SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant: Yes.
Filed by a Party other than the Registrant: No.
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Central Newspapers, Inc.
(Name Of Registrant As Specified In Its Charter)
Central Newspapers, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(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. N/A
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[COMPANY LETTERHEAD]
March 31, 1998
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Central Newspapers, Inc. (the "Company") which will be held on Friday, May 15,
1998, at 10:00 A.M., local time, at the headquarters of the Company, at 200 East
Van Buren Street, Phoenix, Arizona.
The Annual Meeting will be held for the following purposes:
1. To elect seven directors of the Company, each to serve for a
one year term.
2. To consider and act upon a proposal to amend the Company's
Amended and Restated Articles of Incorporation to increase the
number of authorized shares of Class A Common Stock from
75,000,000 shares to 150,000,000 shares and Class B Common
Stock from 50,000,000 shares to 130,000,000 shares.
3. To consider and act upon a proposal to amend the Company's
Amended and Restated Articles of Incorporation to remove the
provisions regarding the indemnification of the Company's
directors and officers.
4. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on March 20, 1998 are entitled
to vote at the meeting.
By Order of the Board of Directors
/s/ Louis A. Weil, III
Louis A. Weil, III
President and Chief Executive Officer
<PAGE>
[COMPANY LETTERHEAD]
March 31, 1998
To Our Shareholders:
The 1998 Annual Meeting of Shareholders of Central Newspapers, Inc. will be held
at the headquarters of Central Newspapers, Inc., at 200 East Van Buren Street,
Phoenix, Arizona, on May 15, 1998. The meeting will start promptly at 10:00
A.M., local time.
We urge you to read the enclosed Notice of Annual Meeting and Proxy Statement so
that you may be informed about the business to come before the meeting. At your
earliest convenience, please sign and return the accompanying proxy in the
postage-paid envelope furnished for that purpose.
A copy of our Annual Report for 1997, which is not a part of our proxy
soliciting material, is enclosed.
Central Newspapers, Inc.
/s/ Louis A. Weil, III
Louis A. Weil, III
President and Chief Executive Officer
Please complete, date, sign and mail promptly the accompanying
proxy in the return envelope provided for that purpose,
whether or not you plan to attend the meeting.
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Central
Newspapers, Inc., an Indiana corporation (the "Company"), the principal
executive offices of which are located at 200 East Van Buren Street, Phoenix,
Arizona. This Proxy Statement and the enclosed proxy were mailed on or about
March 31, 1998.
The enclosed proxy is solicited for use at the Annual Meeting of the
Company's shareholders to be held on May 15, 1998 at 10:00 A.M., local time, at
the headquarters of Central Newspapers, Inc., at 200 East Van Buren Street,
Phoenix, Arizona and at any adjournment(s) thereof.
All shares represented by the enclosed proxy will be voted at the meeting
in accordance with instructions given by the shareholder, but where no
instruction is given, the shares will be voted in favor of the action
recommended by the Board of Directors and, in the absence of any recommendation,
in accordance with the best judgment of the proxy holders. A shareholder
executing and delivering the enclosed proxy may revoke it by a written notice
delivered to the Secretary of the Company or in person at the meeting, at any
time before it is exercised.
The entire cost of soliciting proxies will be borne by the Company. The
Company expects to reimburse brokers or other persons for their reasonable
out-of-pocket expenses in forwarding proxy material to the beneficial owners.
PURPOSES OF MEETING
The purposes of the meeting are (1) to elect seven directors, each to serve
for a one year term, (2) to consider and act upon a proposal to amend the
Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation") to increase the number of authorized shares of Class A Common
Stock from 75,000,000 shares to 150,000,000 shares and Class B Common Stock from
50,000,000 shares to 130,000,000 shares, (3) to amend the Company's Articles of
Incorporation to remove the provisions regarding the indemnification of the
Company's directors and officers, and (4) to transact such other business as may
properly come before the meeting. The Board of Directors is not aware of any
other business which will come before the meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The close of business on March 20, 1998 has been fixed as the record date
for determining which shareholders are entitled to notice of, and to vote at,
the meeting and at any adjournment(s) thereof. As of March 10, 1998, 22,091,159
shares of the Company's Class A Common Stock and 31,345,500 shares of the
Company's Class B Common Stock were outstanding. The Company's Class A Common
Stock and Class B Common Stock are referred to collectively herein as the
Company's Common Stock. The Company has no other class of capital stock
outstanding. Each holder of record of Class A Common Stock on the record date
will be entitled to 1/10 of a vote for each share registered in his or her name
on each matter presented to a vote of the shareholders at the Annual Meeting.
Each holder of record of Class B Common Stock on the record date will be
entitled to one vote for each share registered in his or her name on each matter
presented to a vote of the shareholders at the Annual Meeting. All shares of
Class A Common Stock and Class B Common Stock vote together as a single class. A
majority of the votes entitled to be cast, in person or by proxy, is necessary
for a quorum. Under Indiana law, once a share is represented for any purpose at
a meeting, it is deemed present for quorum purposes for the remainder of the
meeting. The affirmative vote of a majority of the quorum is required for the
election of directors and the approval of the amendment to the Company's
Articles of Incorporation. Abstentions, broker non-votes and instructions on a
proxy to withhold authority to vote for one or more of the director nominees
will have the same effect as a vote against the particular issue or nominee.
<PAGE>
The persons listed in the following table are known by management to own
beneficially more than 5% of the outstanding shares of the Company's Class A
Common Stock or Class B Common Stock. The names and addresses of these persons,
and the number and percentage of shares of Class A Common Stock and Class B
Common Stock owned beneficially by them as of March 10, 1998 (based on the best
information available to the Company on such date) are included in the following
table. To the Company's knowledge, each shareholder has sole investment and
voting power with respect to the shares shown as beneficially owned by such
shareholder unless otherwise indicated.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner(1) Title of Class Beneficial Ownership of Class(2)
---------------------- -------------- -------------------- -----------
<S> <C> <C> <C>
Eugene C. Pulliam Trust Class A Common Stock -0- --
Class B Common Stock 22,907,500 73.1%
Nina Mason Pulliam Class A Common Stock 5,073,600 23.0%
Charitable Trust Class B Common Stock 3,732,500 11.9%
Eugene S. Pulliam Class A Common Stock 1,878,574 (3) 8.5%
307 North Pennsylvania Street Class B Common Stock 25,235,000 (4) 80.5%
Indianapolis, Indiana 46204
Frank E. Russell Class A Common Stock 6,093,600 (5) 27.4%
Class B Common Stock 26,765,000 (6) 85.4%
Ariel Capital Management, Inc. Class A Common Stock 1,324,507 (7) 6.0%
307 North Michigan Avenue Class B Common Stock -0- --
Chicago, Illinois 60601
</TABLE>
* Less than one percent.
(1) Unless otherwise specified, all addresses: 135 North Pennsylvania
Street, Suite 1200, Indianapolis, Indiana 46204.
(2) Calculated pursuant to Rule 13d-3(d)(1) promulgated under the
Securities Exchange Act of 1934, as amended, except that percentages do
not reflect rights to acquire shares of Class A Common Stock through
conversion of shares of Class B Common Stock. Each share of Class B
Common Stock is convertible into 1/10 of a share of Class A Common
Stock.
