McCLATCHY NEWSPAPERS, INC.
2100 Q Street
Sacramento, CA 95816
March 31, 1997
To our Stockholders:
You are invited to attend the annual meeting of stockholders to be held at
9:00 a.m. on Wednesday, May 21, 1997 at the Hyatt Regency Hotel, Regency Rooms A
and B, 1209 L Street, Sacramento, California 95814.
At the meeting, you will be asked to (i) elect Directors for the coming
year, (ii) approve the amendment of the Company's Certificate of Incorporation
to increase (A) the number of shares of Class A Common Stock, par value $.01 per
share, from 50,000,000 to 100,000,000, and (B) the number of shares of Class B
Common Stock, par value $.01 per share, from 30,000,000 to 60,000,000 and (iii)
ratify the selection of the firm of Deloitte & Touche LLP as independent
auditors of the Company for the 1997 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,
/s/ Gary Pruitt
------------------------------------
Gary Pruitt
President and Chief Executive Officer
/s/ Erwin Potts
------------------------------------
Erwin Potts
Chairman of the Board
<PAGE>
McCLATCHY NEWSPAPERS, INC.
2100 Q Street
Sacramento, CA 95816
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
McCLATCHY NEWSPAPERS, INC.
TO BE HELD MAY 21, 1997
To the Stockholders:
The annual meeting of stockholders of McClatchy Newspapers, Inc. (the
"Company") will be held at the Hyatt Regency Hotel, Regency Rooms A and B, 1209
L Street, Sacramento, California 95814, on Wednesday, May 21, 1997, at 9:00 a.m.
local time, for the following purposes:
1. The election of Directors;
2. To approve the amendment of the Company's Certificate of
Incorporation to increase (i) the number of authorized shares of Class A
Common Stock, par value $.01 per share, from 50,000,000 to 100,000,000 and
(ii) the number of authorized shares of Class B Common Stock, par value
$.01 per share, from 30,000,000 to 60,000,000;
3. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for 1997; and
4. 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 17, 1997
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
/s/ Karole Morgan-Prager
Karole Morgan-Prager, Secretary
March 31, 1997
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>
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 21, 1997, at the Hyatt Regency Hotel, Regency Rooms A and B,
1209 L Street, Sacramento, California 95814. This Proxy Statement and the
accompanying form of proxy are being mailed to stockholders on or about March
31, 1997.
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, FOR approval of proposal 2, approval
of the increase in the Company's authorized capital stock and proposal 3,
ratification of the appointment of Deloitte & Touche LLP 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, FOR approval of proposal 2 and FOR approval of proposal 3.
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 17, 1997 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 9,018,108 shares of Class A Common Stock, each of
which is entitled to one vote in the election of the three Class A Directors, no
vote in the election of the nine Class B Directors and one-tenth vote upon other
matters presented at the meeting, and 28,842,287 shares of Class B Common
Stock, each of which is entitled to no vote in the election of the three Class A
Directors, one vote in the election of the nine 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 and
proposal 3. 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.
<PAGE>
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, 68, 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, 68, 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 and the President of Stanford University. She
served on the board of directors of The Brown Group, Inc. from 1985 to 1996, and
has served 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, 63, 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, Hughes Markets, Inc., De La Salle Institute and the Rosenberg Foundation.
He is currently managing partner of Alpine Partners, a family investment general
partnership. 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, 53, 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, 74, 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, The Central Valley Foundation and the Public Policy Institute of
California. 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>
Molly Maloney Evangelisti(1), 44, has been a Director of the Company since
July 1995. She worked in various capacities for The Sacramento Bee from October
1978 to December 1996, including the oversight of special projects for The
Sacramento Bee.
William L. Honeysett, 59, 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), 76, has been a Director of the Company since July
1975 and Assistant Secretary of the Company since August 1980.
James B. McClatchy(1), 75, 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), 71, has been a Director of the Company since
March 1976 and Assistant Secretary since August 1980.
Erwin Potts, 64, has been the Chairman of the Board of Directors of the
Company since May 1995. Mr. Potts served as Chief Executive Officer of the
Company from April 1989 to May 1996, as President from July 1987 to May 1995 and
as Chief Operating Officer from July 1987 to April 1989. 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 former member of the California Business
Roundtable, and a former director of the California Newspaper Publishers
Association.
Gary B. Pruitt, 39, has been Chief Executive Officer since May 1996 and
President since May 1995. He served as Chief Operating Officer of the Company
from May 1995 to May 1996. He has been a Director of the Company 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 director of the American Press
Institute and the Crocker Art Museum Association. He is also a member of the
Chancellor's Committee for The University of California, Berkeley, the
California Business Roundtable and the Associated Press Auditing Committee.
William M. Roth, 80, 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 also
served as a member of the University of California Board of Regents for 16
years.
James P. Smith, 59, 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>
Other Executive Officers
Peter M. CaJacob, 53, 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, 61, 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 a past President and a director of the American
Society of Newspaper Editors and a board member and membership chair 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, 34, has been General Counsel and Corporate Secretary
of the Company since July 1995. From May 1992 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 1992.
Committees of the Board of Directors
The Board of Directors held six meetings and one organizational meeting
during 1996. 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 1996.
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
1996.
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 one meeting in 1996.
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 two meetings in 1996.
All Board and Committee members, attended more than 75% of the meetings of
the Board and/or Committees on which he or she served, except William Coblentz,
who attended 71% of the Board meetings and 50% of the Audit Committee meetings;
Betty Lou Maloney, who attended 71% of the Board meetings; and William Roth, who
attended 57% of the Board meetings.
