<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
DAILY JOURNAL CORP.
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(Name of Registrant as Specified In Its Charter)
DAILY JOURNAL CORP.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
DAILY JOURNAL CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held February 7, 2001
----------------
To the Shareholders of
DAILY JOURNAL CORPORATION
The Annual Meeting of Shareholders of Daily Journal Corporation (the
"Company") will be held at 915 East First Street, Los Angeles, California
90012 on Wednesday, February 7, 2001, at 10:00 a.m., Los Angeles time. The
purpose of the Annual Meeting is to consider and vote upon the following
matters, as more fully described in the accompanying Proxy Statement which is
attached hereto and incorporated herein:
(1) Election of a Board of Directors.
(2) Ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants for the current fiscal year.
(3) Such other matters as may properly come before the meeting.
The Board of Directors has fixed the close of business on December 15, 2000
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof.
By Order of the Board of Directors
Ira A. Marshall, Jr.
Secretary
January 5, 2001
----------------
IMPORTANT
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE
URGED TO DATE, FILL IN, SIGN, AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
DAILY JOURNAL CORPORATION
355 South Grand Avenue, 34th Floor
Los Angeles, California 90071
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
February 7, 2001
Your proxy in the enclosed form is solicited by the Board of Directors of
the Company for use at the Annual Meeting of Shareholders to be held on
February 7, 2001 at 915 East First Street, Los Angeles, California 90012 at
10:00 a.m., and at any adjournment thereof. Each properly executed proxy
received prior to the Annual Meeting will be voted as directed, but, if not
otherwise specified, proxies will be voted for the election of the nominees
for directors named in this Proxy Statement and to ratify the appointment of
Ernst & Young LLP as the Company's independent accountants for the current
fiscal year. As to any other business which may properly come before the
meeting and be submitted to a vote of shareholders, proxies received by the
Board of Directors will be voted in accordance with the discretion of the
holders thereof.
Each shareholder has the right to revoke his proxy at any time before it is
voted. A proxy may be revoked by filing with the Secretary of the Company at
355 South Grand Avenue, 34th Floor, Los Angeles, California 90071, a written
revocation or a properly executed proxy bearing a later date, or by voting in
person.
The Company will bear the cost it contracts for in solicitation of proxies.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone, or telecopier by officers, directors and other employees
of the Company (none of whom will receive additional compensation therefor).
The Company will also request persons, firms and corporations holding shares
in their names, or in the names of their nominees, which are beneficially
owned by others, to send or cause to be sent proxy materials to, and obtain
proxies from, such beneficial owners, and, on request, will reimburse such
holders for their reasonable expenses in so doing.
The close of business on December 15, 2000 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. Shares of Common Stock, of which
1,552,256 were outstanding on December 15, 2000, are the only voting
securities of the Company. A majority of the Company's outstanding shares of
Common Stock as of December 15, 2000 must be represented in person or by proxy
to constitute a quorum for the Annual Meeting. All shares represented in
person or by proxy, regardless of the nature of the vote, the indication of
abstention or the absence of a vote indication, including broker non-votes,
will be counted to determine the number of shares represented at the meeting.
This Proxy Statement and the enclosed form of proxy were first mailed to
shareholders on or about January 5, 2001.
<PAGE>
ELECTION OF DIRECTORS
The Bylaws of the Company permit from three to five members of the Board of
Directors. Presently, five directors serve on the Board. The directors are
elected annually and serve until the next annual meeting of shareholders and
the election of their successors.
The Board of Directors has nominated for election the five current directors
of the Company. Shareholders have cumulative voting rights in the election of
directors. This means that each shareholder has the right to cast a number of
votes equal to his number of shares of Common Stock multiplied by the number
of directors to be elected, and to cast all of such votes for one nominee or
distribute such votes among two or more nominees as he chooses. The right to
vote cumulatively is dependent on a shareholder's giving notice of his
intention to cumulate his votes either to an officer of the Company in writing
48 hours before the meeting or by an announcement during the meeting before
the voting for directors commences. Once such notice is given, all other
shareholders entitled to vote at the meeting will be without further notice
entitled to cumulate their votes. Unless otherwise instructed, the persons
named in the accompanying form of Proxy will vote the proxies for the five
nominees named below, reserving the right, however, to cumulate such votes and
to distribute them among the nominees at the discretion of the Proxyholders.
