards, such as the Tribune Company's, promote continuity. We
think a better way to insure continuity is through re-election. When directors
are performing well they routinely are re-elected with majorities over 95%. We
believe that reducing the frequency of elections reduces the accountability of
each director to shareholders and that annual elections can prove the way for
improved board sensitivity to important shareholder issues. A declassified
board, with annual elections, can help give the Tribune Company the
flexibility it needs as it moves into the next century. Generally,
shareholders have grown hostile to classified boards. In 1996, shareholders
overturned staggered boards at General Instrument, Rowan, Alumax, Liz
Claiborne, and Stride Rite. Overall support for declassification proposals
increased to 42.4% in 1996, from 39.1% in 1995, according to the IRRC's review
of elections. By adopting annual elections, the Tribune Company can
demonstrate its commitment to fuller accountability to shareholders,
accountability that respects the importance of men and women of all races
among our company's key constituents, and accountability that honors
shareholder prerogatives. We urge you to vote YES for this proposal.
STATEMENT OF THE BOARD OF DIRECTORS AND
MANAGEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL
The Board of Directors and management believe that a classified Board serves
the Company and its stockholders well. The classified board enhances the
continuity and stability of the conduct of Board business, as well as the
Company's policies and management, since generally at least two-thirds of the
Directors have prior experience and familiarity with the business of the
Company. The Board believes that this continuity also contributes to more
effective long-term strategic planning.
The Board also believes that directors elected for staggered terms are as
accountable to stockholders as they would be if elected annually, since the
same legal duties and standards of performance apply regardless of the term of
service. Stockholders of a corporation with a classified board may express
their satisfaction or dissatisfaction with the Board's performance at annual
elections of a class of Directors and retain the power to elect a new majority
of the Board over the course of two years. In addition, stockholders may
remove any Director if there is cause.
The classified Board is also intended to encourage persons who may seek to
acquire control of the Company to initiate such action through negotiations
with the Board in lieu of coercive takeover tactics. A classified board
prevents a party from threatening immediate removal of the incumbent Board of
Directors. By reducing the threat of an abrupt change in the composition of
the entire Board, classification of directors would give the Board sufficient
time to review any takeover proposal, study appropriate alternatives and
achieve the best result for all stockholders. The Board believes that although
a classified Board enhances the ability to negotiate favorable terms with a
proponent of an unsolicited, coercive proposal, it does not necessarily
discourage takeover offers.
Pursuant to Delaware law, an amendment to the Company's charter requires the
adoption of an amendment by the Board of Directors of the Company followed by
the affirmative vote by holders of a majority of the outstanding Common Stock
who are entitled to vote thereon. Therefore, the adoption of this proposal
would not in itself eliminate the classified Board, but would only amount to
an advisory recommendation to the Board to take the necessary steps to achieve
a declassified Board.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE AGAINST THE
STOCKHOLDER PROPOSAL.
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EXECUTIVE COMPENSATION
GOVERNANCE AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
The Company seeks to offer a compensation package necessary to attract and
retain top-quality management employees and which reflects competitive
conditions in the lines of business in which the Company is engaged and in the
geographic areas where the services are to be performed. Elements of
compensation are designed to reflect the performance of the Company and the
employee.
The 1996 compensation package paid to executive officers and other manage-
ment personnel of Tribune Company consists of four elements: (1) salary, (2)
annual incentive bonus, (3) stock options and (4) retirement and other bene-
fits.
Commencing in 1997, the Company has adopted the 1997 Incentive Compensation
Plan, which, if approved by stockholders as proposed in Proposal 2, will re-
place the annual incentive bonus and stock option program currently maintained
by the Company. Please refer to the discussion of the 1997 Incentive Compensa-
tion Plan.
The Company also seeks to provide an opportunity for employees and execu-
tives to acquire and hold stock in the Company in order to more closely align
the interests of employees and stockholders. Effective January 1, 1996, the
Company, with the Governance and Compensation Committee's approval, estab-
lished target levels for executive stock ownership. These guidelines are de-
scribed below.
SALARIES
Salary levels for executive officer positions are set so as to reflect the
duties and level of responsibilities inherent in the position. Comparative
salaries paid by other companies, based on compensation surveys prepared by
independent outside organizations, are considered in evaluating the salary
level for a given position. These surveys include hundreds of companies repre-
senting a broad cross-section of American business and cover more companies
than are included in the two indexes used in the performance graph at the end
of this report. Each set of data used is selected because it is believed to be
the best available for its intended purpose. The Committee sets salaries
within the range of accepted practice but does not target a specific percen-
tile range within the comparative groups in setting salaries of the Company's
executive officers. The particular qualifications of the individual holding
the position and his or her level of experience are also considered in estab-
lishing a salary level.
Salaries of executive officers are reviewed annually and at the time of pro-
motions. The performance and contribution of the individual to the Company are
the primary criteria influencing salary adjustments. Salary changes reflect
the performance of the Company to the extent that the performance is consid-
ered in establishing the salary guidelines applicable for all salaried employ-
ees during the current year. The Committee also reviews comparative surveys of
salary information for comparable positions as described in the preceding par-
agraph in connection with the annual salary review. The sources of the data
used varies from executive to executive based on the availability of compara-
ble information relative to each position. Salaries of all executive officers
are reviewed early in the year and changes are made effective as of the end of
February.
The salary paid to John W. Madigan, Chairman, President and Chief Executive
Officer of the Company, was increased by $28,000 to $728,000 effective as of
February 26, 1996. This represented a 4.0 percent increase in Mr. Madigan's
salary. The rate of increase was consistent with the Company's overall merit
increase guidelines based upon performance for salaried employees for 1996.
ANNUAL INCENTIVE BONUS
The Company maintains a plan that provides executive officers the opportu-
nity to earn an annual incentive bonus based on performance of the Company,
performance of their individual business unit, if applicable, their contribu-
tion toward achievement of certain Company-wide objectives and an evaluation
of the executive's individual performance.
17
<PAGE>
The Company's current annual incentive bonus plan establishes a target bonus
level, stated as a percent of year-end salary, for each executive officer
based on his or her level of responsibility. The target bonus is divided into
three principal elements, and the first element is further subdivided into two
to six sub-categories as follows:
<TABLE>
<CAPTION>
PERCENT OF
TARGET
BONUS ELEMENTS BONUS
-------------- ----------
<S> <C>
Financial Performance Measures:
Earnings per share and/or business unit operating profit..... 40-50%
Other performance measures appropriate to the executive...... 10-20%
------
Subtotal..................................................... 60%
Organizational objectives (four for 1996)...................... 20%
Individual performance or achievement.......................... 20%
------
Total.......................................................... 100%
</TABLE>
In the case of the earnings per share and/or operating profit objective, the
bonus earned for 1996 was on a proportional scale with one-third of the target
paid if 90 percent of the objective is achieved up to 166 percent of target if
120 percent of the objective is achieved. For the other financial performance
measures, the target amount is paid if the objective is achieved or exceeded,
and nothing is paid if the objective is not reached. With respect to the orga-
nizational objectives and individual performance elements, the Committee may
award an amount which, together with the financial performance component, does
not exceed 160 percent of the target amount.
Measures of financial performance are established by the Committee in
February and are based on the Company's operating plan that is approved by the
Board at the beginning of the year. In the case of Mr. Madigan, the applicable
1996 performance measures were primary net income per share (50 percent of
target bonus) and corporate office cash operating expenses (10 percent of
target bonus). The first measure was exceeded and the other measure was
achieved. The 1996 performance measures applicable to other executive officers
named in the summary compensation table were primary net income per share,
corporate office cash operating expenses, Broadcasting Group operating profit,
operating expenses net of broadcasting rights, TV broadcast rights cash
payments, Publishing Group operating profit and Publishing Group cash
operating expenses excluding newsprint as a percentage of revenue. Five of the
performance measures were met or exceeded, one was partially met and one was
not met.