4
<PAGE>
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 17, 1997 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 and Number of Shares
Executive Officers as a Group, of Class B
and 5% Stockholders(2) Common Stock(3) Percent
-------------------------------- ----------------- -------
<S> <C> <C>
James B. McClatchy.................................... 16,074,053(4) 55.7%
William K. Coblentz................................... 13,769,049(5) 47.7%
William Ellery McClatchy.............................. 13,000,000(6) 45.1%
Erwin Potts........................................... 12,500,000(7) 43.3%
William M. Roth....................................... 12,500,000(7) 43.3%
Molly Maloney Evangelisti............................ 3,812,500 13.2%
Brown McClatchy Maloney............................... 3,730,748(8) 12.9%
Betty Lou Maloney..................................... 1,850,000 6.4%
All executive officers and directors as a group
(17 persons)....... 21,907,021 75.9%
- --------
(2) All addresses: c/o McClatchy Newspapers, Inc., P. O. Box 15779,
Sacramento, CA 95852-0779.
(3) Share holdings reflect the 25% (five for four) stock dividend on the
Company's Class A and Class B Common Stock, paid on January 2, 1997 to
stockholders of record on December 16, 1996.
(4) Includes: (i) 12,500,000 shares held under five separate trusts with
2,500,000 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 2,500,000 shares in one such
trust as to which he has a present income interest. (ii) 598,581 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) 500,000 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.
(5) Includes: (i) 12,500,000 shares held under five separate trusts with
2,500,000 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) 598,581 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) 500,000 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) 170,468
shares with regard to which William K. Coblentz acts as a 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.
(6) Includes: (i) 12,500,000 shares held under five separate trusts with
2,500,000 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 2,500,000 shares in one such
trust as to which he has
5
<PAGE>
a present income interest. (ii) 500,000 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 Ellery McClatchy disclaims
beneficial ownership of these shares.
(7) These shares are held under five separate trusts each with 2,500,000
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.
(8) Includes 123,428 shares held in four trusts for the benefit of each of
his four children, each containing 30,857 shares. Brown McClatchy Maloney has
sole voting and investment control with respect to these trusts. Brown McClatchy
Maloney disclaims beneficial ownership of these shares.
</TABLE>
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 17, 1997 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 17,
1997.
<TABLE>
<CAPTION>
Deemed Beneficial Ownership of
Class A Common Stock
------------------------------
Beneficial
Ownership of
Outstanding Shares
Directors, Executive Officers, of Class A
Directors and Executive Officers Common Stock Number of Shares
as a Group, and 5% (including shares of Class A
Stockholders(9) held by spouse) Common Stock Percent
------------ --------------- ------------ --------
<S> <C> <C> <C>
James B. McClatchy 12,500 16,086,553 64.1%
William K. Coblentz 12,189(10) 13,781,238 60.4%
William Ellery McClatchy 10,439(11) 13,010,439 59.1%
Erwin Potts 71,572(12) 12,571,572 58.3%
William M. Roth 16,814(11) 12,516,814 58.1%
Molly Maloney Evangelisti 12,302 3,824,820 29.8%
Brown McClatchy Maloney -- 3,730,748 29.3%
Betty Lou Maloney 10,314(11) 1,860,314 17.1%
Sue Maloney Stiles 9,625 1,289,832 12.5%
Kevin Sorensen McClatchy -- 707,968 7.3%
Adair Rideout McClatchy -- 482,968 5.1%
Gary B. Pruitt 46,311(13) 46,311 (14)
James P. Smith 74,196(15) 74,196 (14)
William L. Honeysett 70,504(16) 70,504 (14)
Gregory E. Favre 12,495(17) 12,495 (14)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Deemed Beneficial Ownership of
Class A Common Stock
------------------------------
Beneficial
Ownership of
Outstanding Shares
Directors, Executive Officers, of Class A
Directors and Executive Officers Common Stock Number of Shares
as a Group, and 5% (including shares of Class A
Stockholders(9) held by spouse) Common Stock Percent
------------ --------------- ------------ --------
<S> <C> <C> <C>
S. Donley Ritchey 12,814(11) 12,814 (14)
Joan F. Lane 11,564(11) 11,564 (14)
Frederick R. Ruiz 5,064(18) 5,064 (14)
Larry Jinks 625 625 (14)
Vanguard/PrimeCap Fund, Inc. 487,500 487,500 5.4%
All executive officers and
directors as a group (17 persons
as Beneficial Owners)(19) 411,294 23,582,591 72.7%
- --------
(9) All addresses are c/o McClatchy Newspapers, Inc., P. O. Box
15779, Sacramento, CA 95852-0779, except as follows:
Vanguard/PrimeCap Fund, Inc.
P. O. Box 2600
Valley Forge, PA 19482
(10) Includes 8,439 shares subject to stock options which are currently
exercisable.
(11) Includes 10,314 shares subject to stock options which are currently
exercisable.
(12) Includes 29,563 shares subject to stock options which are currently
exercisable.
(13) Includes 38,275 shares subject to stock options which are currently
exercisable.
(14) Percentage is less than one percent.
(15) Includes 60,150 shares subject to stock options which are currently
exercisable.
(16) Includes 39,389 shares subject to stock options which are currently
exercisable.
(17) Includes 11,975 shares are subject to stock options which are currently
exercisable.
(18) Includes 2,814 shares subject to stock options which are currently
exercisable.
(19) Includes 263,833 shares subject to stock options which are currently
exercisable.
</TABLE>
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>
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, Molly
Maloney Evangelisti and William Ellery McClatchy, are currently compensated at
the rate of $28,000 per year plus $1,200 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 1,875 shares of Class A
Common Stock (as adjusted for the five for four stock split paid by the Company
on January 2, 1997). 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 awards.