(3) Includes (a) 20,000 shares owned by Jane Pulliam, wife of Eugene S.
Pulliam, as to which shares Mr. Pulliam disclaims beneficial ownership,
(b) 1,778,574 shares held by the Eugene S. Pulliam Trust of which Mr.
Pulliam is the Trustee and (c) options held by Mr. Pulliam which are
currently exercisable for 80,000 shares of Class A Common Stock.
(4) Includes (a) 22,907,500 shares owned by the Eugene C. Pulliam Trust of
which Eugene S. Pulliam and Frank E. Russell are Trustees with shared
voting and investment power and (b) 2,327,500 shares held by the Eugene
S. Pulliam Trust of which Mr. Pulliam is the Trustee.
(5) Includes (a) 15,000 shares owned by Nancy M. Russell, wife of Frank E.
Russell, as to which shares Mr. Russell disclaims beneficial ownership,
(b) 702,000 shares held in eight separate trusts for which Frank E.
Russell acts as sole Trustee and as to which Mr. Russell disclaims
beneficial ownership, (c) 5,073,600 shares held by the Nina Mason
Pulliam Charitable Trust of which Mr. Russell is Trustee, as to which
shares Mr. Russell disclaims beneficial ownership, and (d) options held
by Mr. Russell which are currently exercisable for 162,500 shares of
Class A Common Stock.
(6) Includes (a) 22,907,500 shares owned by the Eugene C. Pulliam Trust of
which Eugene S. Pulliam and Frank E. Russell are Trustees with shared
voting and investment power and as to which shares Mr. Russell
disclaims beneficial ownership and (b) 3,732,500 shares held in the
Nina Mason Pulliam Charitable Trust of which Mr. Russell is Trustee, as
to which shares Mr. Russell disclaims beneficial ownership.
(7) Ariel Capital Management, Inc. holds all such shares for client
accounts, none of which individually represents more than 5% of the
outstanding Class A Common Stock, and disclaims beneficial ownership of
such shares. Ariel Capital Management, Inc., in its capacity as
investment advisor, has sole voting power with respect to 1,226,507
shares, shared voting power with respect to 18,900 shares and sole
dispositive power with respect to 1,324,507 shares. This information is
as of February 1, 1998.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock, as of
March 10, 1998, by its directors and named executive officers who served as
executive officers during the fiscal year ended December 28, 1997 and all
directors and executive officers as a group. Unless otherwise indicated, each
shareholder listed below has sole investment and voting power with respect to
the shares shown as beneficially owned by him.
<TABLE>
<CAPTION>
Name of Number of Shares Percent of
Beneficial Owner Title of Class Beneficially Owned Class (1)
---------------- -------------- ------------------ ---------
<S> <C> <C> <C>
Kent E. Agness (2) Class A Common Stock 3,000 *
Class B Common Stock -0- --
Malcolm W. Applegate (3) Class A Common Stock 114,051 (4) *
Class B Common Stock -0- --
William A. Franke Class A Common Stock 5,000 (5) *
Class B Common Stock -0- --
L. Ben Lytle Class A Common Stock 1,200 (6) *
Class B Common Stock -0- --
Thomas K. MacGillivray Class A Common Stock 22,584 (7) *
Class B Common Stock -0- --
John F. Oppedahl Class A Common Stock 39,630 (8) *
Class B Common Stock -0- --
Eugene S. Pulliam Class A Common Stock 1,878,574 (9) 8.5 %
Class B Common Stock 25,235,000(10) 80.5 %
Dan Quayle Class A Common Stock 37,850(11) *
Class B Common Stock 25,000 *
Frank E. Russell Class A Common Stock 6,093,600(12) 27.4 %
Class B Common Stock 26,765,000(13) 85.4 %
Richard Snell Class A Common Stock 2,000(14) *
Class B Common Stock -0- --
Eric S. Tooker Class A Common Stock 5,204 (15) *
Class B Common Stock -0- --
Louis A. Weil, III Class A Common Stock 145,757 (16) *
Class B Common Stock -0- --
All directors and Class A Common Stock 8,348,450 36.9 %
executive officers as Class B Common Stock 29,117,500(10) 92.9 %
a group
</TABLE>
- ------------------
<PAGE>
* Less than one percent.
(1) Calculated pursuant to Rule 13d-3(d)(1) promulgated under the
Securities Exchange Act of 1934, as amended, except that percentages do
not reflect rights to acquire shares of Class A Common Stock through
conversion of shares of Class B Common Stock. Each share of Class B
Common Stock is convertible into 1/10 of a share of Class A Common
Stock.
(2) Kent E. Agness served as a director of the Company until April 24,
1997.
(3) Malcolm W. Applegate served as a director of the Company until April
24, 1997 and retired from his positions as President and General
Manager of Indianapolis Newspapers, Inc. effective January 1, 1998.
(4) Includes (a) 7,000 restricted shares, (b) 1,051 shares held for the
benefit of Mr. Applegate by the Savings Plus Plan and (c) options held
by Mr. Applegate which are currently exercisable for 86,000 shares of
Class A Common Stock.
(5) Includes options held by Mr. Franke which are currently exercisable for
3,000 shares of Class A Common Stock.
(6) Includes options held by Mr. Lytle which are currently exercisable for
1,000 shares of Class A Common Stock.
(7) Includes (a) 6,500 restricted shares, (b) 1,668 shares held for the
benefit of Mr. MacGillivray by the Savings Plus Plan and (c) options
held by Mr. MacGillivray which are currently exercisable for 14,416
shares of Class A Common Stock.
(8) Includes (a) 7,000 restricted shares, (b) 755 shares held for the
benefit of Mr. Oppedahl by the Savings Plus Plan and (c) options held
by Mr. Oppedahl which are currently exercisable for 31,750 shares of
Class A Common Stock.
(9) Includes (a) 20,000 shares owned by Jane Pulliam, wife of Eugene S.
Pulliam, as to which shares Mr. Pulliam disclaims beneficial ownership,
(b) 1,778,574 shares held by the Eugene S. Pulliam Trust of which Mr.
Pulliam is the Trustee and (c) options held by Mr. Pulliam which are
currently exercisable for 80,000 shares of Class A Common Stock.
(10) Includes (a) 22,907,500 shares owned by the Eugene C. Pulliam Trust of
which Eugene S. Pulliam and Frank E. Russell are Trustees with shared
voting and investment power and (b) 2,327,500 shares held by the Eugene
S. Pulliam Trust of which Mr. Pulliam is the Trustee.
(11) Includes (a) 8,816 shares owned by Marilyn Tucker Quayle, wife of Dan
Quayle, and (b) options held by Mr. Quayle which are currently
exercisable for 3,000 shares of Class A Common Stock.
(12) Includes (a) 15,000 shares owned by Nancy M. Russell, wife of Frank E.
Russell, as to which shares Mr. Russell disclaims beneficial ownership,
(b) 702,000 shares held in eight separate trusts for which Frank E.