The four organizational objectives for 1996 were: business development,
overall effectiveness and efficiency, managing diversity and professional
management. The success in achieving these objectives is measured by a
subjective evaluation of progress in each area and each executive's
contribution to that success. Likewise, each executive's overall performance
is subjectively evaluated.
The Committee also retains the right to adjust the overall bonus to better
reflect its evaluation of the Company's overall performance, but did not do so
for 1996.
In considering bonuses for executives other than Mr. Madigan, the Committee
considers bonus recommendations submitted by the Chief Executive Officer. The
Committee also receives an assessment of the performance of each executive
from Mr. Madigan and discusses the assessments with him. In assessing the
performance of Mr. Madigan, the Committee meets privately with the Company's
other outside directors for that purpose.
Mr. Madigan's target bonus was 60 percent of year-end salary for 1996. The
Committee awarded Mr. Madigan a bonus of $698,880 for 1996, which is
approximately 160 percent of the target bonus under the plan. The bonus earned
reflects achievement of the financial performance objectives, progress toward
achievement of the Company-wide objectives and the outside directors'
evaluation of Mr. Madigan's individual performance and achievements in 1996.
18
<PAGE>
STOCK OPTIONS
The Company for many years has used stock options as its long-term incentive
program for executives. Stock options are used because they directly relate
the amounts earned by the executives to the amount of appreciation realized by
the Company's stockholders over comparable periods. Stock options also provide
executives with the opportunity to acquire and build an ownership interest in
the Company.
The Committee considers stock option awards on an annual basis. These are
normally awarded in July. In determining the amount of options awarded, the
Committee generally establishes a level of award based on the position held by
the individual and his or her level of responsibility, both of which reflect
the executive's ability to influence the Company's long-term performance. The
number of options previously awarded to and held by executives is also
reviewed but is not an important factor in determining the size of the current
award. The number of options actually awarded in any year may be increased or
decreased from the target level based on an evaluation of the individual's
performance, but the Committee does not use any particular corporate or
business unit performance measures in determining the size of stock option
grants to individual executive officers.
In July 1996, the Committee awarded Mr. Madigan a nonqualified stock option
(adjusted for the Stock Split) to purchase 90,000 shares at the current fair
market value of the stock, which was then $34.81. The award was consistent
with the number of shares that had been awarded to the Chief Executive Officer
of the Company in recent years.
To encourage stock ownership by executive officers, replacement stock
options ("Replacement Options") are granted simultaneously with the exercise
of the original stock option. Replacement Options are intended to encourage an
executive officer to exercise a stock option earlier than might otherwise
occur, thus resulting in increased share ownership by the executive officer.
Replacement Options are granted when an executive officer exercises an option
by surrendering (or attesting to) currently owned shares to purchase the
shares subject to the option as well as to satisfy tax withholding obligations
related to the exercise of the option. Replacement Options are subject to the
same terms and conditions as the original options, including the expiration
date, except that the option price of a Replacement Option is the fair market
value on the date of its grant rather than the option price of the original
option. The grant of Replacement Options does not result in an increase in the
total combined number of shares and options held by an employee and,
therefore, does not increase amounts paid by the Company. As shown in the
table on page 22, Mr. Madigan received Replacement Options during 1996 based
on his exercise of previously awarded options.
BENEFIT PROGRAMS
The executive officers participate in various health, life, disability and
retirement benefit programs that are generally made available to all salaried
employees. Certain programs such as the Savings Incentive Plan and the
Employee Stock Purchase Plan provide employees with the opportunity to acquire
Common Stock. In addition, the executive officers participate in the Employee
Stock Ownership Plan on a consistent basis with other employees. The Company
also maintains a Supplemental Defined Contribution Plan for employees who earn
salaries in excess of the limit imposed by the Internal Revenue Code to
replace a portion of the contribution lost by the imposition of such limit.
The ESOP, which is intended to become the principal retirement plan for the
Company, relates the amount of retirement benefits that will ultimately be
received to the value of the Common Stock. Executive officers also receive
certain traditional benefits and perquisites that are customary for their
positions.
STOCK OWNERSHIP GUIDELINES
Effective January 1, 1996, the Committee implemented stock ownership
guidelines for approximately 70 executives of the Company. The guidelines
range from a high of five times annual salary in the case of Mr. Madigan to
two times annual salary. Executives are expected to achieve the suggested
ownership level over a five-year period in increments of 20% per year. Shares
held in Company benefit plans are counted in satisfying the guidelines but
unexercised stock options are not counted. The Committee believes that these
guidelines will have the positive effect of further aligning the interests of
the Company's top executives with those of stockholders.
19
<PAGE>
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code imposes a $1 million limit on the tax deduction
for certain executive compensation payments. The Company's policy is to obtain
a tax deduction for compensation payments to Company executives to the extent
it is practicable to do so. The Company should be able to fully deduct
compensation in the form of stock options and other awards granted under the
1997 Incentive Compensation Plan, if approved by the stockholders.
Andrew J. McKenna, Chairman
Kristie Miller
James J. O'Connor
Donald H. Rumsfeld
20
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL --------------------------- UNDERLYING ALL OTHER
POSITION YEAR SALARY(1) BONUS OTHER OPTIONS(#)(2) COMPENSATION(3)
- - ------------------------ ---- --------- -------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John W. Madigan......... 1996 $724,231 $698,880 $ 30,400 480,274 $28,220
Chairman, President and
Chief Executive 1995 676,539 509,600 15,129 296,544 20,898
Officer 1994 564,616 275,000 11,255 237,302 19,084
James C. Dowdle......... 1996 573,635 350,000 6,533 390,710 28,558
Executive Vice
President/Media
Operations 1995 558,808 300,000 3,348 291,916 22,773
1994 495,000 275,000 4,834 184,978 20,959
Dennis J. FitzSimons.... 1996 441,712 300,000 9,383 102,802 28,191
Executive Vice
President, 1995 432,270 230,000 5,431 112,752 22,411
Tribune Broadcasting
Company 1994 385,431 215,000 6,422 63,632 20,607
Joseph D. Cantrell...... 1996 364,519 162,900 6,909 37,060 28,211
Executive Vice
President, 1995 354,904 150,000 777,789(4) 32,552 22,400
Tribune Publishing
Company 1994 255,404 150,000 96,695(4) 24,000 20,719
David D. Hiller......... 1996 336,250 170,000 26,431 26,138 28,206
Senior Vice
President/Development 1995 329,000 155,000 -0- 20,000 22,404
1994 309,923 145,000 -0- 16,000 20,604
</TABLE>
- - --------
(1) Amounts represent salary compensation for 52 weeks for fiscal years 1996
and 1994 and 53 weeks for fiscal year 1995.
(2) All options have been restated to reflect the Stock Split. Amounts
represent New Options and Replacement Options to purchase shares of Common
Stock granted during fiscal years 1996, 1995 and 1994. New Options granted in
fiscal years 1996, 1995 and 1994 were as follows: Mr. Madigan 90,000, 100,000
and 50,000, respectively; Mr. Dowdle 50,000, 60,000 and 50,000, respectively;
Mr. FitzSimons 36,000, 28,000 and 24,000, respectively; Mr. Cantrell 24,000,
28,000 and 24,000, respectively; and Mr. Hiller 18,000, 20,000 and 16,000,
respectively.