The principal elements of the Company's executive compensation program are
(i) annual base salary, (ii) annual cash bonus based on assessment of success in
meeting performance objectives on an individual, unit and/or Company-wide basis,
(iii) 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 (iv) 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>
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, 1996
Salary and incentive levels of the Company's executive officers for fiscal
year 1996 were reviewed by the Compensation Committee in late 1995. Bonuses were
subsequently determined and paid 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, with
particular emphasis on salary levels on Peer Group companies with market
capitalization comparable to the Company. The Peer Group consists of those
companies included in the Company's Five-Year Performance Graph below. 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 1996 salary increases to
executive officers ranging from 2.3% to 47.2% over prior year salary. With the
exception of Mr. Pruitt, who received the 47.2% increase as a result of the
increase in his responsibilities and his promotion to Chief Executive officer,
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 the proportion of the executive's total compensation
at risk. Awards under the MBO annual bonus plan, which applies to each executive
officer other than the CEO and James B. McClatchy, were based on full or partial
achievement of preestablished performance goals. The performance objectives
applicable to Messrs. 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. Applying these objectives, operating income and net
income level, as well as other financial and operating performance factors,
e.g., earnings per share, circulation growth, capital expense
9
<PAGE>
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 1996 bonuses for Messrs.
Honeysett and Smith. Also, as a result of Mr. Favre's position as Executive
Editor of The Sacramento Bee, as well as Vice President, News of the Company,
in determining Mr. Favre's 1996 bonus, the financial performance of The
Sacramento Bee together with continued improvement in the quality of news
content consistent with achievement of the Company's financial objectives were
considered.
Each performance objective was weighted to reflect its relative performance
to specific short-term and long term 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 40 percent
(depending on the particular participant) of his or her base salary during the
year.
As noted above, Mr. McClatchy is not subject to the Company's MBO annual
bonus plan, and, therefore, the Committee determined his 1996 bonus separately.
In determining Mr. McClatchy's 1996 bonus, the Committee considered the
Company's record financial performance in 1996, as described below, as well as
his contribution to the Company's editorial committee.
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 established
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.
The Committee awarded no stock options to Mr. Potts for 1997.
Executive Performance Incentive Awards. Awards for 1996 under the Company's
Executive Performance Plan ("EPP") were made in late 1995. 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. A total of $495,700 was awarded
to the Company's executive officers for 1996 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. The Committee made no EPP
award to Mr. Potts for 1997.
10
<PAGE>
Compensation of the Chief Executive Officer, 1996
On May 15, 1996, Mr. Pruitt was named Chief Executive Officer of the
Company and continued in his role as President. As of that date, Mr. Potts
continued in his role as Chairman of the Board. Mr. Potts' 1996 salary, which
was determined in late 1995, was $540,020, a 2.3% increase over his prior year
salary, reflecting the anticipated changes in Mr. Potts' responsibilities at the
Company in 1996, as well as the lingering effects of the California recession,
the impact of higher newsprint prices and continued restraint on costs. Mr.
Pruitt's 1996 salary was also considered in late 1995 and was set at that time
at $400,000, a 30.8% increase over his 1995 salary, reflecting his increased
responsibilities at the Company. As noted above, Mr. Pruitt was named CEO on May
15, 1996. On June 1, 1996, the Company entered into an employment agreement with
Mr. Pruitt, which is discussed in more detail below, and, as of that date, his
salary was increased an additional 16.4% to $450,000.
In determining the 1996 bonus award for both Mr. Potts and Mr. Pruitt, the
Committee subjectively assessed the Company's financial performance, as well as
each of their individual accomplishments during the year. Mr. Potts' bonus for
1996, awarded in January 1997, was not based on specific predetermined financial
targets, other than the expectation that the Company would meet or exceed its
budgeted financial goals. The Committee considered the Company's overall results
for the year, taking into account the level of his responsibility and
accountability, and his individual performance as the Company's Chief Executive
Officer through May 15, 1996. The $125,000 bonus awarded to Mr. Potts by the
Compensation Committee reflected the Company's record financial and operational
results for 1996, as described below. The Committee also considered the role Mr.
Potts' played in the successful transition of Mr. Pruitt to CEO, as well as the
financial performance of the News and Observer Publishing Company (N&O), which
was acquired by the Company, under Mr. Potts' direction, in 1995 and
outperformed management's expectations in 1996.
In determining Mr. Pruitt's bonus, the Committee considered the Company's
1996 operating and financial results as well as his performance as the
CEO from May 15 through the end of the year. The $225,000 bonus awarded to Mr.
Pruitt reflected the Company's strong financial and operating results in 1996,
as well as the structural changes that occurred under his leadership as
managment continued sharpening the Company's strategic focus on operating
mid-sized newspapers in growth markets. These changes included the sale of the
Company's five community newspapers, the sale of the internet access business
operated by Nando, the Company's national internet publisher, and the migration
of the Company's legislative online tracking business, Legi-Tech, to the World
Wide Web.
During 1996, the Company had earnings of $44.5 million, up 32.3% over 1995
earnings of $33.6 million, with a resulting increase in earnings per share from
$.90 in 1995 to $1.18. The Company posted record revenues and operating income
in 1996, and except for a one-time favorable tax adjustment in 1994, achieved
record earnings. Revenues were up 15.4% to $624.2 million due primarily to the
addition of the N&O. Advertising revenues increased 15.7% to $484.5 million and
circulation revenues were up 13.7% to $108.3 million. Expenses reflected lower
newsprint prices and cost controls, as well as lower financing costs as debt
was repaid. The Company's financial results produced an accrual under the fixed
formula of the EPP of cash compensation for 1996 of $108,486 for Mr. Potts and
$96,214 for Mr. Pruitt.(20) Average paid daily circulation of the Company's 13
daily newspapers grew in 1996 by 0.3%, despite the continued national trend of
declining circulation.