Russell acts as sole Trustee and as to which Mr. Russell disclaims
beneficial ownership, (c) 5,073,600 shares held by the Nina Mason
Pulliam Charitable Trust of which Mr. Russell is Trustee, as to which
shares Mr. Russell disclaims beneficial ownership, and (d) options held
by Mr. Russell which are currently exercisable for 162,500 shares of
Class A Common Stock.
(13) Includes (a) 22,907,500 shares owned by the Eugene C. Pulliam Trust of
which Eugene S. Pulliam and Frank E. Russell are Trustees with shared
voting and investment power, as to which shares Mr. Russell disclaims
beneficial ownership and (b) 3,732,500 shares held in the Nina Mason
Pulliam Charitable Trust of which Mr. Russell is Trustee, as to which
shares Mr. Russell disclaims beneficial ownership.
(14) Includes options held by Mr. Snell which are currently exercisable for
1,000 shares of Class A Common Stock.
(15) Includes (a) 3,500 restricted shares, (b) 204 shares held for the
benefit of Mr. Tooker by the Savings Plus Plan and (c) options held by
Mr. Tooker which are currently exercisable for 1,000 shares of Class A
Common Stock.
(16) Includes (a) 1,424 shares held for the benefit of Mr. Weil by the
Savings Plus Plan, (b) 2,500 shares held by the Louis A. Weil III
Family Trust, (c) 14,000 restricted shares and (d) options held by Mr.
Weil which are currently exercisable for 127,833 shares of Class A
Common Stock.
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
Seven directors will be elected at the meeting for a one year term. All of
the nominees listed below are currently directors whose present terms of office
will expire upon completion of the election at the meeting. Unless otherwise
specified by the shareholder, the enclosed proxy will be voted in favor of
electing as directors the nominees listed below. If any nominee should be unable
to serve, the proxy will be voted for a substitute nominee selected by the Board
of Directors of the Company.
The name, principal occupation, business experience since at least 1993,
tenure and age of each nominee for election as a director are as set forth
below.
William A. Franke, age 61, has been the Chairman and Chief Executive
Officer of America West Holdings Corporation, an aviation and travel service
company, and the Chairman of the Board of its principal subsidiary, America West
Airlines, Inc., an airline carrier, since February 1997. Mr. Franke was the
subsidiary's Chief Executive Officer from December 1993 until February 1997 and
its President from May 1996 until February 1997. He is a director of America
West Holdings Corporation and each of its major subsidiaries. He is also a
director of Phelps Dodge Corporation, Beringer Wine Estates Inc., Mtel Latin
America, Inc., and Air Transport Association of America. He is a director and
Chairman of the Board of Airplanes Limited and a controlling trustee and
Chairman of Airplanes U.S. Trust, entities involved in aircraft financing and
leasing. He is also a Managing Partner of Newbridge Latin America, LLP, a
private equity fund focused on Latin American investments. He has been a
director of the Company since 1990.
L. Ben Lytle, age 51, has been President and Chief Executive Officer of
Anthem Insurance Companies, Inc., an insurance holding company, since 1989 and
presently serves as Chairman of the Board of Directors of each of its major
subsidiaries. He is a director of Acordia, Inc., IPALCO, Inc., Duke REIT, and
Bank One, Indianapolis, N.A. He has been a director of the Company since 1997.
Eugene S. Pulliam, age 83, has been Publisher of The Indianapolis Star and
The Indianapolis News since 1975 and was President of Phoenix Newspapers, Inc.
from 1979 until 1997. He has been a director of the Company since 1954. Mr.
Pulliam is the uncle of Dan Quayle.
Dan Quayle, age 51, has been Chairman of Campaign America, a political
action committee, since 1995 and Chairman of BTC, Inc., a private company
through which he operates certain of his personal business interests, since
1993. He served as Chairman of Circle Investors, Inc., a private financial
services and insurance holding company, from 1993 until February 1997 and served
on the Board of Directors of Amtran, Inc., an aviation and travel service
company, in 1996. He was Vice President of the United States from January 1989
to January 1993 and a United States Senator from January 1981 to January 1989.
Mr. Quayle is a director of American Standard, Inc. and U.S. Filter Corporation.
He has been a director of the Company since 1993. Mr. Quayle is the nephew of
Eugene S. Pulliam.
Frank E. Russell, age 77, has been Chairman of the Company's Board of
Directors and Assistant Secretary of the Company since January 1996. Mr. Russell
served as President and Chief Executive Officer of the Company from 1979 through
1995. He has been a director of the Company since 1974.
Richard Snell, age 67, has been Chairman of the Board and Chief Executive
Officer of Pinnacle West Capital Corporation, a utility holding company, and
Chairman of the Board of Arizona Public Service Company since 1990. He is also a
director of Aztar Corporation and Banc One Arizona Corporation. He has been a
director of the Company since 1996.
Louis A. Weil, III, age 57, has been President and Chief Executive Officer
of the Company since 1996. From July 1991 through December 1996, Mr. Weil served
as Publisher and Chief Executive Officer of The Arizona Republic and The Phoenix
Gazette and Executive Vice President of Phoenix Newspapers, Inc. Mr. Weil served
as Publisher of Time from May 1989 to July 1991, and President and Publisher of
The Detroit News from May 1987 to May 1989. Mr. Weil serves as an independent
director of the Domestic Equity, Global Debt and Long-term Municipal and
Domestic Taxable Bond mutual funds managed by The Prudential. He has been a
director of the Company since 1991.
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS AND
COMPENSATION OF DIRECTORS
The Board of Directors of the Company has a Nominating Committee, a
Compensation Committee, an Audit Committee and an Executive Committee.
The members of the Nominating Committee are Frank E. Russell (Chairman),
Eugene S. Pulliam and Louis A. Weil, III. This Committee has the responsibility
of nominating individuals to serve on the Board of Directors of the Company. The
Nominating Committee met in February of 1997 to nominate directors for election
at the 1997 Annual Shareholder Meeting and met in February of 1998 to nominate
directors to stand for election at the 1998 Annual Shareholder Meeting. Each
nominee for election as a director of the Company named herein was recommended
by the Nominating Committee. The Nominating Committee will consider nominees
recommended by shareholders for election at the Company's 1999 Annual Meeting.
Any shareholder who wishes to make such a recommendation to the Nominating
Committee should submit the name or names of the individuals being recommended
in writing to the Nominating Committee, c/o Frank E. Russell, Chairman of the
Board, Central Newspapers, Inc., 135 North Pennsylvania Street, Suite 1200,
Indianapolis, Indiana 46204 by November 23, 1998.
The Compensation Committee is responsible for developing the Company's
executive compensation policies and for reviewing and determining compensation
to be paid to the Chief Executive Officer and the other ten most highly
compensated employees of the Company and its subsidiaries. The Compensation
Committee is also responsible for administering and interpreting the Central
Newspapers, Inc. Amended and Restated Stock Compensation Plan (the "Stock
Compensation Plan"). The Compensation Committee, which met in March, September
and December of 1997, is made up of the non-employee directors of the Company,
namely William A. Franke (Chairman), L. Ben Lytle, Dan Quayle and Richard Snell.