(3) The amounts reported in this column for fiscal year 1996 include $17,072
and $9,611 allocated to each of the named executive officers under the ESOP
and the Supplemental Defined Contribution Plan, respectively, and matching
contributions credited under the Savings Incentive Plan (401(k)) credited to
the following: Mr. Madigan $1,537; Mr. Dowdle $1,875; Mr. FitzSimons $1,508;
Mr. Cantrell $1,528; and Mr. Hiller $1,523.
(4) Includes reimbursement of relocation expenses and related tax
reimbursement of $776,145 and $94,744 for 1995 and 1994, respectively,
relative to a transfer and move to Chicago.
21
<PAGE>
OPTION GRANTS TABLE
The following table presents information as to stock options granted during
the year ended December 29, 1996. The grant of a Replacement Option upon the
exercise of an existing option is intended to promote increased employee share
ownership by encouraging the early exercise of existing options. The grant of
a Replacement Option (as described on page 19) does not result in an increase
in the total combined number of shares and options held by an employee and,
therefore, does not increase amounts paid by the Company. The two columns on
the right project the amount that could be earned if the Common Stock price
appreciates at the annual rates indicated and if the options are held until
the expiration dates shown. There is no assurance that any particular level of
potential realizable value will actually be earned. All information regarding
the options has been restated to reflect the Stock Split.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE PRICE ---------------------
NAME GRANTED(1)(2) FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
- - ------------------------ ------------------- ------------ -------------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Madigan......... New Grant 90,000 3.0537% $34.81 08/30/06 $1,999,454 $5,059,081
Replacement Options
27,298 0.9262 35.50 08/31/00 299,330 498,357
33,958 1.1522 37.19 08/25/99 217,748 460,239
73,566 2.4961 37.50 12/19/00 686,760 1,500,203
6,300 0.2138 37.50 02/07/03 91,238 210,865
35,938 1.2194 37.50 08/30/01 393,621 875,542
42,010 1.4254 34.88 08/26/04 708,609 1,701,240
47,436 1.6095 40.94 03/01/02 575,616 1,282,658
33,386 1.1328 40.94 08/28/02 448,277 1,011,971
53,362 1.8106 40.94 02/07/03 780,401 1,782,792
37,020 1.2561 42.75 08/27/03 621,476 1,440,054
James C. Dowdle......... New Grant 50,000 1.6965 34.81 08/30/06 1,106,364 2,810,600
Replacement Options
36,762 1.2473 33.13 08/28/02 458,434 1,055,379
33,958 1.1522 37.19 08/25/99 217,748 460,239
42,384 1.4381 34.38 08/26/04 703,803 1,689,316
24,720 0.8387 43.19 08/31/00 217,828 466,786
47,436 1.6095 40.94 03/01/02 575,616 1,282,658
35,142 1.1924 40.94 08/30/01 381,362 838,758
53,362 1.8106 40.94 02/07/03 780,401 1,782,792
21,572 0.7319 40.94 06/02/01 220,887 482,758
6,170 0.2093 40.94 02/07/03 90,234 206,136
2,368 0.0803 40.94 06/02/01 24,247 52,993
36,836 1.2498 43.19 08/27/03 625,048 1,448,438
Dennis J. FitzSimons.... New Grant 36,000 1.2215 34.81 08/30/06 796,582 2,028,632
Replacement Options
8,650 0.2935 37.38 08/27/03 137,137 321,739
11,450 0.3885 37.38 03/16/98 39,226 79,969
6,526 0.2214 37.38 08/31/00 56,320 122,089
20,524 0.6964 36.75 08/25/99 128,631 271,655
19,652 0.6668 36.38 08/26/04 342,199 820,000
Joseph D. Cantrell...... New Grant 24,000 0.8143 34.81 08/30/06 531,055 1,349,088
Replacement Options
4,910 0.1666 36.94 08/28/02 63,937 145,784
6,030 0.2046 39.56 08/30/01 61,262 134,270
2,120 0.0719 39.56 08/28/02 26,779 60,238
OPTION GRANTS IN LAST FISCAL YEAR
David D. Hiller......... New Grant 18,000 0.6107 34.81 08/30/06 398,291 1,011,816
Replacement Options
8,138 0.2761 43.69 01/13/99 39,548 81,345
</TABLE>
22
<PAGE>
- - --------
(1) New Options to purchase Common Stock granted under the 1992 Long-Term
Incentive Plan. All options permit the optionee to pay the exercise price with
Common Stock owned for six months and to pay withholding tax with shares
acquired on exercise. The Company has a policy to award Replacement Options to
executives who exercise options in this manner at a time when the stock price
is at least 25% above the option price. New Options are generally exercisable
two years after award and Replacement Options one year after award but
immediately upon a change in control. Options granted less than six months
prior to a change in control to an executive officer are cancelled in exchange
for a cash payment, effected six months and one day after the option grant
date, equal to the difference between the fair market value and the option
price on the date of payment. Replacement Options are awarded upon exercise of
a nonqualified option with payment made with previously owned Common Stock.
The Replacement Option has a term equal to the remaining term on the option
exercised and is conditioned on the individual retaining ownership of the
shares acquired on exercise of the option giving rise to the replacement
award.
(2) Based on shares outstanding on July 30, 1996, the closing stock price of
$34.81 on that date, and a 121-month period, all of which conform to the
regular stock option awards made to executives on that date (as adjusted to
reflect the Stock Split).
OPTION EXERCISES AND VALUES TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------ ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Madigan......... 485,856 $4,094,313 53,228 580,274 $ 538,800 $2,015,531
James C. Dowdle......... 413,890 3,554,397 43,004 450,710 368,222 1,339,619
Dennis J. FitzSimons.... 98,650 879,441 84,734 130,802 684,609 626,619
Joseph D. Cantrell...... 17,850 304,694 62,602 65,060 856,297 371,237
David D. Hiller......... 17,780 379,531 117,220 46,138 1,896,363 255,795
</TABLE>
- - --------
(1) Based on a closing stock price of $40.0625 per share on December 27,
1996, the last business day of the Company's fiscal year (as adjusted to
reflect the Stock Split).