The Committee, in setting salary and bonus levels for Mr. Potts and Mr.
Pruitt, and in fixing the number of stock option awards granted to Mr. Pruitt
under the Company's employee stock option plans, and EPS and Improvement Units
awarded him under the EPP, does not assign relative weight to the indicated
factors. The process is primarily subjective in nature. Each committee member
may well accord a different weight to the various factors considered.
The tables which follow, and accompanying narrative, reflect the decisions
covered by the above discussion.
WILLIAM K. COBLENTZ, Chairman
LARRY JINKS
JOAN F. LANE
S. DONLEY RITCHEY
11
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth the annual compensation paid or accrued by
the Company to or on behalf of the Chief Executive Officer and each of the four
other most highly compensated executive officers of McClatchy Newspapers, Inc.
for the fiscal years December 31, 1994, 1995 and 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- --------------
Other Annual Securities All Other
Name and Compensation Underlying Compensation
Principal Position Year Salary($) Bonus($) ($)(21) Options(#)(22) ($)(23)
- ------------------ ---- --------- ------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Potts, Erwin 1996 540,020 125,000 108,486 0 29,591
Chairman and 1995 528,008 275,000 20,496 31,250 14,539
Former CEO 1994 503,000 300,000 90,251 55,750 13,629
Pruitt, Gary B.(24) 1996 429,167 225,000 96,214 62,500 17,936
President and CEO 1995 305,778 125,000 11,760 25,000 6,645
1994 228,497 62,775 177,888(25) 27,500 6,406
Honeysett, William L. 1996 370,006 125,802 83,800 8,750 17,231
Senior Vice 1995 360,048 102,254 16,800 18,750 8,384
President 1994 335,000 117,244 66,926 33,250 7,669
Smith, James P. 1996 280,020 57,754 62,410 12,500 21,473
Vice President, 1995 273,494 47,861 11,760 12,500 8,238
Finance and CFO 1994 263,500 60,601 49,451 24,500 7,669
Favre, Gregory E. 1996 232,024 50,175 52,780 12,500 19,012
Vice President, 1995 225,004 48,376 10,080 12,500 8,712
News 1994 215,000 50,315 41,891 23,750 8,235
James B. McClatchy 1996 217,516 40,000 0 0 26,590
Publisher 1995 212,500 32,000 0 0 25,047
1994 206,024 40,000 0 0 24,249
- --------
(20) These sums are not immediately available to Mr. Potts and Mr. Pruitt, but
vest at the rate of 25% annually over a four-year period commencing March 1,
1996. However, under the Company's Executive Performance Plan, the amounts
awarded vest by an additional 25% upon a participant's early retirement under
the Company's Restated Retirement Plan. Upon normal retirement under the
Company's Restated Retirement Plan, 100% of the amounts awarded vest
immediately.
(21) 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 1996 was paid to the participants in 1996.
However, under the Company's Executive Performance Plan, the earnings vest by an
additional 25% upon a participant's early retirement under the Company's
Restated Retirement Plan. Upon normal retirement under the Company's Restated
Retirement Plan, 100% of the earnings vest immediately.
(22) Stock option awards have been adjusted to reflect the Company's five
for four stock split, paid in the form of a stock dividend on shares of its
Class A and Class B Common Stock on January 2, 1997, to stockholders of record
on December 16, 1996.
(23) 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 1996 was $6,000.
12
<PAGE>
(24) Mr. Pruitt became an executive officer on May 18, 1994. With respect to
Mr. Pruitt's 1996 salary, from January 1, 1996 through May 31, 1996 his salary
was $400,000. On June 1, 1996, his salary was increased to $450,000.
(25) This amount also represents certain perquisites, including $126,089
paid to Mr. Pruitt as reimbursement of relocation expenses.
</TABLE>
STOCK OPTION AWARDS
The following table contains information concerning stock option awards to
the named executive officers during the year ended December 31, 1996, as
adjusted to reflect the 25% (five for four) stock dividend on the Company's
Class A and Class B Common Stock, paid on January 2, 1997 to stockholders of
record on December 16, 1996. Annual stock option grants consist of stock options
granted based upon assessment by the Compensation Committee of the individual's
past performance, level of responsibility and accountability, anticipated future
contributions and long-term value to the Company. Stock options are granted at
fair market value, have a ten-year term and vest equally over four years
commencing on March 1 following the date of award.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Securities % of Total
Underlying Options Exercise
Options Granted to or Base Grant Date
Granted Employees Price Expiration Present Value
Name (#) in Fiscal Year ($/Sh) Date ($)(26)
- ---- ----------- -------------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C>
Potts, Erwin................... 0 0% n/a n/a n/a
Pruitt, Gary B. ............... 62,500 30.0% $25.10 12-11-2006 $534,730
Honeysett, William L. ......... 18,000 8.7% $25.10 12-11-2006 160,417
Smith, James P................. 12,500 6.0% $25.10 12-11-2006 106,946
Favre, Gregory E. ............. 12,500 6.0% $25.10 12-11-2006 106,946
James B. McClatchy ............ 0 0% n/a n/a n/a
- --------
(26) Options vest in increments of 25% over four years. These values are
determined using the Black-Scholes Option Pricing Model. The Black-Scholes
Option Pricing Model is one of the methods permitted by the Securities and
Exchange Commission for estimating the present value of options. The
Black-Scholes Option Pricing Model is based on assumptions as to certain
variables as described below, and is not intended to estimate, and has no direct
correlation to, the amount that an individual will actually realize upon
exercise of options. The actual value of the stock options that an executive
officer may realize, if any, will depend on the excess of the market price on
the date of exercise over the exercise price. The values listed above were based
on the following assumptions: volatility (measured as the annualized standard
deviation of the sample, as determined from the daily closing prices over the
past seven years, ending with December 31, 1996) of .279; risk free rates of
return of 6.1% to 6.3%; dividend yields of 1.2% to 1.4%; and time of exercise
ranging from 4.3 to 7.3 years as the options vest.