Directors are elected by a plurality of the votes cast by the shares
entitled to vote thereon. Abstentions and broker non-votes are not counted as
votes cast in favor of any nominee.
The Board of Directors of the Company does not contemplate that any of the
following nominees will become unavailable prior to the meeting, but if any
such persons should become unavailable, proxies will be voted for such other
nominees as may be selected by the Board of Directors.
Directors
The information set forth below as to each nominee for election as director
has been furnished to the Company by the respective persons named below:
<TABLE>
<CAPTION>
Name Age Principal Occupation Last Five Years
---- --- ------------------------------------
<C> <C> <S>
Charles T. Munger 77 Mr. Munger has been Chairman and a director of the
Company since 1977. He also serves as Vice Chairman and
a director of Berkshire Hathaway Inc., a holding company
with interests in insurance companies, corporations
engaged in the retail sale of consumer goods, a
manufacturer of premium candies, various other
manufacturers, the publisher of The World Book
Encyclopedia and a newspaper, the Buffalo News. Mr.
Munger is also Chairman of the Board of Directors of
Wesco Financial Corporation (80% owned by Berkshire
Hathaway Inc.), which owns an insurance company and a
specialty steel distribution company. Mr. Munger is a
director of COSTCO Wholesale Corporation, a discount
merchant.
J.P. Guerin 71 Mr. Guerin has been Vice Chairman and a director of the
Company since 1977. Mr. Guerin is a director of Lee
Enterprises, Incorporated, a company owning newspapers.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name Age Principal Occupation Last Five Years
---- --- ------------------------------------
<C> <C> <S>
Gerald L. Salzman 61 Mr. Salzman was elected to the Board of Directors
and became President of the Company in 1986. Mr.
Salzman also acts as Chief Financial Officer,
Treasurer and Assistant Secretary of the Company.
Donald W. Killian, Jr. 71 Mr. Killian has been a director of the Company
since 1988. Prior to retiring in 1996, Mr. Killian
was an attorney in private practice. Mr. Killian is
a private investor and co-trustee of several
private trusts.
George C. Good 78 Mr. Good has been a director of the Company since
1988. Mr. Good is a private investor.
</TABLE>
During the fiscal year ended September 30, 2000, the Board of Directors held
three meetings. The Board of Directors has two standing committees: the audit
committee, consisting of Mr. Killian and Mr. Good, and the compensation
committee, consisting of all directors other than Mr. Salzman. The audit
committee held one meeting during the fiscal year. The audit committee is
responsible for assisting the Board in fulfilling its responsibilities as they
relate to the Company's accounting policies, internal controls, and financial
reporting practices. The compensation committee held one meeting during the
fiscal year. Each director attended all of the meetings of the Board and any
committee of which he was a member. There is no standing nominating committee.
Proxies given without instructions will be voted FOR the nominees listed
above.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth compensation paid by the Company during the
last three fiscal years to the president, who is the only executive officer of
the Company whose aggregate compensation for any of such years exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation(1)
------------------ ------ -------- -------- ---------------
<S> <C> <C> <C> <C>
Gerald L. Salzman 2000 $250,000 $100,000 $238,280
President, Chief Financial 1999 250,000 100,000 352,240
Officer, Treasurer and 1998 250,000 100,000 501,720
Assistant Secretary
</TABLE>
--------
(1) All amounts were paid pursuant to the Company's Plan for Supplemental
Employee Compensation (the "Deferred Management Incentive Plan").
Participation in the Deferred Management Incentive Plan entitles employees
of the Company to a designated share of the Company's income before taxes
and supplemental compensation for the lesser of (a) ten years or (b) the
period during which such employee remains in the Company's employ or in
retirement (and not competing with the Company) following employment with
the Company to age 65. Non-negotiable certificates of employee participant
interest are given to employees as evidence of their participation in the
Deferred Management Incentive Plan on the basis of their performance.
Mr. Salzman received in fiscal 2000 a certificate entitling him under the
Deferred Management Incentive Plan to 1.37% of the Company's pre-tax
earnings for the current and the next nine years. The 2000 grant resulted
in a payment of $40,250 for fiscal 2000.
Compensation of Directors
Messrs. Munger, Guerin and Salzman receive no fees for service as a member
of the Company's Board of Directors. Messrs. Killian and Good each receive a
yearly stipend of $4,000. In addition, the Company reimburses directors for
travel and other expenses incident to service.