PENSION PLAN INFORMATION
The named executive officers participate in the Tribune Company Pension Plan
(the "Pension Plan") and the Tribune Company Supplemental Benefit Plan (the
"Supplemental Plan"). The annual pension benefit under the plans, taken
together, is in general determined by a participant's credited years of
service multiplied by a percentage of the participant's final average
compensation (compensation during the final five years of employment). For the
named executive officers, the sum of amounts listed in the "Salary" column of
the Summary Compensation Table is used as compensation in the calculation of
annual pension benefits. The Code places certain limitations on the amount of
pension benefits that may be paid under qualified plans. Any benefits payable
in excess of those limitations will be paid under the Supplemental Plan. The
Plans were amended in 1989 and the estimated benefits the named executive
officers may receive depend on which Tribune Company entity employed the
individual prior to the amendment. Estimated annual benefits are set forth in
the following tables:
TABLE A
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT PENSION
-----------------------------------------------------------
FINAL
AVERAGE
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$300,000 $ 44,497 $ 61,946 $ 79,394 $ 96,843
400,000 59,697 83,146 106,594 130,043
500,000 74,897 104,346 133,794 163,243
600,000 90,097 125,546 160,994 196,443
700,000 105,297 146,746 188,194 229,643
800,000 120,497 167,946 215,394 262,843
900,000 135,697 189,146 242,594 296,043
</TABLE>
23
<PAGE>
TABLE B
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT PENSION
---------------------------------------------------
FINAL
AVERAGE
COMPENSATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS
------------ ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$300,000 $23,449 $ 46,897 $ 70,346 $ 93,794 $117,243
400,000 31,449 62,897 94,346 125,794 157,243
500,000 39,449 78,897 118,346 157,794 197,243
600,000 47,449 94,897 142,346 189,794 237,243
700,000 55,449 110,897 166,346 221,794 277,243
800,000 63,449 126,897 190,346 253,794 317,243
900,000 71,449 142,897 214,346 285,794 357,243
</TABLE>
Benefits are based on final five-year average salary (see "Salary" column in
the Summary Compensation Table that appears on page 21) and years of credited
service up to a maximum of 35 years. The pension benefits are not subject to
any deduction for social security or other offset amounts. Such amounts are
estimated on the assumption that the participant will commence receiving bene-
fits when he reaches age 65 and that he will receive his pension in the form
of a life annuity with no surviving benefits. The plan will be frozen at De-
cember 31, 1998 so that participants' service and compensation after that date
will not be counted in computing benefits. As a result of their employment
prior to 1989, Messrs. FitzSimons and Madigan will be entitled to pension ben-
efits set forth in Table A and Messrs. Cantrell, Dowdle and Hiller will be en-
titled to pension benefits set forth in Table B. Years of credited service as
of December 31, 1996 for each named executive officer were Mr. Madigan 22
years, Mr. Dowdle 16 years, Mr. FitzSimons 14 years, Mr. Cantrell 18 years,
and Mr. Hiller 8 years.
SEVERANCE ARRANGEMENTS
The Company maintains a Transitional Compensation Plan For Executive Employ-
ees, which provides termination benefits to key executives of the Company and
its subsidiaries who are actually or constructively terminated, without cause,
within 36 months following a change in control of the Company. A "change in
control" means (a) the acquisition, other than from the Company, by a person,
entity or group of 20 percent or more of the combined voting power of the
Company's outstanding voting securities, (b) individuals who as of January 1,
1995, constitute the Board of Directors cease to constitute at least a major-
ity of the Board without approval of the Board, or (c) approval of a merger or
reorganization of the Company where the prior shareholders do not thereafter
own more than 60 percent of the reorganized Company. "Constructively terminat-
ed" means a reduction in the individual's compensation or benefits or a change
in the city in which he or she is required to work. Certain participants in-
cluding Messrs. Madigan, Dowdle, FitzSimons, Cantrell and Hiller may elect to
terminate their employment during the thirteenth month following a change in
control and qualify to receive the benefits under the plan. In the case of ex-
ecutive officers, benefits include (a) payment in cash equal to three times
(in certain cases two times) the highest annual rate of base salary in effect
within three years of the date of the individual's termination plus three
times (in certain cases two times) the individual's average annual bonus paid
over the prior three years; (b) outplacement services and (c) continuation of
life, health and disability insurance. In addition, the plan provides that the
Company will reimburse the executive for any excise tax that results from pay-
ments upon termination being treated as excess parachute payments under fed-
eral income tax law. All executive officers of the Company are covered by the
plan.
All stock options granted by the Company to executives become immediately
vested and exercisable upon a change in control of the Company as defined in
the applicable plan and in grant agreements evidencing awards. The definitions
of change in control are essentially the same as described in the preceding
paragraph.
INDEBTEDNESS OF MANAGEMENT
The Company in 1994 made a 10-year contingent deferred interest loan of
$500,000 to Joseph D. Cantrell to assist him in financing the purchase of a
cooperative apartment upon his transfer to Chicago at the request of the Com-
pany. The outstanding principal balance as of December 31, 1996 was $440,000.
The loan was repaid in full on March 14, 1997 in connection with the sale of
Mr. Cantrell's residence.
24
<PAGE>
PERFORMANCE GRAPH
The following graph compares the five-year cumulative return on the Common
Stock to the Standard and Poor's 500 Stock Index and to the Standard and
Poor's Newspaper Publishing Group Index. The Company is included in both of
these indexes.
LOGO
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Tribune Company.......... $100.00 $119.59 $152.53 $141.50 $162.27 $212.31
S&P Newspaper Publishing
Group................... 100.00 108.98 123.19 110.93 139.44 173.16
S&P 500.................. 100.00 107.60 118.42 119.99 165.87 203.61
</TABLE>
Based on $100 invested on December 31, 1991 in Tribune Company Common Stock,
the Standard and Poor's Newspaper Publishing Group Index, and the Standard and
Poor's 500 Stock Index. Total return assumes reinvestment of dividends
quarterly.
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION
Andrew J. McKenna, Kristie Miller, James J. O'Connor and Donald Rumsfeld
served as members of the Governance and Compensation Committee during the en-
tire fiscal year. Mr. Rumsfeld took a leave of absence from the Board of Di-
rectors from July 1996 through November 1996.
Andrew J. McKenna, Chairman of the Governance and Compensation Committee,
served as an officer of Chicago National League Ball Club, Inc., a subsidiary
of the Company, from August 1981 to December 1984. Subsequent to 1984, Mr.
McKenna's sole position with the Company has been that of an outside director.
25
<PAGE>
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action at the
Company's Annual Meetings consistent with regulations of the Securities and
Exchange Commission (the "Commission"). Under Commission rules, proposals to
be considered for inclusion in the Proxy Statement for the 1998 Annual Meeting
must be received by the Company no later than November 26, 1997. The Company's
Bylaws set forth additional requirements and procedures regarding the
submission by stockholders of matters for consideration at the Annual Meeting,
including a 60-day notice requirement. Proposals should be directed to Tribune
Company, 435 North Michigan Avenue, Chicago, Illinois 60611, Attention: Vice
President, General Counsel and Secretary.
The Company's Bylaws provide that notice of proposed stockholder nominations
for election of directors must be given to the Secretary of the Company not
less than 90 days prior to the meeting at which directors are to be elected.
Such notice must contain certain information about each proposed nominee,
including age, business and residence addresses, principal occupation, the
number of shares of Common Stock beneficially owned by him or her and such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of such proposed nominee, and a signed
consent of the nominee to serve as a director of the Company if elected.
Provision is also made for substitution of nominees by the nominating
stockholder in the event that a designated nominee is unable to stand for
election at the meeting. If the chairman of the meeting of stockholders
determines that a nomination was not made in accordance with the foregoing
procedures, such nomination is void. The advance notice requirement affords
the Governance and Compensation Committee of the Board of Directors the
opportunity to consider the qualifications of all proposed nominees and, to
the extent deemed necessary or desirable by the Board, inform stockholders
about such qualifications.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
if any matters will be presented to the meeting other than those described
above. If other matters properly come before the meeting, the persons named in
the accompanying proxy will vote said proxy in accordance with their best
judgment.
Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. Following the initial solicitation of proxies by mail,
directors, officers and regular employees of the Company may solicit proxies
in person, by telephone or telegraph, but without extra compensation. In
addition, the Company has retained Kissel-Blake, Inc. to assist in the
solicitation of proxies at an estimated cost to the Company of approximately
$12,000 plus out-of-pocket expenses. Such solicitation may be made by mail,
telephone, telegraph or in person. The Company will, upon request, reimburse
the reasonable charges and expenses of brokerage houses or other nominees or
fiduciaries for forwarding proxy materials to, and obtaining authority to
execute proxies from, beneficial owners for whose account they hold Common
Stock.