</TABLE>
13
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table shows the number of shares of Class A Common Stock
represented by outstanding stock options held by each of the five most highly
compensated executive officers as of December 31, 1996, and the value of such
options based on the closing price of the Company's Class A Common Stock on
Tuesday, December 31, 1996, each as adjusted to reflect the 25% (five for four)
stock dividend on the Company's Class A and Class B Common Stock, paid on
January 2, 1997 to stockholders of record on December 16, 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<CAPTION>
Number of Value of
Unexercised Unexercised
Options Options
at FY-End (#) at FY-End ($)
------------- -------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Potts, Erwin .................... 140,351 1,001,802 41,462/ 1,160,936/
86,648 2,426,144
Pruitt, Gary B. ................. 7,500 60,788 65,000/ 1,820,000/
156,875 4,392,500
Honeysett, William L. ........... 9,625 74,650 51,189/ 1,433,292/
97,000 2,716,000
Smith, James P. ................. 2,500 19,500 169,625/ 1,949,500/
100,750 2,821,000
Favre, Gregory E. ............... 25,468 145,216 126,250/ 1,735,000/
57,187 1,601,236
McClatchy, James B. ............. 0 0 0 0
</TABLE>
14
<PAGE>
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, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG McCLATCHY NEWSPAPERS, INC.,
THE S&P MIDCAP 400 INDEX AND A PEER GROUP
[LINE GRAPH]
12/91 12/92 12/93 12/94 12/95 12/96
----- ----- ----- ----- ----- -----
McCLATCHY NEWSPAPERS, INC. 100 112 141 130 141 219
PEER GROUP 100 115 135 127 157 190
S & P MIDCAP 400 100 112 128 123 161 192
* $100 INVESTED ON 12/31/91 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>
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:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
----------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35
- ------------ ------ ------- ------- ------- ------- ------- -------
<C> <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,
$815,020; Gary B. Pruitt, $554,167; William L. Honeysett, $472,260; James P.
Smith, $327,881; Gregory E. Favre, $280,400; and James B. McClatchy, $249,516.
The estimated credited years of service at December 31, 1996, for each
named executive is as follows: Erwin Potts, 20.67; Gary B. Pruitt, 11.67;
William L. Honeysett, 10.42; James P. Smith 22.0; Gregory E. Favre, 12.17; and
James B. McClatchy, 27.23.
EMPLOYMENT AGREEMENT
The Company has an Employment Agreement (the "Agreement") with its Chief
Executive Officer, Gary Pruitt. The Agreement expires on June 1, 1999, or such
later date to which the term of the Agreement is extended pursuant thereto. The
term of the Agreement extends automatically for one year effective June 1, 1997
(so that effective on that date the term of employment is extended from June 1,
1999 to June 1, 2000), and on each succeeding June 1 (so that effective on each
such day, the remaining term of employment is a full three-year period). The
Agreement provides for a base salary of not less than $450,000 per year. If
during the term of the Agreement Mr. Pruitt's employment is involuntarily
terminated for any reason other than "cause," "mental incompetence" or
"disability," or if he resigns for "good reason" (as these terms are defined in
the Agreement), he would be entitled to a severance payment for the balance of
his term equal to 100% of his base salary, at the rate then in effect, if the
termination occurs prior to June 1, 1997; 200% of his base salary, at the rate
then in effect, if the termination occurs on or after June 1, 1997, but prior to
June 1, 1998; or 300% of his base salary, at the rate then in effect, if the
termination occurs on or after June 1, 1998. The severance payment may be made
in a lump sum or, at Mr. Pruitt's election (subject to the approval of the Board
of Directors) in five equal annual installments. In addition, if a severance
payment is made, Mr. Pruitt's group insurance coverage would be continued until
the third anniversary of the effective date of the termination of employment or
until he and his dependents become eligible for comparable coverage as a result
of his reemployment, whichever is earlier. If during the term of the Agreement
Mr. Pruitt's employment is terminated because of his disability, he would be
entitled to a disability benefit in an amount equal to 60% of his base salary
at the rate then in effect, reduced by all other disability benefits that are
payable to him under
16
<PAGE>
the Company's group insurance plan and all federal or state insurance programs.
The disability benefit would be payable until the third anniversary of the
effective date of the termination of employment or until disability benefits
under the Company's group insurance plan are discontinued, whichever is earlier.
In addition, Mr. Pruitt's group insurance benefits would be continued as long as
the disability benefit is payable.
APPROVAL OF AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
(Proposal 2 on Proxy)
The Board of Directors has approved the amendment of Article IV of the
Company's Certificate of Incorporation to increase the number of authorized
shares of all class of stock from 80,000,000 to 160,000,000, consisting of an
increase from 50,000,000 shares of Class A Common Stock, par value $.01, to
100,000,000 shares of Class A Common Stock, par value $.01, and an increase from
30,000,000 shares of Class B Common Stock, par value $.01, to 60,000,000 shares
of Class B Common Stock, par value $.01. The Board of Directors recommends that
the Company's stockholders approve this amendment.