Compensation Committee Interlocks and Insider Participation
Messrs. Munger and Guerin serve on the compensation committee of the Board.
Messrs. Munger and Guerin do not receive compensation from the Company.
4
<PAGE>
Deferred Management Incentive Plan
Under the Deferred Management Incentive Plan in fiscal 2000, the Company
granted certificates entitling employees to receive an aggregate of 2.22% of
the pre-tax earnings in fiscal 2000 (approximately $65,250) and the same
percentage of income before taxes and supplemental compensation expenses in
each of the next nine years provided they are employed by the Company or are
retired and have worked for the Company until age 65. The amounts paid in
fiscal 2000 under the Deferred Management Incentive Plan were adversely
affected primarily by losses of Sustain Technologies, Inc., the Company's 91%
owned subsidiary as of September 30, 2000. The following table sets forth
information about certificates granted and payments made to all employees
during the past five fiscal years pursuant to the Deferred Management
Incentive Plan.
DEFERRED MANAGEMENT INCENTIVE PLAN
AWARDS AND PAYMENTS TO ALL EMPLOYEES IN LAST FIVE FISCAL YEARS
<TABLE>
<CAPTION>
Percentage of pre-
tax earnings Aggregate Supplemental Compensation
----------------------------- ------------------------------------------
Aggregate Net aggregate For For
Fiscal granted cumulative current year prior year
year for year grants (1) grants grants Total
------ --------- ------------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
1996 1.24% 10.59% $ 60,750 $456,840 $517,590
1997 1.47 11.28 83,210 556,408 639,618
1998 2.13 11.73 130,510 588,165 718,680
1999 1.93 11.58 82,110 410,550 492,660
2000 2.22 11.69 65,250 277,680 342,930
</TABLE>
--------
(1) Net of reductions for expired certificates.
DEFERRED MANAGEMENT INCENTIVE PLAN
EXECUTIVE AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance
Number of or other Estimated future payouts
shares, period under non-stock price-
units, or until based plans
other maturation -----------------------------
Name rights or payout Threshold Target Maximum
---- --------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Gerald L. Salzman........ 1.37%(1) 9 years(1) $0 $362,250(2) (2)
</TABLE>
--------
(1) In fiscal 2000, Mr. Salzman received a certificate (the "2000 Grant")
entitling him under the Deferred Management Incentive Plan to 1.37% of the
Company's income before taxes for the current and the next nine years,
provided he remains in the employ of the Company or is retired (and not
competing with the Company) following employment to age 65. (The 1.37%
awarded in the 2000 Grant replaced an earlier awarded certificate which
terminated with a final payment in fiscal 1999.) The 2000 Grant resulted
in a payment of $40,250 for fiscal 2000.
(2) The amount payable to Mr. Salzman under the Deferred Management Incentive
Plan in respect of his 2000 Grant is 1.37% of the Company's income before
taxes. Should the Company's income before taxes for the next nine years be
the same as 2000 income before taxes, the 2000 Grant would result in total
payments to Mr. Salzman over the nine years of $362,250. The actual
payment to Mr. Salzman will vary, however, depending on the Company's
income before taxes in each year of such period.
5
<PAGE>
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
compensation committee, consisting of all of the non-employee directors of the
Company.
The Company's compensation program for management currently consists of
three elements: base salary, year-end bonuses and participation in the
Deferred Management Incentive Plan. Salary and bonus payments are primarily
designed to reward current and past performance, while awards granted pursuant
to the Deferred Management Incentive Plan are aimed at providing incentives
for long-term future profitability of the Company. In determining the amount
and form of executive compensation to be paid or awarded in 2000, the Board
considered the Company's overall performance over a period of years, rather
than constructing a guideline or formula based on any particular performance
measure in a single year. The performance and contribution of the individual
are the primary criteria used to determine salary.
Base salaries are determined by evaluating the responsibilities of the
position and the individual's performance. A small number of employees receive
year-end bonuses and/or participate in the Deferred Management Incentive Plan.
The Company has no stock option plans, retirement plans, disability insurance
programs or traditional perquisites. The Company does offer health insurance
plans which include a life insurance policy for full-time employees. The
concept underlying the Deferred Management Incentive Plan is to link
compensation to the performance of the Company by granting to participating
employees a percentage of income before taxes and supplemental compensation
expenses in the current year and each of the next nine years subsequent to the
grant, provided they remain employed by the Company or are retired and have
worked for the Company until age 65. The committee recognizes that a
significant portion of the compensation paid pursuant to the Deferred
Management Incentive Plan relates to certificates earned in prior years with
future payments entirely dependent on earnings.