The Company's 1996 Annual Report is enclosed, but the report is not
incorporated in this Proxy Statement and is not part of the proxy soliciting
material. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 29, 1996 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WITHOUT EXHIBITS, WILL BE PROVIDED WITHOUT CHARGE TO ANY
SHAREHOLDER SUBMITTING A REQUEST THEREFOR TO THE CORPORATE RELATIONS
DEPARTMENT, TRIBUNE COMPANY, 6TH FLOOR, 435 NORTH MICHIGAN AVENUE, CHICAGO,
ILLINOIS 60611, OR TELEPHONE 800/757-1694.
By Order of the Board of Directors
Crane H. Kenney
Vice President, General Counsel and
Secretary
Dated: March 25, 1997
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EXHIBIT A
TRIBUNE COMPANY
1997 INCENTIVE COMPENSATION PLAN
ARTICLE I
Purpose
The purpose of the 1997 Incentive Compensation Plan (the "Plan") is to
enable Tribune Company (the "Company") to provide management and other
employees of the Company and its Subsidiaries stock options and other stock
and cash incentives based upon the achievement of financial and other
performance goals, thereby attracting, retaining and rewarding such employees
and strengthening the mutuality of interests between the employees and the
Company's stockholders.
ARTICLE II
Definitions
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor legislation.
2.3 "Committee" shall mean the Committee as defined in Section 3.1 hereof.
2.4 "Common Stock" shall mean the Common Stock (without par value) of the
Company.
2.5 "Disability" shall mean a disability qualifying the Participant to
receive benefits under the Company's or a Subsidiary's long-term disability
plan. Disability shall be deemed to occur on the date benefit payments begin.
2.6 "EBITDA" shall mean the earnings of the Company before deducting
interest, taxes, depreciation and amortization.
2.7 "Extraordinary Items" shall mean (i) extraordinary, unusual and/or non-
recurring items of gain or loss, (ii) gains or losses on the disposition of a
business, (iii) changes in tax or accounting regulations or laws, or (iv) the
effect of a merger or acquisition, all of which must be identified in the
audited financial statements, including footnotes, or the Management
Discussion and Analysis section of the Company's annual report.
2.8 "Fair Market Value" unless otherwise required by any applicable
provision of the Code, or any regulations issued thereunder, shall mean as of
any date the closing price of the Common Stock as reported on the New York
Stock Exchange Composite Transaction List for such day or if the Common Stock
was not traded on such day, then the next preceding day on which the Common
Stock was traded.
2.9 "Incentive Stock Option" shall mean any stock option awarded under the
Plan intended to be, and designated as, an incentive stock option within the
meaning of Section 422 of the Code or any successor provision.
2.10 "Nonqualified Stock Option" shall mean any stock option awarded under
the Plan that is not an Incentive Stock Option.
2.11 "Participant" shall mean an eligible employee to whom an award has been
made pursuant to the Plan.
2.12 "Retirement" shall mean any termination of employment by an employee
(other than by death or Disability) who is at least 55 years of age after at
least 10 years of employment by the Company and/or a Subsidiary.
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2.13 "Subsidiary" shall mean any corporation (or partnership, joint venture
or other enterprise) (i) of which the Company owns or controls, directly or
indirectly, 20% or more of the outstanding shares of stock normally entitled
to vote for the election of Directors (or comparable equity participations and
voting power) or (ii) which the Company controls by contract or other means.
"Control" means the power to direct or cause the direction of the management
and policies of a corporation, partnership, joint venture or other enterprise.
2.14 "Termination of Employment" shall mean the termination of a
Participant's employment with the Company or any Subsidiary. A Participant
employed by a Subsidiary shall also be deemed to incur a Termination of
Employment if the Subsidiary ceases to be a Subsidiary and the Participant
does not immediately thereafter become an employee of the Company or another
Subsidiary.
2.15 "Transfer" shall mean anticipation, alienation, attachment, sale,
assignment, pledge, encumbrance, charge or other disposition; and the terms
"Transferred" or "Transferable" shall have corresponding meanings.
ARTICLE III
Administration
3.1 The Committee. The Plan shall be administered by one or more committees
(any such committee, the "Committee") of the Board. The Board shall have the
sole discretion to appoint, add, remove or replace members of the Committee,
and shall have the sole authority to fill vacancies on the Committee. Unless
otherwise provided by the Board: (i) with respect to any award under the Plan
for which the Committee determines that it is necessary or desirable for the
grant or issuance thereof to be exempt under Rule 16b-3 of the Securities
Exchange Act of 1934 (the "1934 Act"), the Committee shall consist of two or
more directors each of whom is permitted under that Rule to make grants or
awards that are exempt from the operation of 1934 Act Section 16(b), and (ii)
with respect to any award that is intended to qualify as "performance-based
compensation" under Code Section 162(m)(4)(C), the Committee shall consist of
two or more directors, each of whom is an "outside director" (as such term is
defined in applicable regulations under Code Section 162(m)). With respect to
any award that is not intended to satisfy the conditions of 1934 Act Rule 16b-
3 or Code Section 162(m)(4)(C), the Committee may delegate all or any of its
responsibilities hereunder to any directors or, except to the extent
prohibited under applicable law, to any officers of the Company (any of whom
also may be a Participant who has been granted or is eligible to be granted
awards under the Plan), and in the context of such awards, references in the
Plan to the "Committee" shall refer to both the Committee and, unless
otherwise provided by the Committee, to any such delegates of the Committee.
3.2 Authority. The Committee shall have full power to select key employees
to whom awards are granted; to determine the size and types of awards and
their terms and conditions; to construe and interpret the Plan; to establish
and amend the rules for the Plan administration; and to make all other
determinations which may be necessary or advisable for the administration of
the Plan. All determinations of the Committee shall be final and conclusive on
all persons, including the Company, its stockholders and Participants, and
their estates and beneficiaries.
ARTICLE IV
Reserved Shares
The number of shares of Common Stock available for awards under the Plan
shall be the sum of the following amounts:
(a) Ten million (10,000,000) shares;
(b) any shares of Common Stock subject to an award hereunder or under any
prior stock incentive plan of the Company if there is a lapse, forfeiture,
expiration or termination of any such award;
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(c) the number of shares of Common Stock exchanged by an optionee as full
or partial payment to the Company of the exercise price under any stock
option exercised under the Plan or any prior stock incentive plan of the
Company;
(d) the number of shares of Common Stock retained by the Company pursuant
to a Participant's tax withholding election or exchanged by a Participant
to satisfy his or her tax withholding obligations as permitted by Section
15.5 hereof; and
(e) any shares of Common Stock purchased by the Company with cash
obtained upon the exercise of options granted under the Plan or any prior
stock incentive plan of the Company and shares repurchased with tax savings
resulting from deductibility exceeding reported compensation expense.
All of these shares may be either authorized but unissued or reacquired
shares. Four million (4,000,000) of the Plan shares may, but need not, be
issued pursuant to the exercise of Incentive Stock Options. The maximum number
of shares subject to stock options granted to any Participant during any five-
year period during the term of the Plan shall not exceed one million
(1,000,000).
ARTICLE V
Eligibility
All management and other employees of the Company and its Subsidiaries,
including employees who are members of the Board of Directors, shall be
eligible for participation in the Plan or any program contained herein.
Participation under the Plan from among those eligible shall be determined by
the Committee.
ARTICLE VI
Types of Awards
Awards under the Plan may be granted in any one or a combination of (a)
stock options, (b) performance equity program awards, and (c) annual
management incentive program awards.