The Company's Common Stock is divided into two classes, Class A Common
Stock and Class B Common Stock, each with identical rights with respect to
dividends and in any dissolution, but different voting rights. The Class A
Common Stock, shares of which are publically traded and listed on the New York
Stock Exchange under the trading symbol "MNI", is generally entitled to
one-tenth of a vote per share and has the right to vote as a class to elect 25%
of the Company's Directors (rounded up to the nearest whole number), but no vote
with respect to the election of other Directors. The Class B Common Stock, which
is convertible at the option of the holder into Class A Common Stock on a
one-for-one basis, is entitled to one vote per share and has the right to vote
as a class to elect 75% of the Company's Directors (rounded down to the nearest
whole number), but no vote with respect to the election of other Directors.
The Class B Common Stock is closely held and subject to an agreement among
stockholders and the Company designed to keep such stock in the hands of the
members of the McClatchy family and thus to prevent such stock from being held
by the public generally (see "Stock Ownership -- Agreement Among Class B
Stockholders"). Therefore, the Company is restricted from issuing additional
shares of Class B Common Stock, except as contemplated by that agreement. As of
March 17, 1997, the holders of Class B Common Stock had the right to vote shares
constituting approximately 97% of the combined voting power of the Class A and
Class B Common Stock.
The Board of Directors believes it is in the Company's best interests to
increase the number of authorized shares of Class A Common Stock in order to
have additional authorized but unissued shares of Class A Common Stock available
for issuance to meet business needs as they arise. The Board of Directors
believes that the availability of such additional shares will help the Company
attract and retain talented employees through the grant of stock options and
other stock-based incentives. The Board of Directors also believes that the
availability of such shares will provide the Company with the flexibility to
issue Class A Common Stock for other proper corporate purposes which may be
identified by the Board of Directors in the future, such as stock dividends,
finances or acquisitions. Under the Company's Certificate of Incorporation,
stock dividends may not be paid on the Class A Common Stock unless the Company
also pays a like dividend on the Class B Common Stock. Therefore, the Board of
Directors believes it is advisable to increase the authorized shares of Class B
Common Stock pursuant to the proposed amendment of the Company's Certificate of
Incorporation. The issuance of additional shares of stock may have a dilutive
effect on earnings per share and, for a person who does not purchase additional
shares to maintain his or her pro rata interest, on a stockholder's percentage
voting power.
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable without further action by the Company's
stockholders, except as may be required by applicable laws or the rules of any
stock exchange or any national securities association trading system on which
the securities may be listed or traded. The Company's management has no
arrangements, agreements, understandings or plans at the present time for the
issuance or use of the additional shares of Common Stock proposed to be
authorized. Upon issuance, such shares will have the same respective rights as
the outstanding shares of Common Stock. Holders of Common
17
<PAGE>
Stock do not have preemptive rights. The Board of Directors does not intend to
issue any Common Stock except on terms which the Board deems to be in the best
interests of the Company and its then-existing stockholders. Any future issuance
of Common Stock will be subject to the rights of holders of outstanding shares
of any preferred stock which the Company may issue in the future.
The full text of Article IV, as such Article is proposed to be amended
pursuant to this proposal, is set forth in Appendix A hereto.
The affirmative vote of the holders of a majority of the Company's
outstanding Common Stock is required to approve this proposal. If approved by
the stockholders, the proposed amendment to Article IV will become effective
upon the filing of a Certificate of Amendment with the Secretary of State of
Delaware amending the Company's Certificate of Incorporation, which will occur
as soon as reasonably practicable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES AS SET FORTH IN APPENDIX A.
RATIFICATION OF INDEPENDENT AUDITORS
(Proposal 3 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, 1997. 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 reporting regulations
under Section 16 require directors, executive officers and greater than 10%
stockholders to report changes in ownership of Company securities.
18
<PAGE>
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.
Proposals of stockholders intended to be presented at the Company's 1998
annual meeting of stockholders must be received at the corporate Secretary's
office, 2100 Q Street, Sacramento, California 95816, no later than November 30,
1997, to be considered for inclusion in the proxy statement and form of proxy
for that meeting.
By Order of the Board of Directors
/s/ Karole Morgan-Prager
Karole Morgan-Prager, Secretary
March 31, 1997
-19-
<PAGE>
APPENDIX A
ARTICLE IV OF THE
RESTATED CERTIFICATE OF
INCORPORATION OF
McCLATCHY NEWSPAPERS, INC.
(a) Authorized Capitalization. The total number of shares of all
classes of stock which the Corporation shall have authority to issue is one
hundred sixty million (160,000,000) shares, consisting of one hundred million
(100,000,000) shares of Class A Common Stock, with a par value of one cent
($.01) per share, and sixty million (60,000,000) shares of Class B Common Stock,
with a par value of $.01 per share. The number of authorized shares of Class A
Common Stock or Class B Common Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) if the increase or decrease
is approved by the holders of a majority of the voting power of all of the then
outstanding shares of stock entitled to vote in any general election of
directors, voting together as a single class, but without the separate vote of
the holders of any other class of stock.
(b) Class A Common Stock. The shares of Class A Common Stock and
shares of Class B Common Stock shall be identical in all respects and shall have
equal rights and privileges except as set forth in this paragraph (b) and in
paragraph (c) of this Article IV. Upon dissolution of the Corporation, holders
of Class A Common Stock and holders of Class B Common Stock are entitled to
share ratably in the assets thereof that may be available for distribution after
satisfaction of creditors.