The compensation committee believes the Deferred Management Incentive Plan
is preferable to a conventional stock option plan. As a mechanism for
compensation, a stock option plan is capricious, as employees awarded options
in a particular year would ultimately receive too much or too little
compensation for reasons unrelated to employee performance. Such variations
could cause undesirable effects, as employees receive different results for
options awarded in different years. In addition, a conventional stock option
plan would fail properly to weigh the disadvantage to shareholders through
dilution. The Deferred Management Incentive Plan was implemented in
combination with repurchases of the Company's stock, and therefore the
Company's per share earnings have not been diluted by grants under the
Deferred Management Incentive Plan. At September 30, 2000, certificates for
213,000 units (which are approximate share equivalents based on stock
outstanding at the commencement of the plan) were outstanding under the
Deferred Management Incentive Plan while 295,068 shares of the Company's
common stock (including Treasury Shares) have been repurchased since the
commencement of the plan.
Charles T. Munger, chairman, and J.P. Guerin, vice-chairman, continue to
work for nothing and to own substantial shareholdings. Gerald L. Salzman is
the only executive officer who receives compensation and, in determining his
compensation package, the committee recognized that Mr. Salzman serves in
several executive capacities. Mr. Salzman currently serves as the Company's
president, treasurer, assistant secretary, chief accounting officer and chief
financial officer.
6
<PAGE>
During fiscal 2000, Mr. Salzman's base salary and year-end bonus remained
$250,000 and $100,000, respectively, or the same as the amounts paid in each
fiscal year since 1992. The committee believes that the amounts of base salary
(which will be continued at the same level for fiscal 2001) and bonus were
warranted by Mr. Salzman's performance in fiscal 2000. While the committee did
not undertake a comparison of Mr. Salzman's compensation to amounts paid by
other companies to their chief executive officers, the committee members did
utilize in their determination of Mr. Salzman's compensation their collective
current and past experience as directors and executive officers of numerous
companies. The compensation committee recognized the fact that about 58% of
Mr. Salzman's total compensation for fiscal 2000 was "at risk" and dependent
on the earnings of the Company pursuant to the Deferred Management Incentive
Plan and the year-end bonus. In light of the Company's financial performance
and Mr. Salzman's continued effectiveness, after considering the amount of the
certificates previously granted to Mr. Salzman, the committee granted to Mr.
Salzman additional certificates entitling him to receive about 1.37% or
$40,250 of the fiscal 2000 pre-tax earnings of the Company. Certificates
awarded to Mr. Salzman in earlier years of the Deferred Management Incentive
Plan, which constitute the largest portion of his certificates, began to
expire after fiscal 1996, and those Certificates expiring in fiscal 2000 were
for 1.37% of pre-tax earnings. In addition, pursuant to previously granted
certificates, Mr. Salzman received 8.12%, or $238,280 of the fiscal 2000 pre-
tax earnings. The compensation committee will continue to examine the
appropriate amount of future grants to Mr. Salzman in light of the Company's
financial performance and the expiration, or expected expiration, of a
substantial portion of the certificates Mr. Salzman currently holds.
Compensation committee: Charles T. Munger
J.P. Guerin
Donald W. Killian, Jr.
George C. Good
AUDIT COMMITTEE REPORT
The Company's audit committee has reviewed and discussed the audited
financial statements with the Company's management and has discussed with the
independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380). The audit
committee has received written disclosures and the letter from the independent
accountant required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees), and has discussed with the independent accountant its
independence.
Based on this review and these discussions, the audit committee recommended
to the Board of Directors that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the last fiscal year.
The Company's Board of Directors has adopted a written Audit Committee
Charter for the audit committee, and a copy of the Charter is included as
Appendix A to this Proxy Statement. Both members of the audit committee are
"independent" as defined in the National Association of Securities Dealers'
listing standards.
Audit committee: Donald W. Killian, Jr.
George C. Good
7
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total return
on the Company's common stock, the Standard & Poor's 500 Composite Index and
the Standard & Poor's Publishing-Newspapers MidCap Index, assuming $100 was
invested on September 30, 1995, and all dividends were reinvested. The Company
has not declared a dividend in any of the fiscal years shown.