The Audit Committee is responsible for reviewing the services and fees of
the Company's independent accountants, financial statements, accounting
practices and adequacy of auditing and internal controls of the Company. The
members of the Audit Committee are Richard Snell (Chairman), William A. Franke,
and L. Ben Lytle. The Committee met in February and September of 1997 and
February of 1998.
The Executive Committee has all authority of the Board of Directors during
intervals between meetings of the Board subject to such limitations as may be
imposed by law, by subsequent resolution of the Board of Directors, or by the
By-Laws. The members of the Executive Committee are Louis A. Weil, III
(Chairman), Eugene S. Pulliam and Frank E. Russell. The Executive Committee met
once in February of 1997 and took other action by written consent. Any material
action taken by the Executive Committee is ratified by the Board of Directors.
The Board of Directors held six meetings during the Company's fiscal year
ended December 28, 1997. No director attended fewer than 75% of the aggregate of
(i) the total number of meetings of the Board of Directors, and (ii) the total
number of meetings of the committees of which he was a member at the time of the
meeting.
Directors who are also employees of the Company receive no director fees or
other compensation for acting as a director. Non-employee directors receive an
annual retainer of $20,000, $1,000 for each meeting of the Board of Directors
attended and $750 for each meeting of a committee of the Board of Directors
attended. Under the Stock Compensation Plan, each non-employee director receives
an annual grant of stock options to purchase 1,000 shares of the Company's Class
A Common Stock upon election or re-election to the Board of Directors. Such
options have an exercise price equal to the fair market value of the Class A
Common Stock on the date of grant and a term of ten years. In addition,
non-employee directors receive certain life insurance coverage. William A.
Franke, L. Ben Lytle and Dan Quayle receive coverage under split-dollar life
insurance arrangements pursuant to which the Company will be reimbursed for
premiums paid. The dollar value benefit of the premiums paid pursuant to such
policies in 1997 was $4,025, $9,525 and $11,266 for Mr. Franke, Mr. Lytle and
Mr. Quayle, respectively. The Company also provided such split-dollar life
insurance for Kent E. Agness who served as a director until April 1997. The
dollar value benefit of the premium paid for Mr. Agness in 1997 was $4,738.
Richard Snell receives coverage under a death benefit only arrangement. For
1997, the current year term cost of such insurance for Mr. Snell was $971. All
directors also participate in the Company's Directors' and Officers' Charitable
Award Program. Under this program, upon the death of a participating officer or
director, the Company will donate $500,000 to one or more qualifying charitable
organizations chosen by the participant and the Company will be reimbursed by
life insurance proceeds. Individual participants derive no financial benefit
from this program since all charitable deductions accrue solely to the Company.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Compensation For Services
The compensation for services rendered to the Company and its primary
operating subsidiaries, Phoenix Newspapers, Inc. ("PNI") and Indianapolis
Newspapers, Inc. ("INI"), during the fiscal year ended December 28, 1997, paid
to the Chief Executive Officer and the four other most highly compensated
executive officers of the Company who served in such positions during the fiscal
year ended December 28, 1997 is set forth below:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Other Compensation All
Name and Principal Position Annual Restricted Securities Other
During the Fiscal Year Compen- Stock Underlying Compen-
Ended December 28, 1997 Year Salary ($) Bonus ($) sation($) Awards ($) Options(#) sation($)
- ----------------------- ---- ---------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Louis A. Weil, III 1997 472,500 360,000 (1) -0-(3) 15,000 78,890(9)
President and Chief 1996 435,150 304,500 (1) 505,750 80,000 68,423(10)
Executive Officer 1995 390,817 176,581 (1) -0- 42,000(8) 67,207(11)
John F. Oppedahl 1997 287,500 172,956 (1) -0-(4) 6,750 60,793(9)
Publisher and Chief 1996 275,150 146,300 (1) 252,875 30,000 27,885(10)
Executive Officer of PNI 1995 --- --- --- --- --- ---
Malcolm W. Applegate 1997 274,367 156,750 (1) -0-(5) 5,500 40,073(9)
President and 1996 263,900 140,315 (1) 252,875 16,000 31,267(10)
General Manager of INI 1995 248,067 109,908 (1) -0- 42,000(8) 33,550(11)
Thomas K. MacGillivray 1997 215,200 129,000 118,505 (2) 106,313(6) 6,750 34,215(9)
Vice President and Chief 1996 190,150 106,400 (1) 180,625 32,000 17,440(10)
Financial Officer 1995 --- --- --- --- --- ---
Eric S. Tooker 1997 182,701 110,000 119,157 (2) 69,375(7) 3,000 27,394(9)
Vice President, Secretary and 1996 101,228 55,552 (1) 93,750 10,000 14,366(10)
General Counsel 1995 --- --- --- --- ---
</TABLE>
Footnotes on following page
<PAGE>
(1) Executive officers of the Company receive certain perquisites, but with
respect to this executive officer the incremental cost of providing such
perquisites does not exceed the lesser of $50,000 or 10% of the officer's
salary and bonus.
(2) Indicates total amounts paid for relocation expenses for each executive
officer's relocation to Phoenix.
(3) At the close of the 1997 fiscal year, Mr. Weil held 14,000 restricted
shares, the aggregate value of which was $980,875. Dividends are currently
paid on the restricted shares.
(4) At the close of the 1997 fiscal year, Mr. Oppedahl held 7,000 restricted
shares, the aggregate value of which was $490,437.50. Dividends are
currently paid on the restricted shares.
(5) At the close of the 1997 fiscal year, Mr. Applegate held 7,000 restricted
shares, the aggregate value of which was $490,437.50. Dividends are
currently paid on the restricted shares.
(6) At the close of the 1997 fiscal year, Mr. MacGillivray held 6,500
restricted shares, the aggregate value of which was $455,406.25. Dividends
are currently paid on the restricted shares.
(7) At the close of the 1997 fiscal year, Mr. Tooker held 3,500 restricted
shares, the aggregate value of which was $245,218.75. Dividends are
currently paid on the restricted shares.
(8) Represents option grants made with respect to 1994 and 1995.
(9) Includes the following for Messrs. Weil, Oppedahl, Applegate, MacGillivray,
and Tooker: (a) Company matching contributions to the Savings Plus Plan of
$4750, (b) Company matching contributions to the Company's Non-Qualified
Savings Plan of $28,550, $13,668, $12,495, $9,018, and $3,915 for each
named executive officer, respectively, (c) dollar value benefits for
premium payments under split-dollar life insurance policies under which the
Company will be reimbursed for premiums paid in the amounts of $36,872,
$33,657, $14,219, $11,893, and $14,430 for each named executive officer,
respectively, and (d) automobile allowances in the amounts of $8,718,
$8,718, $8,609, $8,554, and $4,299 for each named executive officer,
respectively.
(10) Includes the following amounts for Messrs. Weil, Oppedahl, Applegate,
MacGillivray: (a) Company matching contributions to the Savings Plus Plan
of $4,750 and (b) Company matching contributions to the Company's
Non-Qualified Savings Plan of $24,836, $12,108, $11,419, and $7,112 for
each named executive officer, respectively. Includes for Messrs. Weil,
Opperdahl, Applegate, MacGillivray and Tooker the dollar value benefits for
premium payments under split-dollar life insurance policies under which the
Company will be reimbursed for premiums paid in the amounts of $38,837,
$11,027, $15,098, $5,578, and $14,366, for each named executive officer,
respectively.
