<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
McClatchy Newspapers, Inc.
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
- --------------------------------------------------------------------------------
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MCCLATCHY NEWSPAPERS, INC.
2100 Q STREET
SACRAMENTO, CA 95816
MARCH 29, 1996
To our Stockholders:
You are invited to attend the annual meeting of stockholders to be held at
9:00 a.m. on Wednesday, May 15, 1996 in the 7th Floor Conference Center of the
1201 K Street Building (located at the corner of 12th and K Streets),
Sacramento, CA 95814.
At the meeting, you will be asked to (i) elect Directors for the coming
year and (ii) ratify the selection of the firm of Deloitte & Touche LLP as
independent auditors of the Company for the 1996 fiscal year.
In addition, the Board of Directors will report on the Company's affairs
and a discussion period will be provided for questions and comments.
Whether or not you plan to attend the meeting, it is important that your
shares be represented. Accordingly, we ask that you sign, date and mail the
enclosed proxy in the envelope provided at your earliest convenience. By doing
so, your right to attend or vote at the meeting will in no way be limited.
Sincerely,
[LOGO]
ERWIN POTTS
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
MCCLATCHY NEWSPAPERS, INC.
2100 Q STREET
SACRAMENTO, CA 95816
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
MCCLATCHY NEWSPAPERS, INC.
TO BE HELD MAY 15, 1996
To the Stockholders:
The annual meeting of stockholders of McClatchy Newspapers, Inc. (the
"Company") will be held in the 7th Floor Conference Center of the 1201 K Street
Building (located at the corner of 12th and K Streets), Sacramento, California
95814, on Wednesday, May 15, 1996, at 9:00 a.m. local time, for the following
purposes:
1. The election of Directors;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for 1996; and
3. To transact such other business as may properly come before the
meeting and any postponement or adjournment thereof.
All of the above matters are more fully described in the accompanying Proxy
Statement. Stockholders of record on the books of the Company on March 18, 1996
are entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof. A list of stockholders entitled to vote at the meeting will
be available for inspection at the Company's offices, 2100 Q Street, Sacramento,
California, at least 10 days before the meeting.
By Order of the Board of Directors
[LOGO]
KAROLE MORGAN-PRAGER
Secretary
March 29, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED REPLY ENVELOPE. THIS WILL NOT
LIMIT YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING.
<PAGE> 4
MCCLATCHY NEWSPAPERS, INC.
2100 Q STREET
SACRAMENTO, CALIFORNIA 95816
----------------------------
PROXY STATEMENT
----------------------------
Your proxy in the form enclosed is solicited by the Board of Directors of
the Company for use in voting at the annual meeting of stockholders to be held
on Wednesday, May 15, 1996, in the 7th Floor Conference Center of the 1201 K
Street Building (located at the corner of 12th and K Streets), Sacramento,
California 95814. This Proxy Statement and the accompanying form of proxy are
being mailed to stockholders on or about March 29, 1996.
The shares represented by the proxies received, properly dated and
executed, and not revoked will be voted at the meeting. A proxy may be revoked
at any time before it is exercised by delivering to the Company a written notice
of revocation or a duly executed proxy bearing a later date, or by attending the
meeting and voting in person. Subject to any such revocation, all shares
represented by properly executed proxies will be voted in accordance with the
specifications on the enclosed proxy. If no such specifications are made, the
Class A shares will be voted FOR the election of the four nominees for Class A
Directors listed in this Proxy Statement and FOR approval of proposal 2,
ratification of the appointment of Deloitte & Touche as the Company's
independent auditors. Similarly, if no specifications are made, the Class B
shares will be voted FOR the election of the ten Class B Directors listed in
this Proxy Statement and FOR approval of proposal 2.
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement and the proxies solicited hereby and will reimburse brokerage
firms and nominees for their reasonable expenses in forwarding solicitation
materials to beneficial owners of shares held of record by such brokerage firms
and nominees. In addition to the solicitation of proxies by mail, officers and
regular employees of the Company may communicate with stockholders either in
person or by telephone or telegraph for the purpose of soliciting such proxies;
no additional compensation will be paid for such solicitation.
OUTSTANDING SHARES AND VOTING RIGHTS
March 18, 1996 has been fixed as the record date for determining the
holders of Class A Common Stock and Class B Common Stock entitled to notice of
and to vote at the annual meeting. As of the close of business on such date, the
Company had outstanding 6,873,419 shares of Class A Common Stock, each of which
is entitled to one vote in the election of the four Class A Directors, no vote
in the election of the ten Class B Directors and one-tenth vote upon other
matters presented at the meeting, and 23,131,334 shares of Class B Common Stock,
each of which is entitled to no vote in the election of the four Class A
Directors, one vote in the election of the ten Class B Directors and one vote
upon other matters presented at the meeting. Election of the Class A and Class B
Directors will be by plurality of the votes cast by each respective class. The
affirmative vote of the holders of a majority of the aggregate voting power of
the shares of Class A Common Stock and Class B Common Stock present or
represented at the meeting is required for the approval of proposal 2. Thus,
abstentions have the same effect as a negative vote; broker non-votes are not
abstentions for this purpose.
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY)
The Restated Certificate of Incorporation of the Company provides that the
holders of Class A Common Stock have the exclusive right as a class to elect 25%
of the Company's directors, or the nearest larger whole number, but no vote with
respect to the election of the other directors. The holders of the Class B
Common Stock have the right to elect the remaining directors. At the meeting,
ten Class B Directors will be elected by the Class B Stockholders and four Class
A Directors will be elected by the Class A Stockholders.
1
<PAGE> 5
Unless you request on your proxy card that voting of your proxy be withheld
for any one or more of the following nominees for director, proxies of Class A
Common Stock will be voted for the election of the four nominees for Class A
Directors named below and proxies of Class B Common Stock will be voted for the
election of the ten nominees for Class B Directors named below, all to serve
until the next annual meeting of stockholders and until their successors are
elected or chosen. In the event any nominee is unable or declines to serve as a
director at the time of the meeting, the proxy will be voted for any nominee who
shall be designated by the present Board to fill such vacancy.
NOMINEES FOR CLASS A DIRECTORS
Larry Jinks, 66, has been a Director of the Company since July 1995. He
spent 37 years with Knight Newspapers and Knight-Ridder, Inc. and, during that
time, he served as managing editor of The Miami Herald from 1966 to 1972, as
executive editor of The Miami Herald from 1972 to 1976, as editor of the San
Jose Mercury News from 1977 to 1981, as a corporate officer of Knight-Ridder
from 1981 to 1989, and as publisher of the San Jose Mercury News from 1989 to
1994. He is a member of the executive committee of the Newspaper Management
Center at Northwestern University and is chairman of the Knight Foundation's
Journalism Advisory Committee.