(i) Dividends.
(A) Such dividends or distributions as may be determined by
the Board of Directors of the Corporation from time to time may be declared and
paid or made upon the Class A Common Stock out of any source at the time
lawfully available for the payment of dividends, provided that (subject to
subparagraphs (B) and (C) below of this paragraph (b)(i)) identical dividends or
distributions are declared and paid concurrently upon the Class B Common Stock.
If dividends or distributions are declared and paid upon the Class B Common
Stock (subject to subparagraphs (B) and (C) below of this paragraph (b)(i)) an
identical dividend shall be declared and paid concurrently on the Class A Common
Stock.
(B) No dividend may be declared and paid in Class A Common
Stock unless the dividend is payable only to holders of Class A Common Stock and
a dividend payable to Class B Common Stock is declared and paid concurrently in
respect of outstanding shares of Class B Common Stock in the same number of
shares of Class B Common Stock per outstanding share.
(C) If a dividend is declared and paid in Class B Common
Stock in respect of outstanding shares of Class B Common Stock, then a dividend
shall be declared and paid concurrently in shares of Class A Common Stock in
respect of outstanding shares of Class A Common Stock so that each holder of
outstanding shares of Class A Common Stock receives (on a per outstanding share
basis) a total number of dividend shares of Class A Common Stock equal to the
number of dividend shares of Class B Common Stock received by the holders of the
outstanding shares of Class B Common Stock.
(ii) Stock Combinations and Subdivisions. The Class A Common Stock
shall not be combined or subdivided unless at the same time there is a
proportionate combination or subdivision of the Class B Common Stock. If the
Class B Common Stock is combined or subdivided, a proportionate combination or
subdivision of the Class A Common Stock shall be made at the same time.
(iii) Voting. The holders of Class A Common Stock shall have the
voting rights set forth below:
(A) With respect to the election of Directors, the holders of
Class A Common Stock voting as a separate class shall be entitled to elect that
number of Directors which constitutes twenty-five percent (25%) of the total
membership of the Board of Directors and if such twenty-five percent
A-1
<PAGE>
(25%) is not a whole number, then the holders of Class A Common Stock will be
entitled to elect the nearest higher whole number of directors which constitutes
twenty five percent (25%) of such membership. Such election shall be from a
slate of Director nominees separate from a slate of Director nominees from which
holders of Class B Common Stock shall elect Directors. There shall be no
cumulative voting for either holders of Class A Common Stock or holders of
Class B Common Stock.
(B) The holders of Class A Common Stock will be entitled to
vote as a separate class on the removal, with or without cause, of any Director
elected by the holders of Class A Common Stock, provided that, to the extent
permitted by applicable law, any Director may be removed for cause by the Board
of Directors.
(C) Except as may otherwise be required by law, the holders
of Class A Common Stock shall, in all matters not referred to in subparagraphs
(A) or (B) of this paragraph (b)(iii) or in subparagraphs (A) or (B) of
paragraph (c)(iii) of this Article IV, vote together with the holders of Class B
Common Stock as a single class, provided that the holders of Class A Common
Stock will have one-tenth 1/10 of a vote for each share and the holders of
Class B Common Stock shall have one (1) vote for each share.
(D) Notwithstanding anything herein to the contrary, the
holders of Class A Common Stock shall have exclusive voting power on all matters
at any time when no shares of Class B Common Stock are issued and outstanding.
(c) Class B Common Stock.
(i) Dividends and Distributions. Subject to the provisions of
paragraph (b)(i) of this Article IV, such dividends and distributions may be
declared and paid or made upon the Class B Common Stock as may be permitted by
applicable law.
(ii) Stock Combinations and Subdivisions. Subject to the provisions of
paragraph (b)(ii) of this Article IV, the Class B Common Stock may be combined
or subdivided in such manner as may be permitted by applicable law.
(iii) Voting. Subject to the provisions of paragraph (b)(iii) of this
Article IV, the Class B Common Stock shall have one (1) vote per share on all
matters that may be submitted to a vote of the stockholders. Without limiting
the generality of the foregoing:
(A) With respect to the election of Directors, the holders of
Class B Common Stock shall be entitled, voting as a separate class, to elect the
remaining Directors not subject to the priority right of the holders of the
Class A Common Stock set forth in paragraph (b)(iii)(A) of this Article IV; and
(B) The holders of the Class B Common Stock will be entitled
to vote as a separate class on the removal, with or without cause, of any
Director who was elected either by the holders of the Class B Common Stock or by
Directors who were elected by the holders of the Class B Common Stock, provided
that any Director may be removed for cause by the Board of Directors.
(iv) Conversion.
(A) Each holder of record of Class B Common Stock may, in
such holder's sole discretion and at such holder's option, convert any whole
number or all of such holder's shares of Class B Common Stock into fully paid
and nonassessable shares of Class A Common Stock at the rate (subject to
adjustment as hereinafter provided) of one (1) share of Class A Common Stock for
each share of Class B Common Stock surrendered for conversion; provided,
however, that such conversion may not occur unless the shares of Class A Common
Stock into which the shares of Class B Common Stock are to be converted shall
have been listed or approved for listing upon notice of issuance on a national
securities exchange certified by rule or order of the Commissioner of
Corporations of the State of California pursuant to Section 25100(o) of the
California Corporations Code. Any such conversion may be effected by any holder
of Class B Common Stock surrendering such holder's
A-2
<PAGE>
certificate or certificates for the shares of Class B Common Stock to be
converted, duly endorsed, at the office of the Corporation or any transfer
agent for the Class B Common Stock, together with a written notice to the
Corporation at such office that such holder elects to convert all or a
specified number of shares of Class B Common Stock and stating the name or
names in which such holder desires the certificate or certificates for which
shares of Class A Common Stock to be issued. Promptly thereafter, the
Corporation shall issue and deliver to such holder or such holder's nominee or
nominees, a certificate or certificates for the number of shares of Class A
Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made at the close of business on the
day of such surrender and the person or persons entitled to receive the shares
of Class A Common Stock issuable on such conversion shall be treated for all
purposes as the record holder or holders of such shares of Class A Common Stock
on that date.