(11) Includes the following amounts for Messrs. Weil and Applegate: (a) Company
matching contributions to the Savings Plus Plan of $4,620, (b) Company
matching contributions to the Company's Non-Qualified Savings Plan of
$18,076 and $9,699, respectively, and (c) dollar value benefits for premium
payments under split-dollar life insurance policies under which the Company
will be reimbursed for premiums paid in the amounts of $44,511 and $19,231,
respectively.
<PAGE>
Option Grants, Exercises and Holdings
The following tables set forth information relating to option grants,
exercises and holdings with respect to each of the executive officers named in
the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Number of Percent of Value Assuming
Securities Total Options Annual Rates of Stock
Underlying Granted To Exercise Price Appreciation
Options Employees in Price Per Expiration For Option Term
Name Granted Fiscal Year Share Date 5% (2) 10% (2)
- -------------------- ------- ----------- ----- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Louis A. Weil, III 15,000(1) 12.10% $46.375 3/11/07 $437,472 $1,108,645
John F. Oppedahl 6,750(1) 5.44% $46.375 3/11/07 $196,852 $ 498,890
Malcolm W. Applegate 5,500(1) 4.44% $46.375 3/11/07 $160,406 $ 406,503
Thomas K. MacGillivray 6,750(1) 5.44% $46.375 3/11/07 $196,862 $ 498,890
Eric S. Tooker 3,000(1) 2.42% $46.375 3/11/07 $ 87,494 $ 221,729
</TABLE>
(1) These options vest in three equal annual installments beginning on March
11, 1998.
(2) Based on a market value of $70.0625 per share at December 26, 1997. These
gains are based upon assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the
full option term. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on option exercises and Class A
Common Stock holdings are dependent on the future performance of the
Company's Class A Common Stock and overall stock market conditions. There
can be no assurance that the amounts reflected on this table will be
achieved.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of
No. of Unexercised
Unexercised In-The-Money
Options at Options at
Shares Value Fiscal Year-End Fiscal Year-End
Acquired on Realized At Exer- Unexer- Exer- Unexer-
Name Exercise Exercise Date cisable cisable cisable (1) cisable (1)
- ---- ------------ ------------- ---------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Louis A. Weil, III -0- --- 127,833 98,667 $6,156,581 $3,632,011
John F. Oppedahl -0- --- 31,750 36,000 $1,443,483 $1,309,874
Malcolm W. Applegate 8,000 $293,000.00 69,666 36,334 $3,300,166 $1,412,707
Thomas K. MacGillivray 5,500 $237,187.50 14,416 35,834 $ 557,460 $1,293,304
Eric S. Tooker 3,333 $ 97,490.25 1,000 8,667 $ 26,812 $ 289,886
</TABLE>
(1) Based on the closing price for Class A Common Stock on December 26, 1997
which was $70.0625 per share.
Defined Benefit Plans
The Company maintains the Central Newspapers, Inc. Retirement Plan (the
"Pension Plan") for its employees. The Pension Plan is a tax qualified defined
benefit plan under the Internal Revenue Code of 1986, as amended (the "Code")
and is subject to requirements imposed under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
<PAGE>
Employees of the Company and certain of its subsidiaries (collectively, the
"Participating Companies") automatically become participants in the Pension Plan
on the first day of the month following completion of at least 1,000 hours of
service in a designated one year period of employment with the Participating
Companies. Benefits are fully vested upon completion of at least five years of
service. Benefits also become vested upon a participant's death, disability or
attainment of early retirement age.
For service prior to 1994, a participant's annual retirement income under
the Pension Plan is equal to the sum of his or her basic credits and his
supplemental credits, subject to a special dollar limitation under the Code.
However, the Participating Companies have periodically increased the amount of
retirement income payable to participants. The Participating Companies
contribute amounts to the Pension Plan on a periodic basis which, when
aggregated with voluntary employee contributions, are sufficient to fund the
Pension Plan in accordance with actuarial assumptions. Benefits are payable upon
normal, early or disability retirement and deferred vested benefits are payable
on other terminations of employment. Benefits with an actuarial value in excess
of $3,500 are payable on a monthly basis. Under certain circumstances, survivor
benefits are payable upon the death of a participant.
For service prior to 1994, a participant generally earned basic credits for
each week's participation in the Pension Plan equal to the amount of his or her
weekly earnings, up to $312.00, multiplied by 1-7/8%. A participant could choose
to earn supplemental credits for each week of participation in the Pension Plan
by voluntarily contributing 3-3/4% of the participant's weekly earnings over
$312.00 (including salary, wages, overtime, bonuses and contributions to the
Central Newspapers, Inc. Savings Plus Plan (the "Savings Plus Plan")) to the
Pension Plan. If a participant chose to make such voluntary contributions, he or
she received supplemental credits equal to 60% of the voluntary contributions
made each week.
Effective January 1, 1994 the Pension Plan eliminated the voluntary
employee contribution feature, provided future benefits based on the
participants' years of service and average compensation at retirement and
enhanced the pension benefits of early retirees who begin receiving their
benefits before age 65. Specifically, a participant's retirement benefit for
periods of service after 1993 equals 1.2% of the participant's average annual
compensation for the highest 5 of his last 10 years of employment with the
Participating Companies multiplied by his number of years of service with the
Participating Companies after 1993. Plan participants who had attained age 50 on
December 31, 1993 could elect to continue making voluntary employee
contributions and have benefits provided under the pre-1994 plan provisions. The
benefits provided to existing retirees and beneficiaries were increased by
varying amounts up to ten percent. The Participating Companies have received
from the Internal Revenue Service a favorable determination as to the
tax-qualified status of the Pension Plan, as amended and restated.
The aggregate annual benefit payments receivable by a participant under the
Pension Plan are subject to a maximum benefit amount equal to the lesser of the
following amounts: (i) $125,000 in fiscal 1997 subject to specified limitations
and adjustments under the Code; or (ii) 100% of the participant's average annual
income (as defined under Section 415 of the Code) from the Participating
Companies during the three consecutive years in which the employee was a
participant in the Pension Plan and had the greatest aggregate income from the
Participating Companies.
Effective January 1, 1994, the Participating Companies adopted a
supplemental retirement plan (the "Supplemental Plan") for those employees who
are eligible for split dollar insurance coverage under the Executive Life
Insurance Plan and who make more than $160,000 per year (as indexed for
inflation each year under Internal Revenue Service rules). The Supplemental Plan
allows each participant to accrue a benefit each year equal to: (a) the benefits
that participant would be entitled to receive under the Pension Plan without
regard to the limits imposed by Sections 401(a)(17) and 415 of the Code; minus
(b) the benefits that participant is entitled to receive under the Pension Plan.
Section 401(a)(17) of the Code provides that only the first $160,000 of an
individual's annual compensation may be considered in calculating that
individual's accrued benefit under the Pension Plan. Section 415 of the Code
limits each participant to a $125,000 (indexed for inflation) annual benefit
under the Pension Plan. The accrued benefits calculated under this formula are
based solely on service on and after January 1, 1994.