Daily Journal Corporation
Total Cumulative Shareholder Return for Five Year Period Ended September 30,
2000
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
September 30 1995 1996 1997 1998 1999 2000
------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Daily Journal Corporation............. 100.00 92.31 140.77 107.69 112.69 88.08
S & P 500............................. 100.00 120.34 169.01 184.30 235.54 266.83
Publishing (Newspaper) - MidCap....... 100.00 106.59 141.05 142.95 149.25 149.80
</TABLE>
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 29, 2000 the names and
holdings of those persons known to the Company to be beneficial owners of more
than 5% of its Common Stock, the holdings of each nominee for director, and
the holdings of all directors and executive officers as a group. Each person
has sole investment and voting power, except where indicated otherwise.
<TABLE>
<CAPTION>
Amount Percent
Beneficial Owner Beneficially Owned of Class
---------------- ------------------ --------
<S> <C> <C>
Munger, Marshall & Co. 599,409(1) 37.0%
Charles T. Munger 599,409(1) 37.0
Ira A. Marshall, Jr. 601,609(1) 37.1
J.P. Guerin 265,338(2) 16.4
The Guerin Family Trust 165,744(3) 10.2
Gerald L. Salzman 31,827(4) 2.0
Donald W. Killian, Jr. 3,100(5) (7)
George C. Good None --
All directors and executive officers
as a group (six persons) 901,874(6) 55.6
</TABLE>
--------
(1) 599,409 shares are owned by Munger, Marshall & Co., a California limited
partnership, whose address is 355 South Grand Avenue, Los Angeles,
California 90071, in which partnership Mr. Munger and Ira A. Marshall,
Jr., Secretary of the Company, are sole general partners and controlling
persons who share investment and voting power. Mr. Munger and Mr. Marshall
own approximately 16.7% and 2.5%, respectively, of the interest in Munger,
Marshall & Co. Mr. Munger's and Mr. Marshall's business address is 355
South Grand Avenue, Los Angeles, California 90071. The Company owns
approximately 5.1% of the interest in Munger, Marshall & Co.
(2) 229,708 shares are held by The Guerin Family Trust and another trust for
which Mr. Guerin is trustee and a beneficiary; 10,868 shares are held by a
trust for which Mr. Guerin serves as trustee, as to which shares Mr.
Guerin disclaims beneficial ownership; 6,762 shares are held by
Mr. Guerin's wife, who exercises sole investment and voting power over
such shares, as to which shares Mr. Guerin disclaims beneficial ownership;
and 18,000 shares are held by the Guerin Foundation, as to which shares
Mr. Guerin exercises sole investment and voting power but disclaims
beneficial ownership. Mr. Guerin's, the trusts', and the foundation's
business address is 355 South Grand Avenue, Los Angeles, California 90071.
(3) Mr. Guerin is trustee and a beneficiary of this trust.
(4) 30,936 of such shares are held by a pension plan of Mr. Salzman. 191
shares are held by a pension plan of Mr. Salzman's wife, who holds sole
investment and voting power over such shares.
(5) All of such shares are held by Mr. Killian and Annabelle L. Killian as
trustees for the Killian Family 1987 Revocable Trust, who share investment
and voting power.
(6) This figure eliminates double counting of 599,409 shares owned by Munger,
Marshall & Co., of which both Mr. Munger and Mr. Marshall are general
partners, and of 165,744 shares of The Guerin Family Trust, for which Mr.
Guerin is a trustee and beneficiary.
(7) Less than 1%.
9
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
J.P. Guerin filed one late Form 4 on November 27, 2000 to report the
disposition of 6,000 shares of the Company's Common Stock in one transaction
from the J.P. Guerin Trust to the Guerin Foundation in October 2000.
RATIFICATION OF RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
On June 29, 2000, the Company received confirmation that its independent
accountant, PricewaterhouseCoopers LLP ("PwC"), had resigned. PwC's
resignation was not recommended or approved by the Company's Board of
Directors or by the audit committee. The reports of PwC on the financial
statements of the Company for fiscal years 1998 and 1999 contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle. In connection with its
audits for fiscal years 1998 and 1999 and through the date of its resignation,
there were no disagreements with PwC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of PwC would have
caused them to make reference thereto in their report on the Company's
financial statements for those years. During fiscal years 1998 and 1999 and
through June 29, 2000, there were no "reportable events" (as defined in the
regulations of the Securities and Exchange Commission). The Company requested
and received a letter from PwC confirming that there were no such
disagreements or reportable events.