Joan F. Lane, 67, has been a Director of the Company since March 1989. From
1982 to 1992, Mrs. Lane served as Special Assistant to the Dean of the School of
Humanities and Sciences of Stanford University. She is currently a Special
Assistant to the Board of Trustees of Stanford University. She has served on the
board of directors of The Brown Group, Inc. from 1985 to the present, as a
director of the James Irvine Foundation from 1990 to the present, and as a
trustee of the San Francisco Foundation from 1984 to November 1991. She was a
member of the board of trustees of Smith College from 1978 to 1985, and chairman
of that board from 1982 to 1985.
S. Donley Ritchey, 62, has been a Director of the Company since July 1985.
He retired from Lucky Stores in 1986, where he was chief executive officer and
chairman of its board of directors. Mr. Ritchey is a director of Pacific Telesis
Group, Spreckels Industries, Inc., Hughes Markets, Inc., De La Salle Institute
and the Rosenberg Foundation. He served as a council member of the town of
Danville, California from 1987 to 1995 and has twice served as mayor of
Danville.
Frederick R. Ruiz, 52, has been a Director of the Company since July 1993.
He is chairman and chief executive officer of Ruiz Foods, Inc., a family-owned
frozen food manufacturer, having been a co-founder with his father of that
business in 1964. He has served on the board of directors of Gottschalks, Inc.
since 1992. In 1992, Mr. Ruiz' company received the U.S. Small Business
Association's National Entrepreneurial Success Award and was inducted into the
SBA Hall of Fame in Washington, D.C. Mr. Ruiz is a member of the board of the
College of the Sequoias Foundation; a member of the President's Advisory Board,
Business Advisory Council of the School of Business, and Board of Governor's
Foundation, and past chairman of the Valley Business Center, School of Business,
all at California State University, Fresno. He is a member of the board of
trustees of Valley Children's Hospital, Fresno, serves on the board of the
California Hispanic Business College Fund, and is a review board member for the
U.S. Military Academy.
NOMINEES FOR CLASS B DIRECTORS
William K. Coblentz, 73, has been a Director of the Company since March
1979. He is a senior partner in the San Francisco law firm of Coblentz, Cahen,
McCabe & Breyer. He was a member of the board of directors of Pacific Telesis
Group from 1976 to 1992 and is a member of the boards of directors of the Koret
Foundation and The Central Valley Foundation. From 1964 through 1980 Mr.
Coblentz was a member of the University of California Board of Regents and was
its chairman for two years.
2
<PAGE> 6
Molly Maloney Evangelisti(1), 43, has been a Director of the Company since
July 1995. She has worked in various capacities for The Sacramento Bee since
October 1978 and currently oversees special projects for The Sacramento Bee.
William L. Honeysett, 58, has been a Director of the Company since July
1993 and its Senior Vice President since May 1995. Prior to that date, he had
been Executive Vice President since February 1994 and Vice President, Operations
since October 1991. Until October 1991 he was publisher of The (Tacoma,
Washington) News Tribune. Mr. Honeysett was a regional president for Gannett
Co., Inc. before becoming publisher in Tacoma. He is a former director of the
Pacific Northwest Newspaper Association.
Betty Lou Maloney(1), 75, has been a Director of the Company since July
1975 and Assistant Secretary of the Company since August 1980.
James B. McClatchy(1), 74, is Publisher of McClatchy Newspapers, having
been elected to that position in July 1987. He served as the Chairman of the
Company's Board of Directors, from April 1989 to May 1995 and from August 1980
to July 1987. Mr. McClatchy was a Director of the Company from 1943 through
1965, was again elected a Director in March 1976 and has served in that capacity
since that time. He is a former owner and publisher of several weekly newspapers
in California and Nevada. He is a board member and past president of the
Inter-American Press Association, board chairman and director of the French
American International School, and a director and president of The Central
Valley Foundation.
William Ellery McClatchy(1), 70, has been a Director of the Company since
March 1976 and Assistant Secretary since August 1980.
Erwin Potts, 63, has been the Chairman of the Board of Directors of the
Company since May 1995 and its Chief Executive Officer since April 1989. He
served as President of the Company from July 1987 to May 1995 and as its Chief
Operating Officer from March 1985 to May 1995. He was the Company's Executive
Vice President from March 1985 to July 1987, and a Vice President from March
1979 to March 1985. In addition, Mr. Potts has been a Director of the Company
since 1976. He is a member of the advisory board of the John S. Knight
Fellowship at Stanford University, and from 1989 to 1992 was a member of the
advisory board of the University of North Carolina School of Journalism. He is a
member of the Newspaper Association of America board of governors, a director of
the Sacramento Regional Foundation, a member of the California Business
Roundtable, and a former director of the California Newspaper Publishers
Association.
Gary B. Pruitt, 38, has been President and Chief Operating Officer of the
Company since May 1995 and a Director since July 1995. From May 1994 to May 1995
he served as Vice President, Operations and Technology of the Company. Prior to
that time he was Publisher of The Fresno Bee from October 1991 to May 1994. He
served the Company as Secretary and General Counsel from 1987 to 1991 and
Counsel from 1984 to 1987. Mr. Pruitt also held the position of Assistant to the
Vice President of Operations from March 1991 to October 1991, and Assistant to
the President of The Sacramento Bee from April 1990 to March 1991. He currently
serves as a member of the Chancellor's Committee for The University of
California, Berkeley.
William M. Roth, 79, has been a Director of the Company since September
1980. He was chief financial officer for Matson Navigation Company from 1952 to
1961, chairman of the board of Pacific Life Assurance Company from 1960 to 1963,
and U. S. Ambassador and Special Trade Representative from 1963 to 1969. He was
a member of the University of California Board of Regents for 16 years. Mr. Roth
is President of Roth Properties, a family controlled investment management
company.
James P. Smith, 58, is Vice President, Finance and Treasurer of the
Company. He has been a Director of the Company since March 1982. He was named
Vice President, Finance in December 1985 and Treasurer in July 1980. Prior to
that time he had served as Assistant Treasurer. Mr. Smith served as Secretary
from July 1980 through January 1987. Mr. Smith has been the Company's chief
financial officer since 1980.
- ---------------
(1) James B. McClatchy and William Ellery McClatchy are brothers. Betty Lou
Maloney is their cousin by marriage. Molly Maloney Evangelisti is Betty Lou
Maloney's daughter.
3
<PAGE> 7
OTHER EXECUTIVE OFFICERS
Peter M. CaJacob, 52, has been Vice President, Human Resources of the
Company since December 1993. He joined the Company as its Director of Human
Resources in February 1990. From 1989 to February 1990 he was director of human
resources for the GenCorp Automotive Group and prior to that time held
management positions in human resources with Aerojet General Corporation and
Whirlpool Corporation. Mr. CaJacob served on the board of directors of the
Industrial Relations Bureau of the California Newspaper Publishers Association
in 1990 and 1991.
Gregory E. Favre, 60, has been Vice President, News of the Company since
January 1990 and Executive Editor of The Sacramento Bee since 1984. Prior to
that he was managing editor of the Chicago Sun Times and managing editor of the
Chicago Daily News. Mr. Favre is the immediate past-President and a director of
the American Society of Newspaper Editors and a board member of the
Inter-American Press Association. He is a member of the Journalism Values
Institute and of the ASNE Foundation Board. He was named California Newspaper
Executive of the Year by the California Newspaper Publishers Association in
1993. He served as President of the California Society of Newspaper Editors
during the 1988-1989 term.