<PAGE>
The Supplemental Plan is not tax qualified. Benefits under the Supplemental
Plan are payable solely from the general assets of the Participating Companies
and are not funded in any manner. Participants are not subject to income tax on
their Supplemental Plan benefits until these benefits are actually paid. The
actuarial present value of the Supplemental Plan benefits a participant earns
each year is currently subject to employment taxes, but will not later be
subject to employment taxes when paid to the participant.
Benefits under the Supplemental Plan are paid in a single lump sum cash
payment at the time the participant's employment with the Participating
Companies terminates for any reason. If the participant's employment terminates
by reason of his or her death, the participant's spouse or other beneficiary
designated under the Pension Plan will be entitled to a single lump sum cash
payment computed in the same manner as the death benefit he or she is entitled
to receive under the Pension Plan. In lieu of a single lump sum cash payment,
each participant may make an irrevocable election, within 30 days after becoming
a participant in the Supplemental Plan, to have his or her, his or her spouse's
or his or her beneficiary's benefits under the Supplemental Plan paid in the
same form and at the same time as his or her benefits are paid under the Pension
Plan.
The table below shows the estimated annual benefits expressed in single
life annuity form that would be provided by the Pension Plan and the
Supplemental Plan (if applicable) for the executive officers named in the
Summary Compensation Table if such officers had both attained age 65 and retired
on January 1, 1998. All such executive officers have made the maximum possible
voluntary contributions to the Pension Plan.
Estimated Annual
Benefits at January 1, 1998
---------------------------
Louis A. Weil, III $59,098
John F. Oppedahl $16,549
Malcolm W. Applegate $39,502
Thomas K. MacGillivray $12,402
Eric S. Tooker $ 4,558
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Statement of Compensation Policies
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") is responsible for developing the Company's executive
compensation policies. The Compensation Committee has adopted the following list
of objectives to be achieved through its compensation of executive officers:
o Recruit, retain and reward high performing executive talent through
the use of a combination of short-term cash and long-term equity
compensation;
o Link annual and long-term compensation of executive officers to the
creation of shareholder value; and
o Provide base salaries for executive officers at approximately the 50th
percentile of salaries paid for comparable positions by other similar
companies in the industry, and create annual incentive opportunities
which can increase total cash compensation toward the 75th percentile.
During the fiscal year ended December 28, 1997, the Company's executive
compensation program was comprised of base salary, annual incentive bonuses and
long-term incentive opportunities in the form of stock options and restricted
stock.
<PAGE>
Base Salary
The Compensation Committee determines, on an annual basis, the base salary
of the Chief Executive Officer and each of the other ten most highly compensated
employees of the Company and its subsidiaries. Base salary levels for the
Company's executive officers are targeted to fall into the middle range of
salaries offered for comparable positions by other similar companies in the
newspaper industry. Merit increases to base salaries are based upon the
attainment of certain pre-negotiated, measurable objectives relevant to the
Company's business strategy. In setting salaries for fiscal 1997, the
Compensation Committee reviewed recommendations of management that were
developed in conjunction with a compensation consultant retained by the Company.
These recommendations were prepared, in part, based upon comparative
compensation data relating to newspaper companies which actively compete with
the Company for executive talent, some of which are included in the index of
peer companies used to construct the performance graph which follows this
report. In addition to such recommendations, in determining an executive's base
salary the Compensation Committee took into account the executive's tenure and
individual experience, as well as the Compensation Committee's subjective
assessment of individual performance. None of the factors considered in
determining base salaries were assigned relative weights.
Effective March 11, 1997, the Compensation Committee increased by 10% the
salary paid to Louis A. Weil, III. This increase reflected, among other factors,
the Compensation Committee's subjective assessment of Mr. Weil's individual
performance, particularly his performance in putting together a new management
team and the energy and leadership he demonstrated in leading change within the
Company. Based upon information obtained from the Company's compensation
consultant, the Compensation Committee believes Mr. Weil's base salary is
slightly below the mid-point of the range of salaries paid to chief executive
officers by other similar companies in the newspaper industry generally.
Incentive Bonus Awards
Incentive bonuses are intended to serve as true incentives rather than as a
form of deferred compensation. Higher-level executives with more of an
opportunity to impact the value of the Company have the opportunity to achieve a
larger bonus than other executives.
Incentive bonuses for the executive officers of the Company named in the
Summary Compensation Table which precedes this report were determined under the
Annual Incentive Program for the Company and its primary operating subsidiaries,
INI and PNI. For the 1997 fiscal year, awards under the Annual Incentive Program
were based on Company, operating subsidiary and individual objectives. Company
performance was evaluated based upon the achievement of an after-tax net income
goal, operating subsidiary performance was evaluated based upon achievement of
an operating income goal, and individual performance was evaluated based upon
the achievement of certain individual objectives set by the participant and
other members of management. The Company net income goal and the subsidiary
operating income goal were approved by the Compensation Committee. Each of the
three objectives was assigned a different weight depending on a participant's
position in management, with the achievement of the net income goal for the
Company being weighted most heavily for the Company's corporate executives (100%
for Mr. Weil, Mr. Tooker and Mr. MacGillivray), and with the achievement of the
applicable subsidiary operating income goal being weighted most heavily for
executive officers of its operating subsidiaries (60% for Mr. Oppedahl and Mr.
Applegate). The size of an incentive bonus payable under the Annual Incentive
Program was determined as a percentage of the participant's base salary, with
such percentage being determined based upon (i) the participant's position in
management and (ii) the actual performance of the Company, the operating
subsidiaries and the individual participant, as applicable, when measured
against their respective objectives.
The amount of incentive bonus for 1997 paid to Mr. Weil as Chief Executive
Officer of the Company was determined under the terms of the Annual Incentive
Program. This bonus was based upon the achievement by the Company of its net
income goal as adjusted by the Compensation Committee to account for certain
significant share repurchases.
<PAGE>
The Company has revised the Annual Incentive Plan for the 1998 fiscal year.
The Annual Incentive Plan still incorporates the three performance goals
outlined above, but the performance of the Company is now measured by earnings
per share rather than by net income, with the earnings per share goal set by the
Compensation Committee. In addition, the Annual Incentive Plan for 1998 is less
subjective, giving less weight to the individual performance component. Finally,
for the executive officers of the operating companies, the performance of the
operating companies is weighted more heavily than in 1997 (70% for Mr.
Oppedahl).
Stock Option and Restricted Stock Awards
The Amended and Restated Central Newspapers, Inc. Stock Compensation Plan
is the Company's long-term incentive plan for executive officers and key
managers. Grants under the Stock Compensation Plan are made by the Compensation
Committee, the members of which are all non-employee directors of the Company.
Such option grants, and restricted stock awards are based both on past
achievement and expected future contribution. Those individuals at higher salary
levels who have greater influence over shareholder value have the opportunity to
receive larger option awards than other executives and key managers.