On July 26, 2000, the Company engaged Ernst & Young LLP as its independent
accountant. During fiscal years 1998 and 1999 and during the period prior to
the engagement of Ernst & Young LLP, neither the Company nor anyone else
acting on its behalf consulted Ernst & Young LLP regarding the application of
accounting principles to a specified transaction (or the type of audit opinion
that might be rendered on the Company's financial statements) or any matter
that was either the subject of a disagreement or a reportable event.
The Board of Directors for the Company has selected Ernst & Young LLP to
serve as the Company's independent accountants during the current fiscal year.
A representative of Ernst & Young LLP is expected to be present at the Annual
Meeting to make such statements as Ernst & Young LLP may desire and will be
available to answer appropriate questions from shareholders.
Ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants for the current fiscal year will require that the
votes cast in favor of ratification exceed the votes cast against
ratification. Abstentions and broker non-votes are not counted for purposes of
determining whether this proposal has been approved.
Proxies given without instructions will be voted FOR ratification of Ernst &
Young LLP as the Company's independent accountants.
10
<PAGE>
OTHER MATTERS
Other Business
The Board of Directors does not know of any matter to be presented at the
Annual Meeting which is not listed in the notice of Annual Meeting and
discussed above. If other matters should come before the meeting, however, the
persons named in the form of proxy will vote in accordance with their best
judgment.
Cost of Solicitation
The solicitation of proxies for the Annual Meeting will be made primarily by
mail. The Company may reimburse persons holding shares in their names as
custodians, nominees, or fiduciaries for expenses they may incur in obtaining
instructions from beneficial owners of such shares.
Proposals of Security Holders
It is expected that the Company's 2002 Annual Meeting will be held on or
about February 8, 2002. Shareholders desiring to submit proposals for action
at that meeting will be required to submit them to the Company on or before
September 7, 2001. Any such shareholder proposal must also be proper in form
and substance, as determined in accordance with the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder.
Stockholders intending to present proposals from the floor of the 2002
Annual Stockholder Meeting in compliance with Rule 14a-4 promulgated under the
Exchange Act of 1934, as amended, must notify the Company of such intentions
before November 20, 2001. After such date, the Company's proxy in connection
with the 2002 Annual Stockholder Meeting may confer discretionary authority on
the Board to vote on any such proposals.
Annual Report to Shareholders
Enclosed with this Proxy Statement is the Annual Report of the Company for
the year ended September 30, 2000. The enclosed Annual Report is included for
the convenience of shareholders only and should not be viewed as part of the
proxy solicitation material.
Additional Information
If any person who was a beneficial owner of Common Stock of the Company on
the record date for the Annual Meeting of Shareholders desires additional
information, a copy of the Company's Annual Report on Form 10-K will be
furnished without charge upon receipt of a written request prior to the date
of the Annual Meeting. The request should identify the person requesting the
Report as a shareholder of the Corporation as of December 15, 2000. The
exhibits of that Report will also be provided upon request and payment of
copying charges. Requests should be directed to Mr. Ira A. Marshall, Jr.,
Daily Journal Corporation, 355 South Grand Avenue, 34th Floor, Los Angeles,
California 90071.
By Order of the Board of Directors
Ira A. Marshall, Jr.
Secretary
DATED: January 5, 2001
11
<PAGE>
APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
DAILY JOURNAL CORPORATION
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors (the "Board") of Daily Journal Corporation (the "Corporation") in
fulfilling its oversight responsibilities by reviewing (i) the Corporation's
financial reports, (ii) the Corporation's systems of internal controls
regarding finance, accounting, legal compliance and ethics that the Board and
management have established, and (iii) the Corporation's auditing, accounting
and financial reporting processes generally. Consistent with this function,
the Audit Committee should encourage continuous improvement of, and should
foster adherence to, the Corporation's policies, procedures and practices at
all levels. The Audit Committee's primary duties and responsibilities are to:
. Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the Corporation's independent
accountants.
. Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
. Oversee the independence of the independent accountants.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
(a) The Audit Committee shall be comprised of two or more directors as
determined by the Board.