Karole Morgan-Prager, 33, has been General Counsel and Corporate Secretary
of the Company since July 1995. From May 1993 to July 1995 she was Associate
General Counsel of The Times Mirror Company. She was an associate with the
Morrison & Foerster law firm from October 1987 to May 1993.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings and one organizational meeting
during 1995. The Board of Directors of the Company has the following standing
committees: Compensation Committee, Audit Committee, Pension and Savings Plans
Committee, and Committee on the Board. The Board has no nominating committee.
Mr. Coblentz, Chairperson, Mr. Jinks, Mrs. Lane, and Mr. Ritchey are the
members of the Compensation Committee. The Compensation Committee adopts and
administers the following compensation plans for executive officers and certain
other employees of the Company: the Management By Objective Plan, the Executive
Performance Plan, the Employee Stock Purchase Plan, the 1987 Stock Option Plan
and the 1994 Stock Option Plan. The Compensation Committee held three meetings
in 1995.
Mr. Ruiz, Chairperson, Mr. Coblentz, Mrs. Lane and Mr. Ritchey are the
members of the Audit Committee. The Audit Committee recommends selection of the
independent auditors for the Company to the Board (selection being subject to
ratification by the stockholders), reviews the scope and results of the annual
audit, approves the services to be performed by the independent auditors, and
reviews the independence of the auditors, the performance and fees of the
independent auditors, the effectiveness and adequacy of the systems of financial
reporting and internal accounting controls, and the scope and results of
internal auditing procedures. The Audit Committee held four meetings during
1995.
Mrs. Lane, Chairperson, Mr. Coblentz, Mr. Jinks, Mr. Ritchey, Mr. Roth, and
Mr. Ruiz are the members of the Committee on the Board. The Committee on the
Board develops criteria for Board membership and advises the Board with respect
to such other matters relating to directors as may be deemed appropriate. The
Committee on the Board held five meetings in 1995.
Mr. Ritchey, Chairperson, Mr. Coblentz, Mrs. Lane and Mr. Smith are the
members of the Pension and Savings Plans Committee. The Pension and Savings
Plans Committee reviews the Company's pension funding policy and objectives,
monitors the investment of the assets in the Plans, and recommends appropriate
related action to the Board of Directors. The Pension and Savings Plans
Committee held one meeting in 1995.
All Board and Committee members, except William Ellery McClatchy, attended
more than 75% of the meetings of the Board and/or Committees on which he or she
served. Mr. McClatchy attended five of the seven Board meetings held during
1995.
4
<PAGE> 8
STOCK OWNERSHIP
CLASS B COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class B Common Stock as of March 18, 1996 by (i)
certain of the Company's Directors and nominees for Director, (ii) all executive
officers and Directors of the Company as a group, and (iii) each person known by
the Company to own beneficially more than 5% of the outstanding shares of its
Class B Common Stock.
<TABLE>
<CAPTION>
CERTAIN DIRECTORS, DIRECTORS NUMBER OF SHARES
AND EXECUTIVE OFFICERS AS A GROUP, OF CLASS B
AND 5% STOCKHOLDERS(2) COMMON STOCK PERCENT
- ------------------------------------------------------------------ ---------------- -------
<S> <C> <C>
James B. McClatchy................................................ 12,866,743(3) 55.6%
William K. Coblentz............................................... 11,015,240(4) 47.6%
William Ellery McClatchy.......................................... 10,400,000(5) 45.0%
Erwin Potts....................................................... 10,000,000(6) 43.2%
William M. Roth................................................... 10,000,000(6) 43.2%
Molly Maloney Evangelisti......................................... 3,050,000 13.2%
Brown McClatchy Maloney........................................... 2,897,680(7) 12.5%
Betty Lou Maloney................................................. 1,480,000 6.4%
All executive officers and directors as a group (17 persons)...... 17,533,118 75.8%
</TABLE>
- ---------------
(2) All addresses: c/o McClatchy Newspapers, Inc., P.O. Box 15779, Sacramento,
CA 95852-0779.
(3) Includes: (i) 10,000,000 shares held under five separate trusts each with
2,000,000 shares and different income beneficiaries. James B. McClatchy,
William Ellery McClatchy, William K. Coblentz, William M. Roth and Erwin
Potts share joint voting and investment control with respect to these
trusts. James B. McClatchy disclaims beneficial ownership of all but the
2,000,000 shares in one such trust as to which he has a present income
interest. (ii) 478,865 shares over which James B. McClatchy and William K.
Coblentz share joint voting and investment control as co-executors under
the will of Charles K. McClatchy, deceased. James B. McClatchy disclaims
beneficial ownership of these shares. (iii) 400,000 shares over which James
B. McClatchy, William Ellery McClatchy and William K. Coblentz share joint
voting and investment control as co-trustees of certain trusts established
under the will of Charles K. McClatchy, deceased. James B. McClatchy
disclaims beneficial ownership of these shares.
(4) Includes: (i) 10,000,000 shares held under five separate trusts each with
2,000,000 shares and different income beneficiaries. James B. McClatchy,
William Ellery McClatchy, William K. Coblentz, William M. Roth and Erwin
Potts share joint voting and investment control with respect to these
trusts. William K. Coblentz disclaims beneficial ownership of these shares.
(ii) 478,865 shares over which James B. McClatchy and William K. Coblentz
share joint voting and investment control as co-executors under the will of
Charles K. McClatchy, deceased. William K. Coblentz disclaims beneficial
ownership of these shares. (iii) 400,000 shares over which James B.
McClatchy, William Ellery McClatchy and William K. Coblentz share joint
voting and investment control as co-trustees of certain trusts established
under the will of Charles K. McClatchy, deceased. William K. Coblentz
disclaims beneficial ownership of these shares. (iv) 136,375 shares with
regard to which William K. Coblentz acts as co-trustee under one trust
agreement with voting and investment control shared with other trustees.
William K. Coblentz and his co-trustees disclaim beneficial ownership of
these shares.
(5) Includes: (i) 10,000,000 shares held under five separate trusts each with
2,000,000 shares and different income beneficiaries. James B. McClatchy,
William Ellery McClatchy, William K. Coblentz, William M. Roth and Erwin
Potts share joint voting and investment control with respect to these
trusts. William Ellery McClatchy disclaims beneficial ownership of all but
the 2,000,000 shares in one such trust as to which he has a present income
interest. (ii) 400,000 shares over which James B. McClatchy,
5
<PAGE> 9
William Ellery McClatchy and William K. Coblentz share joint voting and
investment control as co-trustees of certain trusts established under the
will of Charles K. McClatchy, deceased. William Ellery McClatchy disclaims
beneficial ownership of these shares.