In 1997, certain officers were granted restricted stock awards under the
Stock Compensation Plan. Under the Stock Compensation Plan, the recipients of
the restricted stock awards cannot transfer their shares and must forfeit their
shares if they cease to be employees of the Company other than by reason of
death or permanent and total disability. Restrictions on most of the restricted
stock awards made will lapse five years from the date of grant, or at the end of
the third or fourth year if the market price of the Company's Class A Common
Stock has increased by a targeted annual compounded percentage. The awards of
restricted stock under the Stock Compensation Plan are not intended to be made
annually but rather to be made periodically as incentives for management
retention. In determining the amount of individual awards, the Committee
considered recommendations of the Company's compensation consultant and the
Committee's subjective assessment of the recipient's level of responsibility and
contribution to the Company. The factors considered by the Committee were not
assigned relative weights.
Two grants of stock options were also made in fiscal 1997. The first grant,
in March 1997, represented the annual option grants for fiscal 1997. The second
grant, in September 1997, was made to executives of Career Services, Inc., a
subsidiary acquired by the Company in February, 1997. Both grants were made
using the same procedures, as outlined below.
To assist in determining the size of option grants, the Company retained an
independent compensation consultant to make specific recommendations regarding
the number of options that should be granted to each executive officer and key
manager. Such recommendations were based on the consultant's review of the
practices of newspaper companies, including some of the companies in the index
of peer companies used in constructing the performance graph which follows this
report. In determining the amount of individual grants, the Compensation
Committee also considered recommendations received from the Chief Executive
Officer (with regard to all grant recipients other than the Chief Executive
Officer), the size of previous option grants, internal relativity and the
Committee's subjective assessment of the grant recipient's level of
responsibility and contribution to the Company. The factors considered by the
Committees were not assigned relative weights.
With regard to option grants and awards of restricted stock made to the
Chief Executive Officer, the Committee followed the same procedure as it did
with regard to other grant recipients. The option grants made to Mr. Weil in
March matched the number of option grants recommended by the Company's
compensation consultant and were consistent with the Committee's objectives
based on previous grants made to Mr. Weil and to others in the Company.
<PAGE>
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to a
corporation's chief executive officer and the four other most highly compensated
executive officers. Section 162(m) provides that qualifying performance-based
compensation will not be subject to the deduction limit if certain requirements
are met. The provisions of the Company's Stock Compensation Plan permit the
grant of stock options and restricted stock awards that qualify as
performance-based compensation for purposes of Section 162(m). None of the
executive officers of the Company received compensation in excess of the Section
162(m) deductibility limits in fiscal 1997. The Compensation Committee will
continue to consider the effect of the deductibility limits of Section 162(m) in
its future determination of executive compensation.
William A. Franke, Chairman
L. Ben Lytle
Dan Quayle
Richard Snell
Members of the
Compensation Committee
March 2, 1998
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for the
Company's Class A Common Stock, the Standard & Poor's 500 Stock Index (the "S&P
500") and an index of peer companies selected by the Company.
COMPARISON OF FIVE FISCAL YEAR CUMULATIVE TOTAL RETURN (1) Among
Central Newspapers, Inc., S & P 500 and a Peer Group (2)
[GRAPH OMITTED]
<TABLE>
<CAPTION>
12/27/92 12/26/93 12/25/94 12/31/95 12/29/96 12/28/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Central Newspapers, Inc. 100 125 127 150 208 343
Peer Group 100 112 106 131 161 241
S&P 500 100 113 114 157 194 258
</TABLE>
(1) The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) (the "Total Return") is based on a
$100 investment as of the market close on December 27, 1992 (the
trading day prior to the beginning of the Company's fifth preceding
fiscal year). The Total Return is shown through December 28, 1997.
(2) Investment in the peer group is weighted based on market capitalization
as of December 27, 1992. Companies in the peer group are as follows:
Gannett Co., Inc., Knight-Ridder, Inc., Lee Enterprises, Incorporated,
McClatchy Newspapers, Inc., The New York Times Company, Pulitzer
Publishing Company, The E.W. Scripps Company, Tribune Company and The
Washington Post Company.
<PAGE>
TERMINATION BENEFITS AGREEMENT
Louis A. Weil, III, the President and Chief Executive Officer of the
Company since January 1, 1996, is a party to a Termination Benefits Agreement,
dated as of February 23, 1996, which entitles Mr. Weil to receive certain
benefits from the Company in the event his employment as Chief Executive Officer
of the Company is terminated for any reason other than cause (as defined in the
agreement) or his death, total disability or attainment of age 65. In such
event, Mr. Weil shall be entitled to receive (i) a lump sum payment equal to
200% of his annual base salary on the date of termination, (ii) a lump sum
payment equal to 200% of the pro rata portion of the bonus he would have
received if he had been employed on the last day of the year in which the
termination occurred, which amount will be payable on or before March 31 of the
calendar year following the termination, and (iii) continuation of medical
coverage for two years following the termination.
INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
reappointed Price Waterhouse LLP as the independent public accounting firm to
audit the financial statements of the Company for the fiscal year ending
December 27, 1998. Price Waterhouse LLP served as the Company's independent
public accounting firm for the 1997 fiscal year. It is expected that
representatives of Price Waterhouse LLP will be present at the Annual Meeting,
will be given the opportunity to make a statement, if they so desire, and will
respond to appropriate questions.
The independent accountant engaged to audit the Company's financial
statements for the 1995 and 1996 fiscal years was Geo. S. Olive & Co. LLC. The
Audit Committee solicited proposals from independent accounting firms and based
on those bids recommended the selection of Price Waterhouse LLP to audit the
Company's financial statements for the 1997 fiscal year. Based upon the
recommendation of the Audit Committee, the Board of Directors approved the
change in accountants from Geo. S. Olive & Co. LLC to Price Waterhouse LLP for
the 1997 fiscal year. The reports of Geo. S. Olive & Co. LLC on the financial
statements for the 1995 and 1996 fiscal years did not contain an adverse opinion
or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. The Company and Geo. S.
Olive & Co. LLC have had no disagreements on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Geo. S. Olive & Co.
LLC, would have caused it to make a reference to the subject matter of the
disagreement in connection with its audit report. Moreover, none of the events
listed in Item 304(a)(1)(k) of Regulation S-K occurred during 1995 or 1996 or
any subsequent interim period.
PROPOSAL II -- APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO INCREASE NUMBER OF AUTHORIZED SHARES
The Board of Directors has approved a proposed amendment to the Company's
Articles of Incorporation which would increase the number of authorized shares
of Common Stock.
The Company is currently authorized to issue 75,000,000 shares of Class A
Common Stock and 50,000,000 shares of Class B Common Stock. The proposed
amendment to the Company's Articles of Incorporation would increase the number
of authorized shares of Class A Common Stock to 150,000,000 shares and of Class
B Common Stock to 130,000,000 shares. The proposed increase in authorized shares
is being made primarily for the following reasons: (a) to permit the Company to
declare potential future stock splits and/or stock dividends, (b) to permit the
Company to issue additional shares as consideration in potential future mergers
or acquisitions and (c) to permit the Company to issue additional shares for
other general corporate purposes. The continued availability of shares of Common
Stock is necessary to provide the Company with the flexibility to take advantage
of such opportunities. There are, at present, no plans, understandings,
agreements or arrangements concerning the issuance of additional shares of the
Company's Common Stock except for those shares presently reserved for issuance.