(b) All members of the Audit Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of
the Audit Committee shall have accounting or related financial management
expertise.
(c) The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors
shall be duly elected and qualified. Unless a Chair is elected by the
full Board, the members of the Audit Committee may designate a Chair by
majority vote of the full Audit Committee membership.
III. MEETINGS
(a) The Audit Committee shall meet at least annually, or more frequently as
circumstances dictate.
(b) As part of its job to foster open communication, the Audit Committee
should meet at least annually with senior and financial management and
the independent accountants in separate executive sessions to discuss any
matters that the Audit Committee or each of these groups believe should
be discussed privately.
<PAGE>
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
(a) Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any
reports or other financial information prepared by the independent
accountants. If deemed appropriate after such review, the Audit
Committee shall recommend to the Board that the financial statements
be included in the Corporation's 10-K.
3. Review the regular internal reports to senior management prepared by
financial management and any responses to such reports.
4. Review each 10-Q prior to its filing.
5. Review with financial management and the independent accountants
those communications required to be communicated by the independent
accountants by Statement of Accounting Standards (SAS) 61 as amended
by SAS 90 relating to the conduct of the audit.
(b) Independent Accountants
6. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness, and approve
the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Audit Committee should review
and discuss with the accountants all significant relationships the
accountants have with the Corporation to determine the accountants'
independence. Also on an annual basis, the Audit Committee shall
ensure its receipt from the independent accountants of a formal
written statement delineating all relationships between the auditor
and the Corporation, consistent with Independence Standards Board
Standard No. 1.
7. Review the performance of the independent accountants and approve
any proposed discharge of the independent accountants when
circumstances warrant. The Audit Committee shall ensure that the
independent accountants are ultimately accountable to the Board and
the Audit Committee, as representatives of the Corporation's
shareholders.
8. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
(c) Financial Reporting Processes
9. In consultation with the independent accountants and financial
management, review the integrity of the organization's financial
reporting processes, both internal and external.
10. Consider the independent accountants' judgments about the quality
and appropriateness of the Corporation's accounting principles as
applied in its financial reporting.
11. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants or financial management.
<PAGE>
(d) Process Improvement
12. Establish regular and separate systems of reporting to the Audit
Committee by each of financial management and the independent
accountants regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
the appropriateness of such judgments.
13. Following completion of the annual audit, review separately with
each of financial management and the independent accountants any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to
required information.
14. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the
financial statements.
15. Review with the independent accountants and management the extent
to which changes or improvements in financial or accounting
practices have been implemented. (This review should be conducted at
an appropriate time subsequent to implementation of changes or
improvements, as decided by the Audit Committee.)
16. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Audit Committee or
the Board deems necessary or appropriate.
<PAGE>
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PROXY
DAILY JOURNAL CORPORATION
The undersigned hereby appoints Charles T. Munger, J. P. Guerin and Gerald L.
Salzman as proxyholders, each with the power to appoint his substitute; hereby
authorizes them or any of them to represent and vote as designated below all
the shares of common stock of the Daily Journal Corporation held of record by
the undersigned on December 15, 2000 at the Annual Meeting of Shareholders to
be held February 7, 2001 or any adjournment thereof, and hereby acknowledges
receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
each dated January 5, 2001.
1. Election of Directors
[_] FOR all nominees listed below (except as marked to the
contrary below)
[_] WITHHOLD AUTHORITY to vote for
all nominees listed below
Charles T. Munger, J. P. Guerin, Gerald L. Salzman, Donald W. Killian, Jr.,
George C. Good
(To withhold authority for any individual nominee, strike a line through his
name above.)
2. Ratification of appointment of Ernst & Young LLP as independent
accountants for current fiscal year.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the proxyholders are authorized to vote upon such
other business as may properly come before the meeting.
(Please sign and date this Proxy on the reverse side)
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This Proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR proposals 1 and 2. Unless otherwise specified, the proxyholders or
their substitute may cast an equal number of votes for each nominee for
director or cumulate such votes and distribute them among the nominees at the
discretion of such proxyholders.
This Proxy is solicited on behalf of the Board of Directors of the Daily
Journal Corporation.
Dated: _____________________, 2001
Signature: _______________________
Signature: _______________________
Please sign exactly as name
appears. When shares are held by
joint tenants, both should sign.
When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. If a corporation,
please sign in full corporate
name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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