ARTICLE VII
Stock Option Program
7.1 General Terms. Stock options may be granted to Participants at any time
as determined by the Committee. The Committee shall determine the number of
shares subject to each option and whether the option is an Incentive Stock
Option. The option price for each option shall be determined by the Committee
but shall not be less than 100% of the Fair Market Value of the Common Stock
on the date the option is granted. Each option shall expire at such time as
the Committee shall determine at the time of grant; provided, however, that no
option shall be exercisable later than the tenth (10th) anniversary date of
its grant. Options granted under the Plan shall be exercisable at such time
and subject to such terms and conditions as the Committee shall determine. The
option price upon exercise of any option shall be payable to the Company in
full by (a) cash payment or its equivalent; (b) tendering previously acquired
shares having a Fair Market Value at the time of exercise equal to the option
price; (c) certification of ownership of such previously acquired shares; (d)
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
proceeds from the option shares or loan proceeds to pay the exercise price and
withholding taxes due to Company; or (e) such other methods of payment as the
Committee at its discretion deems appropriate. For purposes of paragraphs (b)
and (c), previously acquired shares must have been owned by the Participant
for at least six months prior to exercise.
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7.2 Termination of Employment by Death, Disability or Retirement. If a
Participant's employment by the Company or a Subsidiary terminates by reason
of death, Disability or Retirement, any stock option held by such Participant,
unless otherwise determined by the Committee at grant, shall be fully vested
and may thereafter be exercised by the Participant or by the beneficiary or
legal representative of the estate of a disabled or deceased Participant, for
a period of five years (or such shorter period as the Committee may specify at
grant) from the date of such death, Disability or Retirement or until the
expiration of the stated term of such stock option, whichever period is the
shorter.
7.3 Other Termination of Employment. Subject to Article XII, unless
otherwise determined by the Committee at or after grant, if a Participant's
employment by the Company or a Subsidiary terminates for any reason other than
death, Disability or Retirement, the stock option shall terminate at such time
as provided in the award.
ARTICLE VIII
Performance Equity Program
8.1 General Terms. The Committee may establish performance equity program
awards for Participants subject to such terms and conditions as the Committee
determines appropriate. Performance equity program awards shall consist of the
right to receive shares of Common Stock which may be earned in whole or in
part if certain performance goals established by the Committee are achieved
over a period of time designated by the Committee. The Committee may, in its
discretion, substitute cash for shares of Common Stock based on the Fair
Market Value of the Common Stock.
8.2 Performance Equity Program Award. Each award shall set forth provisions
regarding (a) the number of shares subject to such award or a formula for
determining such number, (b) the performance criteria and level of achievement
related to these criteria which shall determine the number of shares granted,
issued, retainable and/or vested, (c) the period as to which performance shall
be measured for determining achievement of performance (a "Performance
Period"), which period may, in no event, be less than two years, (d) the
timing of any delivery of shares earned by virtue of performance, (e)
restrictions on the Transfer of the performance equity program award, (f)
forfeiture provisions, and (g) such further terms and conditions, in each case
not inconsistent with the Plan, as may be determined from time to time by the
Committee. The maximum number of shares payable as a performance equity
program award may be a multiple of the target amount payable, and the maximum
number of shares payable for a Performance Period to any Participant that is
intended to satisfy the requirements for "performance-based compensation"
under Code Section 162(m) shall not exceed 30,000.
8.3 Performance Criteria. The Committee shall establish the performance
criteria and level of achievement related to these criteria which shall
determine the target and maximum number of shares payable under a performance
equity program award, which criteria may be based on financial performance
and/or personal performance evaluations. Notwithstanding anything to the
contrary herein, the performance criteria for any performance equity program
awards that are intended by the Committee to satisfy the requirements for
"performance-based compensation" under Code Section 162(m) shall be a measure
based solely on one or more Qualifying Performance Criteria (as defined in
Article X hereof) selected by the Committee and specified at the time the
performance equity program award is established. The Committee shall certify
the extent to which any Qualifying Performance Criteria has been satisfied,
and the number of shares payable as a result thereof, prior to the delivery of
any shares that are intended by the Committee to satisfy the requirements for
"performance-based compensation" under Code Section 162(m).
8.4 Timing of Delivery. The Committee shall determine the timing of any
performance equity program award. The Committee may provide for or, subject to
such terms and conditions as the Committee may specify, may permit a
Participant to elect for the delivery of shares or cash payable under any
performance equity program award to be deferred.
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8.5 Termination of Employment. Upon a Termination of Employment by a
Participant prior to the end of a Performance Period, the following procedures
shall apply as to any performance equity program awards established for such
Participant, unless determined otherwise by the Committee in its sole
discretion:
(a) Death, Disability or Retirement. Following the death, Disability or
Retirement of a Participant, the Participant shall be entitled to a pro-
rata portion of any performance equity program award. Such pro-rata portion
shall be determined following the termination of the relevant Performance
Period by multiplying (i) the number of shares as to which the Committee
determines the performance criteria applicable to such award has been
satisfied, times (ii) a ratio equal to the number of full months of the
Participant's employment with the Company during the performance period for
such award divided by the number of months in the Performance Period for
such award.
(b) Other Termination of Employment. Subject to Article XII, unless the
Committee provides otherwise, upon a Termination of Employment for any
reason other than death, Disability, or Retirement prior to the end of a
Performance Period, the right to any performance equity program award as to
which the performance criteria and any other condition has not then been
satisfied shall be forfeited.
8.6 Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the number of shares subject to receipt, issued, retainable
and/or vested under a performance equity program award may be adjusted by the
Committee on the basis of such further considerations as the Committee in its
sole discretion shall determine. However, the Committee may not, in any event,
increase the number of shares earned upon satisfaction of any performance goal
by any Participant who is a "covered employee" within the meaning of Code
Section 162(m).
ARTICLE IX
Annual Management Incentive Program
9.1 General Terms. The Committee may award annual management incentive
program bonuses to Participants upon achievement of such terms and conditions
as the Committee determines appropriate. Annual management incentive program
bonuses shall consist of monetary payments earned in whole or in part if
certain performance goals established by the Committee for a specified fiscal
year are achieved during that year.
9.2 Annual Management Incentive Program Bonuses. Each year the Committee
shall set forth provisions regarding (a) the performance criteria and level of
achievement related to these criteria upon which the amount of the award
payment shall be based, (b) the timing of any payment earned by virtue of
performance, (c) restrictions on the Transfer of the annual management
incentive program award prior to actual payment, (d) forfeiture provisions,
and (e) such further terms and conditions, in each case not inconsistent with
the Plan. The maximum amount payable to any Participant as an annual
management incentive program award intended to satisfy the requirements for
"performance-based compensation" under Code Section 162(m) shall not exceed
the lower of 0.2% of EBITDA for the fiscal year or $2 million.
9.3 Performance Criteria. The Committee shall establish the performance
criteria and level of achievement related to these criteria upon which the
amount of any award payment shall be based. Notwithstanding anything to the
contrary herein, the performance criteria for any annual management incentive
program bonus that is intended by the Committee to satisfy the requirements
for "performance-based compensation" under Code Section 162(m) shall be a
measure based solely on one or more Qualifying Performance Criteria (as
defined in Article X hereof) selected by the Committee and specified within
the first 90 days of the performance period. The Committee shall certify the
extent to which any Qualifying Performance Criteria has been satisfied, and
the amount payable as a result thereof, prior to payment of any bonus that is
intended by the Committee to satisfy the requirements for "performance-based
compensation" under Code Section 162(m).