(6) These shares are held under five separate trusts each with 2,000,000 shares
and different income beneficiaries. James B. McClatchy, William Ellery
McClatchy, William K. Coblentz, William M. Roth and Erwin Potts share joint
voting and investment control with respect to these trusts. Both Erwin
Potts and William M. Roth disclaim beneficial ownership of these shares.
(7) Includes 86,920 shares held in four trusts for the benefit of each of his
four children, one containing 24,230 shares, a second containing 22,830
shares, a third containing 20,930 shares, and a fourth containing 18,930
shares. Brown McClatchy Maloney has sole voting and investment control with
respect to these trusts. Brown McClatchy Maloney disclaims beneficial
ownership of these shares.
CLASS A COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock as of March 18, 1996 by (i) each
of the Company's Directors and nominees for Director, (ii) each of the Company's
executive officers, (iii) all executive officers and Directors of the Company as
a group, and (iv) each person known by the Company to own beneficially more than
5% of the outstanding shares of its Class A Common Stock. In addition, holders
are deemed to beneficially own shares of Class A Common Stock subject to stock
options which are currently exercisable or exercisable within sixty days of the
record date. A holder of Class B Common Stock is deemed to be the beneficial
owner of the same number of shares of Class A Common Stock under Rule 13d-3
under the Securities Exchange Act of 1934, as amended, on the basis that he or
she has the right, subject to the terms of the Stockholders Agreement discussed
later in this Proxy Statement, to acquire beneficial ownership of Class A Common
Stock by converting Class B Common Stock into Class A Common Stock. In
calculating the percentage of outstanding shares of Class A Common Stock
beneficially owned by each stockholder, the shares of Class A Common Stock which
each stockholder is deemed to own because of such stockholder's ownership of
Class B Common Stock are considered outstanding only with respect to such
stockholder. Consequently, the column which presents the percentage of deemed
beneficial ownership of Class A Common Stock does not reflect the beneficial
ownership of Class A Common Stock which is actually outstanding as of March 18,
1996.
<TABLE>
<CAPTION>
DEEMED BENEFICIAL
OWNERSHIP
BENEFICIAL OWNERSHIP OF OF CLASS A COMMON STOCK
OUTSTANDING SHARES ------------------------
DIRECTORS, EXECUTIVE OF CLASS A NUMBER OF
OFFICERS, DIRECTORS AND COMMON STOCK SHARES OF
EXECUTIVE OFFICERS AS A GROUP, (INCLUDING SHARES CLASS A
AND 5% STOCKHOLDERS(8) HELD BY SPOUSE) COMMON STOCK PERCENT
- -------------------------------------------------- ----------------------- ------------ -------
<S> <C> <C> <C>
James B. McClatchy................................ 10,000 12,876,743 65.2%
William K. Coblentz............................... 9,750(9) 11,024,990 61.6%
William Ellery McClatchy.......................... 6,850(9) 10,406,850 60.2%
Erwin Potts....................................... 140,295(10) 10,140,295 59.6%
William M. Roth................................... 11,950(9) 10,011,950 59.3%
Molly Maloney Evangelisti......................... 9,842 3,059,842 30.8%
Brown McClatchy Maloney........................... -- 2,984,600 30.3%
Betty Lou Maloney................................. 6,750(9) 1,486,750 17.8%
Sue Maloney Stiles................................ 7,700 1,039,566 13.2%
Kevin Sorensen McClatchy.......................... -- 566,375 7.6%
Adair Rideout McClatchy........................... -- 386,375 5.3%
Gary B. Pruitt.................................... 50,694(11) 50,694 (12)
James P. Smith.................................... 56,260(13) 56,260 (12)
William L. Honeysett.............................. 48,917(14) 48,917 (12)
Gregory E. Favre.................................. 31,875(15) 31,875 (12)
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
DEEMED BENEFICIAL
OWNERSHIP
BENEFICIAL OWNERSHIP OF OF CLASS A COMMON STOCK
OUTSTANDING SHARES ------------------------
DIRECTORS, EXECUTIVE OF CLASS A NUMBER OF
OFFICERS, DIRECTORS AND COMMON STOCK SHARES OF
EXECUTIVE OFFICERS AS A GROUP, (INCLUDING SHARES CLASS A
AND 5% STOCKHOLDERS(8) HELD BY SPOUSE) COMMON STOCK PERCENT
- -------------------------------------------------- ----------------------- ------------ -------
<S> <C> <C> <C>
S. Donley Ritchey................................. 8,750(9) 8,750 (12)
Joan F. Lane...................................... 7,750(9) 7,750 (12)
Frederick R. Ruiz................................. 2,125(16) 2,125 (12)
Larry Jinks....................................... 500 500 (12)
Wellington Management Company..................... 354,660 354,660 5.2%
Vanguard/PrimeCap Fund, Inc. ..................... 390,000 390,000 5.7%
All executive officers and directors as a group
(17 persons as Beneficial Owners)(17)........... 419,142 17,952,260 72.5%
</TABLE>
- ---------------
(8) All addresses are c/o McClatchy Newspapers, Inc., P. O. Box 15779,
Sacramento, CA 95852-0779, except as follows:
<TABLE>
<S> <C>
Wellington Management Company Vanguard/PrimeCap Fund, Inc.
75 State Street P. O. Box 2600
Boston, MA 02109 Valley Forge, PA 19482
</TABLE>
(9) Includes 6,750 shares subject to stock options which are currently
exercisable.
(10) Includes 121,800 shares subject to stock options which are currently
exercisable.
(11) Includes 45,250 shares subject to stock options which are currently
exercisable.
(12) Percentage is less than one percent.
(13) Includes 47,800 shares subject to stock options which are currently
exercisable.
(14) Includes 33,250 shares subject to stock options which are currently
exercisable.
(15) These shares are subject to stock options which are currently exercisable.
(16) Includes 1,125 shares subject to stock options which are currently
exercisable.
(17) Includes 338,175 shares subject to stock options which are currently
exercisable.
AGREEMENT AMONG CLASS B STOCKHOLDERS
The owners of all outstanding shares of Class B Common Stock of the Company
are parties to an agreement which will terminate September 17, 2047 (unless
terminated earlier in accordance with its terms), in which they have agreed, for
themselves, their successors and assigns, that subject to certain exceptions no
one of them may make any transfer of any shares of Class B Common Stock (unless
such shares are, as generally permitted by the agreement, first converted into
Class A Common Stock) except to one or more "Permitted Transferees." For
purposes of the agreement, a Permitted Transferee is any current holder of Class
B Common Stock of the Company; any lineal descendant of Charles K. McClatchy
(1858 -- 1936); or a trust for the exclusive benefit of, or in which all of the
remainder beneficial interests are owned by, one or more of such lineal
descendants.