(B) The number of shares of Class A Common Stock into which
the shares of Class B Common Stock may be converted shall be subject to
adjustment from time to time in the event of any capital reorganization,
reclassification of stock of the Corporation, consolidation or merger of the
Corporation with or into another corporation, or sale or conveyance of all or
substantially all of the assets of the Corporation to another corporation or
other entity or person. Each share of Class B Common Stock shall thereafter be
convertible into such kind and amount of securities or other assets, or both, as
are issuable or distributable in respect of the number of shares of Class A
Common Stock into which each share of Class B Common Stock is convertible
immediately prior to such reorganization, reclassification, consolidation,
merger, sale or conveyance. In any such case, appropriate adjustments shall be
made by the Board of Directors of the Corporation in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of Class B Common Stock to the end that the provisions set forth
herein (including provisions for adjustment of the conversion rate) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities or other assets thereafter deliverable on conversion of the Class B
Common Stock.
(C) The Corporation shall, at all times, reserve and keep
available out of the authorized and unissued shares of Class A Common Stock,
solely for the purpose of effecting the conversion of the outstanding Class B
Common Stock, such number of shares of Class A Common Stock as shall from time
to time be sufficient to effect conversion of all outstanding Class B Common
Stock and if, at any time, the number of authorized and unissued shares of Class
A Common Stock shall not be sufficient to effect conversion of the then
outstanding Class B Common Stock, the Corporation shall take such corporate
action as may be necessary to increase the number of authorized and unissued
shares of Class A Common Stock to such number as shall be sufficient for such
purposes.
A-3
<PAGE>
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 21, 1997.
The undersigned hereby appoints Gary Pruitt 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 Newpapers, Inc. that the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on May 21, 1997, 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 and FOR proposal 3.
- -------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK (Continued and to be dated
COMMENT/ADDRESS CHANGE ON REVERSE SIDE and signed, on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in /X/
this example
<TABLE>
<C> <C>
1. To elect directors to serve until the next Annual Meeting of 2. Approval of the Amendment to
Stockholders and until their successors are elected or chosen. the Company's Certificate of
Incorporation to increase the
number of authorized shares of
FOR all nominees WITHHOLD Nominees: Larry Jinks, Joan F. Lane, Class A Common Stock to 100,000,000
listed to the right AUTHORITY S. Donley Ritchey, Frederick R. Ruiz and the number of authorized
(except as marked to (to vote for all nom- shares of Class B Common Stock
the contrary) inees listed at right to 600,000,000.
/ / / / FOR AGAINST ABSTAIN
(Instruction: To withhold authority to / / / / / /
vote for any individual nominee write
the nominee's name below.) I PLAN TO ATTEND MEETING / /
------------------------------------------ COMMENTS/ADDRESS CHANGE
Please mark the box if you
3. Ratification of the appointment of 4. In their discretion, the proxies have written comments/address / /
Deloitte & Touche as the Company's are authorized to vote upon such change on the reverse side.
independent auditors for 1997. other business as may properly
come before the meeting. Please sign exactly as name
FOR AGAINST ABSTAIN 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: ____________________, 1997
----------------------------------
Signature
----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
</TABLE>
- -------------------------------------------------------------------------------
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>
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 21, 1997.
The undersigned hereby appoints Gary Pruitt 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 Newpapers, Inc. that the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on May 21, 1997, 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 and FOR proposal 3.
- -------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK (Continued and to be dated
COMMENT/ADDRESS CHANGE ON REVERSE SIDE and signed, on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in /X/
this example
<TABLE>
<C> <C>
1. To elect directors to serve until the next Annual Meeting of 2. Approval of the Amendment to
Stockholders and until their successors are elected or chosen. the Company's Certificate of
Incorporation to increase the
number of authorized shares of
FOR all nominees WITHHOLD Nominees: William K. Coblentz, Molly Class A Common Stock to 100,000,000
listed to the right AUTHORITY Maloney Evangelisti, William L. Honeysett, and the number of authorized
(except as marked to (to vote for all nom- Betty Lou Maloney, James B. McClatchy, shares of Class B Common Stock
the contrary) inees listed at right William Ellery McClatchy, to 600,000,000.
Erwin Potts, Gary B. Pruitt,
/ / / / William M. Roth, James P. Smith FOR AGAINST ABSTAIN
(Instruction: To withhold authority to / / / / / /
vote for any individual nominee write
the nominee's name below.) I PLAN TO ATTEND MEETING / /
------------------------------------------ COMMENTS/ADDRESS CHANGE
Please mark the box if you
3. Ratification of the appointment of 4. In their discretion, the proxies have written comments/address / /
Deloitte & Touche as the Company's are authorized to vote upon such change on the reverse side.
independent auditors for 1997. other business as may properly
come before the meeting. Please sign exactly as name
FOR AGAINST ABSTAIN 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: ____________________, 1997
----------------------------------
Signature
----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
</TABLE>
- -------------------------------------------------------------------------------
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