9.4 Timing of Payment. The Committee shall determine the timing of payment
of any annual management incentive program bonus. The Committee may provide
for or, subject to such terms and conditions as the Committee may specify, may
permit a Participant to elect for the payment of any annual management
incentive program award to be deferred.
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9.5 Termination of Employment. Upon a Termination of Employment for a
Participant prior to the end of a fiscal year, the following procedures shall
apply as to any annual management incentive program bonus for such fiscal
year, unless determined otherwise by the Committee in its sole discretion:
(a) Death, Disability or Retirement. Following the death, Disability or
Retirement of a Participant, the Participant shall be entitled to receive a
pro-rata portion of any annual management incentive program bonus amount
payable based upon performance for such fiscal year. Such pro-rata portion
shall be paid at such time as the other Participants receive bonuses and
shall be determined by multiplying (i) the amount of the annual management
incentive program bonus that the Committee determines would have been
payable to the Participant for the fiscal year, times (ii) a ratio equal to
the number of full months of the Participant's employment with the Company
during the fiscal year divided by 12.
(b) Other Termination of Employment. Subject to Article XII, unless the
Committee provides otherwise, upon a Termination of Employment for any
reason other than death, Disability, or Retirement prior to the end of a
fiscal year, the right to receive any payment from the annual management
incentive program bonus for that fiscal year shall be forfeited.
9.6 Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the amount to be paid under an annual management incentive
program bonus may be adjusted by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
However, the Committee may not, in any event, increase the amount earned upon
satisfaction of any performance goal by any Participant who is a "covered
employee" within the meaning of Code Section 162(m).
ARTICLE X
Qualifying Performance Criteria
The performance goals established by the Committee with respect to
performance equity program awards and annual management incentive program
bonuses may be based on one or more of the following qualifying performance
criteria selected by the Committee (a) shareholder value added, (b) cash flow,
(c) earnings per share, (d) EBITDA, (e) return on equity, (f) return on
capital, (g) return on assets or net assets, (h) revenue growth, (i) income or
net income, (j) cost control, (k) operating income or net operating income,
(l) operating profit or net operating profit, (m) operating margin, (n) return
on operating revenue, and (o) market share or circulation, all as determined
by the Committee. Performance may be measured on a Corporate, Group, business
unit or consolidated basis and may be measured absolutely or relative to the
Company's peers. The Committee may adjust the performance goals to account for
the effects of Extraordinary Items.
ARTICLE XI
Nontransferability
No awards granted under the Plan may be Transferred, other than by will or
by the laws of descent and distribution. Further, all stock options granted to
a Participant under the Plan shall be exercisable during his or her lifetime
only by such Participant. Notwithstanding the foregoing, at the discretion of
the Committee, a Nonqualified Stock option may be transferable by the
Participant solely to members of the Participant's immediate family or trusts
or family partnerships for the benefit of such persons, subject to such terms
and conditions as may be established by the Committee.
ARTICLE XII
Change in Control
Upon the grant of an award or as otherwise provided by the Committee
consisting of members of the Incumbent Board (as hereinafter defined), upon a
change in control of the Company all outstanding stock options shall become
exercisable, all shares subject to performance equity program awards shall be
delivered as if the
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performance goals for the designated period had been fully achieved and all
annual management incentive program awards shall be paid out as if the
performance for the current fiscal year had been fully achieved. For purposes
hereof, a change in control of the Company shall mean:
(a) the acquisition, other than from the Company, by any person, entity
or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934
Act), excluding for this purpose the Company, the Robert R. McCormick
Tribune Foundation, the Cantigny Foundation and any employee benefit plan
(or related trust) sponsored or maintained by the Company or its
Subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of either the then
outstanding shares of Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in
the election of directors; or
(b) individuals who, as of May 6, 1997, constitute the Board of Directors
of the Company (as of May 6, 1997 the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election, by the stockholders of the Company was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the members of the
Board, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the 1934 Act) shall be considered as though such person were a member
of the Incumbent Board; or
(c) approval by the stockholders of the Company of a reorganization,
merger, or consolidation, in each case, with respect to which persons who
were the stockholders of the Company immediately prior to such approval do
not, immediately after such reorganization, merger or consolidation, own,
directly or indirectly, 50% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company, or a
liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company.
If any amounts payable to a Participant pursuant to the Plan are deemed to be
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code, the Committee may provide in the award that the Company shall pay to
such Participant in addition to any amounts payable pursuant to the Plan an
amount which--after all federal, state and local taxes imposed on the
Participant with respect to such amount are subtracted therefrom--is equal to
the excise taxes imposed on such excess parachute payment pursuant to Section
4999 of the Code.
ARTICLE XIII
Adjustment Provisions
13.1 If the Company shall at any time change the number of issued shares of
Common Stock without new consideration to the Company (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
Common Stock) or make a distribution of cash or property which has a
substantial impact on the value of issued Common Stock, the total number of
shares of Common Stock available for awards under the Plan, the number of
shares which may be made subject to Incentive Stock Options, the maximum
number of shares which may be made subject to a stock option grants during the
term of the Plan and the maximum number of shares under Section 8.2 hereof
shall be appropriately adjusted, and the number of shares covered by each
outstanding award shall be equitably adjusted.
13.2 In the case of any sale of assets, merger, consolidation, combination
or other corporate reorganization or restructuring of the Company with or into
another corporation which results in the outstanding Common Stock being
converted into or exchanged for different securities, cash or other property,
or any combination thereof (an "Acquisition"), subject to the provisions of
the Plan and any limitation applicable to the award:
(a) any Participant to whom a stock option has been granted shall have
the right thereafter and during the term of the stock option, to receive
upon exercise thereof the Acquisition Consideration (as defined
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below) receivable upon the Acquisition by a holder of the number of shares
of Common Stock which might have been obtained upon exercise of the stock
option or portion thereof, as the case may be, immediately prior to the
Acquisition; and
(b) except as otherwise provided in Article XII, any Participant to whom
performance equity program awards have been awarded shall have the right
thereafter and during the term of the award, upon fulfillment of the terms
of the award, to receive on the date or dates set forth in the award, the
Acquisition Consideration receivable upon the Acquisition by a holder of
the number of shares of Common Stock which are covered by the Award.
The term "Acquisition Consideration" shall mean the kind and amount of
securities, cash or other property or any combination thereof receivable in
respect of one share of Common Stock upon consummation of an Acquisition.
13.3 Notwithstanding any other provision of the Plan, the Committee may
authorize the issuance, continuation or assumption of awards or provide for
other equitable adjustments after changes in the Common Stock resulting from
any other merger, consolidation, sale of assets, acquisition of property or
stock, recapitalization, reorganization or similar occurrence upon such terms
and conditions as it may deem equitable and appropriate.
13.4 In the event that another corporation or business entity is being
acquired by the Company, and the Company assumes outstanding employee stock
options and/or stock appreciation rights, the aggregate number of shares of
Common Stock available for awards under the Plan shall be increased
accordingly.
ARTICLE XIV
Amendment and Termination
The terms and conditions applicable to any stock option or other award may
be amended or modified by mutual agreement between the Company and the
Participant or such other persons as may then have an interest therein. The
Board of Directors may amend the Plan from time to time or terminate the Plan
at any time. However, no such action shall reduce the amount of any existing
award or change the terms and conditions thereof without the Participant's
consent. No amendment of the Plan shall be made without stockholder approval,
if such amendment increases the number of shares of Common Stock reserved
under the Plan or the maximum number of option shares which may be awarded to
any Participant in any five-year period or if stockholder approval is
otherwise required by law or regulation or stock exchange rule.