7
<PAGE> 11
In the event that a party to the agreement attempts to transfer any shares
of Class B Common Stock or any interest therein in violation of the agreement,
or upon the happening of certain other events enumerated in the agreement as
"Option Events," the remaining parties will acquire options to purchase the
Class B Common Stock of the party attempting to transfer the same or otherwise
affected by the particular Option Event. Such options to purchase will entitle
each remaining party to purchase that number of shares of Class B Common Stock
which is proportionate to that party's respective holdings of Class B Common
Stock prior to such purchase. If all such shares are not purchased by the
remaining parties, the Company will have the option to purchase the remaining
shares. In general, any shares not so purchased pursuant to this procedure may
thereafter be converted into shares of Class A Common Stock and then transferred
freely (unless following such conversion the outstanding shares of Class B
Common Stock would constitute less than 25% of the total number of all
outstanding shares of Common Stock of the Company). The intent of the foregoing
agreement is to preserve family control of the Company. Such agreement may be
terminated by the vote of the holders of 80% of the outstanding shares of Class
B Common Stock who are subject to such agreement.
COMPENSATION
DIRECTORS' COMPENSATION
Nonemployee Directors, including for this purpose Betty Lou Maloney and
William Ellery McClatchy, are currently compensated at the rate of $26,000 per
year plus $1,100 per day for meetings of the Board of Directors and $750 per day
for in-person attendance at Committee meetings; attendance at Committee meetings
by teleconference is compensated at the rate of $500 for the first meeting and
$250 for the second meeting on any day. Compensation for attendance at meetings
is subject to a limitation of two meetings in any one day, whether Committee or
Board and Committee and whether by teleconference or in-person attendance.
Pursuant to the 1990 Directors' Stock Option Plan, each nonemployee
Director receives on the date of each annual meeting of stockholders at which he
or she is elected an automatic grant of an option for 1,500 shares of Class A
Common Stock. The stock options are granted at fair market value, have a
ten-year term and vest equally over four years commencing on March 1 following
the date of award.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is composed entirely of Directors who are not
employees of the Company. The Committee sets the salary and annual cash bonus of
the Chairman of the Board and the Chief Executive Officer and, after review,
acting on the recommendation of the CEO, approves the annual cash compensation
of other named executive officers. The Committee also administers the Company's
employee stock option plans and the Executive Performance Plan, and in so doing,
designates all persons who will receive awards and sets the amount, form and
other conditions of the award.
The principal elements of the Company's executive compensation program are
(1) annual base salary, (2) annual cash bonus based on assessment of success in
meeting performance objectives on an individual, unit and/or Company-wide basis,
(3) cash compensation under the Executive Performance Plan based upon growth in
earnings per share of the Company's stock and year-over-year improvement in
pretax income, and (4) stock option awards under the stock option plans
providing equity compensation, the value of which will ultimately be determined
by growth over time in the market price of the Company's stock. Together these
elements constitute an integrated compensation program which focuses on both
short-term and long-term performance utilizing a combination of cash and equity
incentives. The program is designed to reward and create incentives for
excellence in individual achievement as well as Company performance.
In evaluating Company performance, the Committee considers improvement in
revenue and earnings, growth in circulation, product excellence and market
acceptance, sound strategic planning, development of
8
<PAGE> 12
new products and services, and community involvement and good corporate
citizenship. In evaluating individual performance of key executives, the
Committee also reviews leadership and individual achievement.
The Committee believes the Company's established compensation program is
vital to the achievement of Company objectives, in that it will:
- Enable the Company to attract and retain key executives essential to the
long-term success of the Company;
- Motivate and reward senior executives for development and achievement of
sound strategic business objectives; and
- Provide opportunity to selected executives to acquire a proprietary
interest in the success of the Company through stock ownership under the
Company's stock option plans and employee stock purchase plan.
In 1994, the Company submitted for a vote of the stockholders its 1994
Stock Option Plan to maximize the tax deductibility of such awards upon exercise
under Section 162(m) of the Internal Revenue Code, as amended. Although the
Company has not qualified under Section 162(m) salary and cash bonus
compensation paid to its executive officers, historically such compensation has
not exceeded more than $1 million in any tax year for any of the Company's five
highest paid executive officers. In the future, the Company may determine to
qualify such compensation, to the extent it exceeds or is expected to exceed the
$1 million threshold. However, the Company may also determine to pay
compensation to the executive officers that may not be deductible.
COMPENSATION OF EXECUTIVE OFFICERS, 1995
Salary and incentive levels of the Company's executive officers for fiscal
year 1995 were reviewed by the Compensation Committee in late 1994. Bonuses were
subsequently fixed and paid in the same manner based on a year-end assessment of
results versus predetermined objectives.
Salaries. In determining salaries, the Committee reviews publicly
available information on compensation at each company included in the Peer Group
for total stockholder return, with particular emphasis on salary levels on Peer
Group companies with market capitalization comparable to the Company. The
Committee also considers internal pay equity factors, general economic
conditions, financial performance of the Company (growth in revenues, ability to
control operating costs, improvement in operating cash flow and operating
income, and improvement in net income), and individual responsibility,
experience and job performance. No specific weight is assigned to any particular
factor.
Based on the foregoing, the Committee granted 1995 salary increases to
executive officers ranging from 3.1% to 10.4% over prior year salary. The
Committee considers these increases to be consistent with salary and wage
increases granted throughout the Company, and believes that base salaries for
the Company's executive officers are at or below the median base salaries for
the Peer Group.
Bonus Awards. It is the goal of the Committee to establish bonus
opportunities that are meaningful in relation to the total compensation of a
participant. The bonus opportunity is also related to the participant's level of
responsibility. In general, in evaluating performance, the higher the level of
responsibility, the greater portion of the executive's total compensation is at
risk. Except as to the CEO, awards under the MBO annual bonus plan were based on
full or partial achievement of preestablished performance goals. The performance
objectives applicable to Messrs. Pruitt, Honeysett, Smith and Favre are
achievement of (i) Company-wide financial performance levels against annual
budgets, (ii) predetermined functional operating goals, and (iii) product and
management improvement objectives. Because of the increased amount of
responsibility undertaken by Mr. Pruitt during 1995 as a result of his
appointment in May 1995 as President, his predetermined functional operating
goals established in early 1995 were not applicable. In establishing Mr.
Pruitt's bonus for 1995, the Committee considered the three performance
objectives described above in light of the changes in his duties and his
increased responsibilities, as well as the role he played in the successful
completion of the Company's acquisition of The News and Observer Publishing
Company (N&O)
9
<PAGE> 13
in Raleigh, North Carolina. Applying these objectives, operating income and net
income level, as well as other financial and operating performance factors,
i.e., earnings per share, circulation growth, capital expense control, diversity
training, marketing, newsprint purchasing, management development, technological
innovation, long-range planning, cash management, control of receivables,
investor relations, litigation management, and internal audit procedures were
considered in determining 1995 bonuses for Messrs. Pruitt, Honeysett and Smith.
Accordingly, in determining Mr. Favre's 1995 bonus, improvement in the quality
of news content consistent with achievement of the Company's financial
objectives was considered.
Each performance objective was weighted to reflect its relative performance
to specific short-term and longterm financial, strategic and/or management
practices goals applicable to the individual. To determine the bonus to which a
participant is entitled, a certain number of points up to 100 were awarded to
each executive officer based upon his performance during the year. A certain
percentage of total points possible, typically not exceeding 10%, is reserved
for subjective evaluation. Points are applied as a percentage, to an amount
equal to a predetermined percent, varying from 25 percent to 50 percent
(depending on the particular participant) of his or her base salary during the
year.
Stock Option Awards. Stock option awards are usually granted each year to
selected management personnel, including all executive officers permitted by the
terms of the employee stock option plans to participate. However, no stock
options were awarded in 1993, with the result that the 1994 awards (which would
under prior practice have been made in late 1993) were not made until January,
1994. Returning to past practice, stock option awards for 1995 were made in late
1994. Thus awards for both 1994 and 1995 were granted during calendar 1994.
In fixing stock option grants, the Committee through subjective evaluation
processes determines the award for the CEO, and as to the four remaining named
executive officers participating in the stock option plans, considers the
recommendation of the CEO. Elements given weight by the Committee in considering
the number of options to be awarded are individual responsibility and
accountability, anticipated contributions, and long-term value of the
participant to the Company. The process employed by the Committee in determining
individual awards under the Company's employee stock option plans, including
those of executive officers, relates primarily to levels of responsibility but
also includes subjective factors not subject to predetermined specific criteria.
Executive Performance Incentive Awards. Awards for 1995 under the
Company's Executive Performance Plan ("EPP") were made in late 1994. These
awards are comprised of EPS Units and Performance Units. An EPS Unit represents
a contingent right to receive cash in an amount equal to the earnings (as
defined in the Plan) attributable to one share of the Company's stock. An
Improvement Unit represents a contingent right to receive cash in an amount
equal to $1 times the number of percentage points not in excess of 25 by which
pretax earnings for the year of grant exceed the pretax earnings for the prior
year. The award vests over a period of four years, commencing March 1 of the
year following the year for which the grant is made. In 1995, a total of $80,976
was awarded to the Company's executive officers under this Plan.
While EPP compensation is tied to the Company's stock and financial
performance, executives selected as participants and the number of EPS Units and
Improvement Units awarded is set after review, acting on the recommendation of
the CEO. EPP awards contribute to keeping participating executives sharply
focused upon maintenance of strong stockholder value even in challenging
economic environments. The selection of participants and determination of award
units relates primarily to levels of responsibility, but also includes
subjective factors not subject to specific criteria.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER, 1995
The 1995 salary of Erwin Potts, the Company's Chairman and Chief Executive
Officer, was $528,008, a 5.0% increase over his prior year salary, reflecting
the record financial and operational successes of the Company in 1994,
notwithstanding a continued weakened economy in the Company's principal markets,
increased newsprint prices and continued restraint of costs.
10
<PAGE> 14
In determining Mr. Potts' 1995 bonus award the Committee subjectively
assessed overall accomplishments, including the Company's financial performance.
His bonus for 1995, awarded in January 1996, was not based on specific
predetermined financial targets but was based upon a year-end review of the
Company's overall results, taking into account the level of his responsibility
and accountability, and his individual performance as the Company's Chief
Executive Officer. The $275,000 bonus awarded to Mr. Potts by the Compensation
Committee reflected the Company's financial and operational results for 1995, as
described below. The Committee also considered the successful completion, under
Mr. Potts' direction, of the Company's acquisition of N&O, the largest
acquisition in the Company's history, which has provided the Company broader
geographic diversity and less reliance on its California roots, while
positioning the Company strategically in the growing Research Triangle area. In
addition, the Committee considered the important shifts made in the Company's
management in 1995, including Mr. Potts' appointment as Chairman and the naming
of Gary Pruitt as the Company's president and William Honeysett as senior vice
president.
During 1995, the Company had earnings of $33.6 million, reflecting the
lingering effects of the California recession, the impact of sharply higher
newsprint prices and the financing costs of the acquisition of N&O. Company
earnings decreased 27.9% from 1994 levels, with a resulting decrease in earnings
per share from $1.58 in 1994 to $1.12 in 1995. Revenues were up 14.7%, in large
part due to the N&O acquisition, and the Company continued its strict cost
control efforts to hold operating expenses in light of further increases in
newsprint prices during the year. The Company's financial results produced an
accrual to Mr. Potts under the fixed formula of the EPP of cash compensation for
1995 of $20,496.(18) Average paid daily circulation of the Company's 13 daily
newspapers grew in 1995 by 19.2 %, and were up 0.6% excluding the newly acquired
News & Observer, despite the continued national trend of declining circulation.
The Committee, in setting Mr. Potts' salary and bonus, and in fixing the
number of stock option awards granted him under the Company's employee stock
option plans, and EPS and Improvement Units awarded him under the EPP, is unable
to assign relative weight to the indicated factors. The process is primarily
subjective in nature. Each committee member may well accord a different weight
to the various factors considered.
The tables which follow, and accompanying narrative, reflect the decisions
covered by the above discussion.
WILLIAM K. COBLENTZ, Chairman
LARRY JINKS
JOAN F. LANE
S. DONLEY RITCHEY
- ---------------
(18) These sums are not immediately available to Mr. Potts, but vest at the rate
of 25% annually over a four- year period commencing March 1, 1995.
11
<PAGE> 15
EXECUTIVE COMPENSATION
The following tables set forth the annual compensation paid or accrued by
the Company to or on behalf of the Chief Executive Officer and each of the four
other most highly compensated executive officers of McClatchy Newspapers, Inc.
for the fiscal years December 31, 1993, 1994 and 1995. No executive officer
serves pursuant to an employment contract.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ ------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(19) OPTIONS(#) ($)(20)
- --------------------------------- ---- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Potts, Erwin..................... 1995 528,008 275,000 20,496 25,000 14,539
Chairman & CEO 1994 503,000 300,000 90,251 44,600 13,629
1993 485,000 220,000 48,843 0 15,792
Pruitt, Gary B.(21).............. 1995 305,778 125,000 11,760.... 20,000 6,645
President & COO 1994 228,497 62,775 177,888(22) 22,000 6,406
Honeysett, William L............. 1995 360,048 102,254 16,800 15,000 8,384
Senior Vice President 1994 335,000 117,244 66,926 26,600 7,669
1993 315,016 87,511 38,253 0 8,418
Smith, James P................... 1995 273,494 47,861 11,760 10,000 8,238
Vice President, Finance & CFO 1994 263,500 60,601 49,451 19,600 7,669
1993 253,500 49,433 28,082 0 8,718
Favre, Gregory E................. 1995 225,004 48,376 10,080 10,000 8,712
Vice President, News 1994 215,000 50,315 41,891 19,000 8,235
1993 205,010 47,040 23,822 0 8,714
</TABLE>
- ---------------
(19) Represents earnings accrued under the Company's Executive Performance Plan.
These earnings are vested and paid out in four equal annual installments of
25% each commencing March 1 following the year for which the award is made;
no portion of the amount earned in 1995 was paid to the participants in
1995.