ARTICLE XV
General Provisions
15.1 Successor. All obligations of the Company under the Plan, with respect
to awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
15.2 Unfunded Status of Plan. This Plan is intended to be unfunded. With
respect to any payments as to which a Participant has a fixed and vested
interest but which are not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company.
15.3 No Right to Employment. Neither this Plan nor the grant of any award
hereunder shall give any Participant or other employee any right with respect
to continuance of employment by the Company or any Subsidiary, nor shall there
be a limitation in any way on the right of the Company or any Subsidiary by
which an employee is employed to terminate his or her employment at any time.
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15.4 No Assignment of Benefits. No award under the Plan shall, except as
otherwise specifically provided hereunder or by law, be Transferable in any
manner, and any attempt to Transfer any such benefit shall be void, and any
such benefit shall not in any manner be subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
benefit, nor shall it be subject to attachment or legal process for or against
such person.
15.5 Taxes. The Company shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares deliverable under the Plan after
giving the person entitled to receive such payment or delivery notice as far
in advance as practicable, and the Company may defer making payment or
delivery as to any award if any such tax is payable until indemnified to its
satisfaction. The Committee may, in its discretion and subject to such rules
as it may adopt, permit a Participant to pay all or a portion of any
withholding taxes arising in connection with the exercise of a nonqualified
stock option or receipt of shares relating to a performance equity program
award, by electing (i) to have the Company withhold shares having a Fair
Market Value equal to the amount to be withheld or (ii) to deliver shares
previously owned for at least six months having a Fair Market Value equal to
the amount to be withheld.
15.6 Governing Law. The Plan and actions taken in connection herewith shall
be governed and construed in accordance with the laws of the State of Delaware
(without regard to applicable Delaware principles of conflict of laws).
ARTICLE XVI
Effective Date and Stockholder Approval
The Plan was adopted by the Board of Directors on December 10, 1996, to be
effective December 29, 1996, subject to stockholder approval.
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TRIBUNE COMPANY PROXY CARD
- - --------------------------------------------------------------------------------
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 6, 1997
James C. Dowdle and John W. Madigan, or either of them, are designated as
proxies to vote all the shares of Common Stock of Tribune Company which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to be
held on May 6, 1997, or at any adjournment thereof, as specified on the reverse
side of this card with respect to:
1. the election of directors--the nominees are James C. Dowdle, Diego E.
Hernandez, Robert E. LaBlanc and Andrew J. McKenna to serve until the 2000
Annual Meeting and Patrick G. Ryan to serve until the 1999 Annual Meeting
(to withhold authority to vote for any individual nominee, write his name in
the space provided on the reverse side of this card);
2. approval of the 1997 Incentive Compensation Plan;
3. ratification of the selection of Price Waterhouse LLP as auditors;
4. consideration of the stockholder proposal described in the accompanying
Proxy Statement; and
5. with discretionary power in the transaction of such other business as may
properly come before the meeting.
Enter your vote by marking the appropriate boxes on the reverse side. The
Company's directors recommend a vote FOR the election of the nominees listed,
FOR proposals 2 and 3 and AGAINST proposal 4. The proxies shall vote as
specified, but if no choice is specified, the proxies shall vote in accordance
with the recommendations of the Company's directors.
<PAGE>
PLEASE RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
[LOGO]
3074
X PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
- - --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3
AND AGAINST PROPOSAL 4.
- - --------------------------------------------------------------------------------
1. Election of directors.
FOR* NOT FOR
[_] [_]
*For, except vote withheld from the following nominee(s):
2. Approval of 1997 Incentive Compensation Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Ratification of auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
- - --------------------------------------------------------------------------------
4. Consideration of the stockholder proposal
FOR AGAINST ABSTAIN
[_] [_] [_]
5. With discretionary power in the transaction of such other business as may
properly come before the meeting.
Note: Please sign exactly as name appears above.
Joint owners should each sign. When signing as at-
torney, executor, administrator, trustee or guard-
ian etc., please give full title.
------------------------------------------------
------------------------------------------------
SIGNATURE(S) DATE
<PAGE>
TRIBUNE COMPANY VOTING INSTRUCTION CARD
- - --------------------------------------------------------------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 6, 1997
The Northern Trust Company, as Trustee for the Tribune Company Employee Stock
Ownership Plan, Vanguard Fiduciary Trust Company, as Trustee for the Tribune
Company Savings Incentive Plan, and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as nominee under the Tribune Company Employee Stock Purchase
Plan, are instructed to vote the Tribune Company Common Stock and Preferred
Stock allocated and held in my respective plan accounts at the Annual Meeting
of Stockholders of the Company to be held on May 6, 1997, or at any adjournment
thereof, as specified on the reverse side of this card with respect to:
1. the election of directors--the nominees are James C. Dowdle, Diego E.
Hernandez, Robert E. LaBlanc and Andrew J. McKenna to serve until the 2000
Annual Meeting and Patrick G. Ryan to serve until the 1999 Annual Meeting (to
withhold authority to vote for any individual nominee, write his or her name
in the space provided on the reverse side of this card);
2. approval of the 1997 Incentive Compensation Plan;
3. ratification of the selection of Price Waterhouse LLP as auditors;
4. consideration of the stockholder proposal described in the accompanying
Proxy Statement; and
5. with discretionary power in the transaction of such other business as may
properly come before the meeting.
Enter your voting instructions on the reverse side. The Company's directors
recommend a vote FOR the election of the nominees listed, FOR proposals 2 and 3
and AGAINST proposal 4. The trustees and nominee shall vote as specified, but
if you return this card and no choice is specified you will be deemed to have
instructed the trustees and nominee to vote in accordance with the
recommendations of the Board of Directors.
<PAGE>
LOGO
Dear Benefit Plan Participant:
You own Tribune Company stock as a participant in the Employee Stock
Ownership Plan, Savings Incentive Plan and/or Employee Stock Purchase
Plan. One of the privileges of stock ownership is the right to vote at the
annual meeting. This year you may vote on the election of directors,
approval of the 1997 Incentive Compensation Plan, the appointment of
auditors and a stockholder proposal. These matters are described in detail
in the notice of annual meeting and proxy statement that is a part of this
mailing.
You may indicate your vote by completing the perforated voting
instruction card that appears directly below. Employee involvement is one
of Tribune's values, so I encourage you to participate in this important
process. Please carefully consider the issues and use your voting rights
by marking, signing and dating the instruction card, and returning it to
First Chicago Trust Company in the enclosed envelope. YOUR VOTE IS
CONFIDENTIAL AND WILL BE SEEN ONLY BY FIRST CHICAGO TRUST AS TABULATING
AGENT FOR THE PLAN TRUSTEES AND ADMINISTRATOR.
Sincerely,
LOGO
5745
----
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
X
THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 AND AGAINST
PROPOSAL 4.
- - --------------------------------------------------------------------------------
FOR*
NOT FOR
FOR
AGAINST
ABSTAIN
FOR
AGAINST
ABSTAIN
1. Election of directors.
2. Approval
of 1997
Incentive
Compensation
Plan
3. Ratification of auditors.
*For, except vote withheld from the following nominee(s):
- - --------------------------------------------------------------------------------
4.
Consideration
of the
stockholder
proposal
5. With discretionary power in the transaction of such other business as may
properly come before the meeting.
Note: Please sign exactly
as name appears above.
Joint owners should each
sign. When signing as at-
torney, executor, adminis-
trator, trustee or guard-
ian etc., please give full
title.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SIGNATURE(S) DATE