(20) This sum includes (i) Company contributions to the Company's 401(k) Plan on
behalf of each of the named executive officers to match pre-tax elective
deferral contributions (included under Salary) made by each to such Plan,
and (ii) premium payments to continue life insurance coverage under the
Group Executive Life Insurance Plan at a level not otherwise available
under the Company's standard life insurance coverage. The amount of the
contribution to the Company's 401(k) Plan for each named executive officer
for 1995 was $6,000.
(21) Mr. Pruitt became an executive officer on May 18, 1994.
(22) This amount also represents certain perquisites, including $126,089 paid to
Mr. Pruitt as reimbursement of relocation expenses.
12
<PAGE> 16
STOCK OPTION AWARDS
The following table contains information concerning stock option awards to
the named executive officers during the year ended December 31, 1995. The two
columns at the right show the hypothetical gains or "option spreads" that would
exist for the respective options based on assumed rates of annual compound stock
price appreciation of 5% and 10% from the date of grant over the full option
term. However, there is no assurance that any particular level of potential
realizable value will actually be earned.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
INDIVIDUAL GRANTS(23) ASSUMED ANNUAL RATE
- ------------------------------------------------------------------------------------ OF STOCK PRICE
(B) (C) APPRECIATION FOR
SECURITIES % OF TOTAL (D) OPTION TERM(24)
UNDERLYING OPTIONS EXERCISE -------------------
OPTIONS GRANTED TO OR BASE (E)
(A) GRANTED EMPLOYEES PRICE EXPIRATION (F) (G)
NAME (#) IN FISCAL YEAR ($/SH) DATE 5% 10%
- ------------------------------- ---------- -------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Potts, Erwin................... 25,000 17.0% $ 22.250 12-13-2005 $349,823 $886,520
Pruitt, Gary B. ............... 20,000 13.6% $ 22.250 12-13-2005 279,858 709,216
Honeysett, William L. ......... 15,000 10.2% $ 22.250 12-13-2005 209,894 531,912
Smith, James P. ............... 10,000 6.8% $ 22.250 12-13-2005 139,929 354,608
Favre, Gregory E. ............. 10,000 6.8% $ 22.250 12-13-2005 139,929 354,608
</TABLE>
- ---------------
(23) Annual stock option grants consist of stock options granted based upon
assessment by the Compensation Committee of the individual's past
performance, level of responsibility and accountability, anticipated future
contributions and long-term value to the Company. Stock options are granted
at fair market value, have a ten-year term and vest equally over four years
commencing on March 1 following the date of award.
(24) In accordance with SEC rules, columns (f) and (g) show gains that might
exist for the respective options over a period of ten years. This valuation
model is hypothetical; if the stock price does not increase above the
exercise price, compensation to the named executive will be zero. Since the
ten-year option terms of the 1996 option awards extend beyond the normal
retirement date of certain of the named executive officers and by the terms
of the Company's stock option plan under which the options have been
granted cannot then be exercised, the table below illustrates the option
values for these executive officers at their normal retirement dates:
<TABLE>
<CAPTION>
OPTIONS NORMAL
GRANTED RETIREMENT
NAME (#) DATE 5% 10%
----------------------------------- ------- ---------- -------- --------
<S> <C> <C> <C> <C>
Potts, Erwin....................... 25,000 5-1-1997 $ 46,245 $102,318
Honeysett, William L............... 15,000 9-1-2002 139,533 336,393
Smith, James P. ................... 10,000 2-1-2003 98,314 239,341
Favre, Gregory E. ................. 10,000 5-1-2000 57,177 128,702
</TABLE>
In addition to the foregoing table, the following supplemental information
should be considered, using the same ten-year option term applicable to the
respective option grant dates, as follows:
<TABLE>
<CAPTION>
5% 10%
------------- -------------
<S> <C> <C>
Per share value, base price plus appreciation:....... $36.24 $57.71
Shareholder value of $1,000 invested:................ $1,629 $2,594
McClatchy Newspapers, Inc. Shareholder Value:........ $1.1 billion $1.7 billion
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table shows the number of shares of Class A Common Stock
represented by outstanding stock options held by each of the five most highly
compensated executive officers as of December 31, 1995 and
13
<PAGE> 17
the value of such options based on the closing price of the Company's Class A
Common Stock on Friday, December 29, 1995. The exercise price of shares
represented by certain of these options was higher than the closing price of the
stock at year end with the result that those options were "out of the money" on
that date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT OPTIONS AT
FY-END(#) FY-END ($)
------------- -------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Potts, Erwin........................... 0 0 98,150/ 2,245,181/
83,450 1,908,919
Pruitt, Gary B. ....................... 0 0 35,500/ 812,063/
46,000 1,052,250
Honeysett, William L. ................. 2,100 10,788 21,850/ 499,819/
48,450 1,108,294
Smith, James P. ....................... 0 0 38,150/ 872,681/
34,450 788,044
Favre, Gregory E. ..................... 0 0 22,875/ 522,854/
33,250 760,594
</TABLE>
14
<PAGE> 18
FIVE-YEAR PERFORMANCE GRAPH
The SEC requires that the Company include in this proxy statement a
line-graph presentation comparing cumulative, five-year stockholder returns on
an indexed basis with (i) a broad equity market index and (ii) an industry index
or peer group. Set forth below is a line graph comparing the percentage change
in the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the S&P Midcap 400 Index and a Peer Group Index
for a period of five fiscal years ended December 31, 1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MCCLATCHY NEWSPAPERS, INC., THE S & P MIDCAP 400 INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
MCCLATCHY NEWSPAPERS, INC. PEER GROUP S & P MIDCAP 400
<S> <C> <C> <C>
12/90 100 100 100
12/91 99 119 150
12/92 111 135 168
12/93 140 157 191
12/94 129 149 185
12/95 139 181 242
</TABLE>
* $100 INVESTED ON 12/31/90 IN STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The Peer Group Index is comprised of the following publicly-traded
newspaper publishing companies, and is weighted according to market
capitalization as of the beginning of each year: (1) A. H. Belo Corporation, (2)
Central Newspapers, Inc. (3) Dow Jones & Company, (4) E. W. Scripps Company (5)
Gannett Co., Inc., (6) Harte-Hanks Communications, Inc., (7) Knight-Ridder,
Inc., (8) Lee Enterprises, Inc., (9) McClatchy Newspapers, Inc., (10) Media
General, Inc., (11) The New York Times Company, (12) Pulitzer Publishing
Company, (13) Times Mirror Company, (14) Tribune Company and (15) Washington
Post Company.
15
<PAGE> 19
PENSION PLANS
The following table shows the estimated annual pension benefits payable to
the named executive officers at normal retirement age (age 65) under the
Company's qualified defined benefit pension plan, as well as its nonqualified
supplemental pension plan that provides benefits that would otherwise be denied
participants by reason of certain Internal Revenue Code limitations on qualified
plan benefits, based on remuneration that is covered under the plans and years
of service with the Company:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
---------------------------------- ------ ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
200,000.......................... 15,000 30,000 45,000 60,000 75,000 90,000 105,000
350,000.......................... 26,250 52,500 78,750 105,000 131,250 157,500 183,750
500,000.......................... 37,500 75,000 112,500 150,000 187,500 225,000 262,500
650,000.......................... 48,750 97,500 146,250 195,000 243,750 292,500 341,250
800,000.......................... 60,000 120,000 180,000 240,000 300,000 360,000 420,000
950,000.......................... 71,250 142,500 213,750 285,000 356,250 427,500 498,750
1,100,000......................... 82,500 165,000 247,500 330,000 412,500 495,000 577,500
</TABLE>
Benefits under the qualified defined pension plan are computed using basic
compensation exclusive of overtime and other compensation; benefits under the
supplemental plan are calculated using basic salary plus any annual cash bonus
awarded. The benefits shown in the foregoing table are not subject to any
deduction for social security or other offset amounts. For single persons,
benefits are computed as straight life annuity amounts. Married persons may
chose between straight life or joint and survivor annuity amounts. Covered
compensation for the named executive officers would consist of the salary and
bonus set forth in the Summary Compensation Table above, and for the named
executive officers as of the end of the last calendar year is: Erwin Potts,
$803,008; Gary B. Pruitt, $430,778; William L. Honeysett, $462,302; James P.
Smith, $321,355; Gregory E. Favre, $273,380.
The estimated credited years of service at December 31, 1995, for each
named executive is as follows: Erwin Potts, 19.67; Gary B. Pruitt, 10.67;
William L. Honeysett, 9.42; James P. Smith 21.00; Gregory E. Favre, 11.17.
RATIFICATION OF INDEPENDENT AUDITORS
(PROPOSAL 2 ON PROXY)
The Board of Directors has appointed, subject to ratification by the
stockholders, Deloitte & Touche LLP as independent auditors for the current
fiscal year ending December 31, 1996. Representatives of Deloitte & Touche LLP
are expected to be present at the annual meeting with the opportunity to make a
statement if they desire to do so and to be available to respond to appropriate
questions.
An affirmative vote of a majority of the aggregate voting power of the
shares of Class A and Class B Common Stock present or represented at the meeting
is required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF DELOITTE &
TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors does not know of any business to be presented at the
annual meeting other than the matters set forth above, but if other matters
properly come before the meeting it is the intention of the persons named in the
proxies to vote in accordance with their best judgment on such matters.
Pursuant to SEC regulations, the Company is required to identify the names
of persons who failed to file or filed late a report required under Section 16
of the Securities Exchange Act of 1934. Generally, the
16
<PAGE> 20
reporting regulations under Section 16 require directors, executive officers and
greater than 10% stockholders to report changes in ownership of Company
securities. Sue Maloney Stiles, a holder of more than 10% of the Company's Class
A Common Stock, filed a Form 4, Statement of Changes in Beneficial Ownership,
reporting sales of stock, 15 days late. Erwin Potts, the Company's Chairman and
CEO, filed a Form 4 reporting a purchase of stock 42 days late. Robert Berger,
the Company's Controller and principal accounting officer, filed a Form 5
relating to 1994 stock option grants approximately one year late and a Form 5
relating to a 1995 stock option grant approximately one month late.
Proposals of stockholders intended to be presented at the Company's 1997
annual meeting of stockholders must be received at the corporate Secretary's
office, 2100 Q Street, Sacramento, California 95816, no later than November 29,
1996, to be considered for inclusion in the proxy statement and form of proxy
for that meeting.
By Order of the Board of Directors
[LOGO]
Karole Morgan-Prager, Secretary
March 29, 1996
17
<PAGE> 21
[LOGO]
Printed on Recycled Paper
<PAGE> 22
MCCLATCHY NEWSPAPERS, INC.
CLASS A COMMON PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 1996.
The undersigned hereby appoints Erwin Potts and Karole Morgan-Prager, or either
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated herein, all the shares
of the Class A Common Stock of McClatchy Newspapers, Inc. that the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on May 15,
1996, or any postponement or adjournment thereof.
This proxy when properly executed will be voted as directed by the undersigned
stockholder. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON REVERSE SIDE
(Continued and to be dated and signed, on other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 23
Please mark
your votes as X
indicated in
this example
Proposal 1: To elect directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected or chosen.
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD Nominees: Larry Jinks, Joan F. Lane, S. Donley Ritchey, Frederick R. Ruiz
listed to the right AUTHORITY
(except as marked to the (to vote for all nominees (INSTRUCTION: To withhold authority to vote for any individual nominee write
contrary) listed at right) the nominee's name below.)
/ / / / -------------------------------------------------------------------------------
</TABLE>
Proposal 2: Ratification of the appointment of Deloitte & Touche as the
Company's independent auditors for 1996.
FOR AGAINST ABSTAIN
/ / / / / /
I PLAN TO ATTEND MEETING / /
COMMENTS/ADDRESS CHANGE
PLEASE MARK THE BOX IF YOU HAVE / /
WRITTEN COMMENTS/ADDRESS CHANGE ON
THE REVERSE SIDE.
Please sign exactly as name appears on your stock certificate. When shares are
held by joint tenants, both should sign. When signing as attorney, as 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.
Dated:____________________________________________________________________, 1996
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
MCCLATCHY NEWSPAPERS, INC.
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE> 24
MCCLATCHY NEWSPAPERS, INC.
CLASS B COMMON PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 1996.
The undersigned hereby appoints Erwin Potts and Karole Morgan-Prager, or either
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated herein, all the shares
of the Class B Common Stock of McClatchy Newspapers, Inc. that the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on May 15,
1996, or any postponement or adjournment thereof.
This proxy when properly executed will be voted as directed by the undersigned
stockholder. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON REVERSE SIDE
(Continued and to be dated and signed, on other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 25
Please mark
your votes as X
indicated in
this example
Proposal 1: To elect directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected or chosen.
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD Nominees: William K. Coblentz, Molly Maloney Evangelisti, William L. Honeysett,
listed to the right AUTHORITY Betty Lou Maloney, James B. McClatchy, William Ellery McClatchy, Erwin Potts,
(except as marked to the (to vote for all nominees Gary B. Pruitt, William M. Roth, James P. Smith
contrary) listed at right)
(INSTRUCTION: To withhold authority to vote for any individual nominee write
/ / / / the nominee's name below.)
-------------------------------------------------------------------------------
</TABLE>
Proposal 2: Ratification of the appointment of Deloitte & Touche as the
Company's independent auditors for 1996.
FOR AGAINST ABSTAIN
/ / / / / /
I PLAN TO ATTEND MEETING / /
COMMENTS/ADDRESS CHANGE
PLEASE MARK THE BOX IF YOU HAVE / /
WRITTEN COMMENTS/ADDRESS CHANGE ON
THE REVERSE SIDE.
Please sign exactly as name appears on your stock certificate. When shares are
held by joint tenants, both should sign. When signing as attorney, as 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.
Dated:____________________________________________________________________, 1996
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
MCCLATCHY NEWSPAPERS, INC.
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