Authorized but unissued shares of the Company's Common Stock may be issued
for such consideration as the Board of Directors determines to be adequate. The
shareholders may or may not be given the opportunity to vote thereon, depending
upon the nature of any such transactions, applicable law, the rules and policies
of the New York Stock Exchange and the judgment of the Board of Directors.
Shareholders have no preemptive rights to subscribe to newly issued shares of
Common Stock.
The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock will provide the flexibility needed to meet
corporate objectives and that such proposed increase is in the best interests of
the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES.
<PAGE>
PROPOSAL III -- APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
TO REMOVE INDEMNIFICATION PROVISIONS
The Board of Directors has approved a proposed amendment to the Company's
Articles of Incorporation which would remove the provisions regarding the
indemnification of the Company's directors and officers.
The Board approved the proposed amendment, because it wants to update and
clarify such provisions to provide protection to the Company's directors and
officers to the fullest extent as can be provided under Indiana law. If the
amendment to the Company's Articles of Incorporation is approved, the Board of
Directors plans to add new indemnification provisions to the Company's Code of
By-Laws. The new provisions would not differ materially from the current
provisions, but rather would attempt to clarify certain items, particularly (a)
the types of proceedings under which indemnification shall be provided, (b) the
standard of conduct which must be met for the Company to provide
indemnification, (c) the methods of determining whether the standards for
indemnification have been met, (d) the terms under which the Company may pay for
or reimburse reasonable defense expenses, and (e) the non-exclusiveness of such
indemnification provisions.
The Board of Directors believes that placing the indemnification provisions
in the Company's Code of By-Laws instead of the Company's Articles of
Incorporation allows the Company the flexibility to keep such provisions current
with any changes that may occur to Indiana or other applicable law. The Board of
Directors has the power to amend the Company's Code of By-Laws, without
shareholder approval, by the affirmative vote of a majority of the directors who
would constitute a full Board of Directors at the time such action is taken.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO REMOVE THE INDEMNIFICATION
PROVISIONS.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Company retains as its legal counsel the law firm of Barnes &
Thornburg, of which Kent E. Agness is a partner. The amount of fees paid to
Barnes & Thornburg for the 1997 fiscal year was less than 5% of the Company's
gross revenues for such fiscal year and less than 5% of Barnes & Thornburg's
gross revenues for the same period.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of Common Stock of the Company. Officers,
directors and greater than ten percent shareholders are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Specific due dates for these reports have been established, and the Company
is required to disclose in this Proxy Statement any failure to file by these
dates during 1997. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, all Section 16(a) filing requirements applicable
to the Company's officers and directors were complied with in respect of the
fiscal year ended December 28, 1997.
<PAGE>
SHAREHOLDER PROPOSALS
The Company's Code of By-Laws provides that only such business may be
conducted at a meeting of shareholders as shall have been properly brought
before the meeting and as shall have been determined to be lawful and
appropriate for consideration by shareholders at the meeting. To properly bring
business before the meeting of shareholders, written notice thereof must be
delivered to or mailed and received at the principal office of the Company not
less than ten (10) days prior to the meeting. A shareholder's notice shall set
forth as to each matter the shareholder proposes to bring before the meeting (a)
a brief description of the business desired to be brought before the meeting,
(b) the name and address, as they appear on the Company's shareholder list, of
the shareholder proposing such business, (c) the class and number of shares of
the Company which are beneficially owned by the shareholder, and (d) any
interest of the shareholder in such business.
Shareholders of the Company may also nominate persons for election to the
Board of Directors by providing written notice to the Company. Such notice must
be delivered to or mailed and received at the principal office of the Company
not less than ten (10) days prior to the meeting and must set forth as to each
person whom the shareholder proposes to nominate (a) the name, age, business
address and residence address of such person, (b) the principal occupation or
employment of such person, (c) the class and number of shares of the Company
which are beneficially owned by such person, (d) any other information relating
to such person that is required to be disclosed in solicitation of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
without limitation such person's written consent to serving as a director if
elected), and (e) the qualifications of the nominee to serve as a director of
the Company. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
Proposals of shareholders intended to be presented at the next Annual
Meeting to be held in 1999 must be received by the Company at its principal
executive offices no later than November 23, 1998 for inclusion in the Proxy
Statement and form of proxy relating to that meeting.
ANNUAL REPORT
The Annual Report for the Company's fiscal year ended December 28, 1997 is
being mailed with this Proxy Statement to all shareholders. The Annual Report is
not a part of the proxy soliciting material.
OTHER MATTERS
Insofar as any of the information in this Proxy Statement may rest within
the knowledge of persons other than the Company, the Company relies upon
information furnished by others for the accuracy and completeness thereof.
Management is not aware of any business to come before the Annual Meeting other
than that described in the Proxy Statement. However, if any other matters should
properly come before the Annual Meeting, it is intended that the proxies
solicited hereby will be voted with respect to those other matters in accordance
with the judgment of the persons voting the proxies.
<PAGE>
[PROXY CARD FOR CLASS A COMMON SHARES]
CENTRAL NEWSPAPERS, INC.
CLASS A COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 15, 1998
The undersigned appoints Eugene S. Pulliam, Frank E. Russell and Louis A. Weil,
III, or any of them, with full power of substitution, as proxies to vote all
shares of CLASS A COMMON STOCK held by the undersigned at the Annual Meeting of
Shareholders of Central Newspapers, Inc. to be held May 15, 1998, at 10:00 a.m.,
Phoenix time, and at any adjournment thereof, on the following matters:
1. ELECTION OF DIRECTORS
FOR all seven nominees listed WITHHOLDING AUTHORITY to vote
below (except as as marked to the for all nominees listed below
contrary below) [ ] [ ]
WILLIAM A. FRANKE, L. BEN LYTLE, EUGENE S. PULLIAM,
DAN QUAYLE, FRANK E. RUSSELL, RICHARD SNELL, LOUIS A. WEIL, III
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR an amendment to the Articles of Incorporation of Central Newspapers,
Inc. to increase the number of authorized shares of Class A Common Stock
from 75,000,000 to 150,000,000 shares and Class B Common Stock from
50,000,000 shares to 130,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR an amendment to the Articles of Incorporation of Central Newspapers,
Inc. to remove the provisions regarding the indemnification of the
directors and officers of Central Newspapers, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, upon such other business (none of which is known to
management of Central Newspapers, Inc. as of the mailing date of this
proxy) as may properly come before the meeting.
IMPORTANT - This Proxy must be signed and dated on the reverse side.
<PAGE>
(Continued from other side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES LISTED ON THE OTHER SIDE OF THIS PROXY CARD. IF ANY
DIRECTOR NOMINEE SHOULD BE UNABLE TO SERVE, THE SHARES WILL BE VOTED FOR A
SUBSTITUTE NOMINEE SELECTED BY THE BOARD OF DIRECTORS. IF ANY OTHER BUSINESS
COMES BEFORE THE MEETING, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
FAVOR OF THE ACTION RECOMMENDED BY THE BOARD OF DIRECTORS AND, IN THE ABSENCE OF
A RECOMMENDATION, IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDERS.
Please sign exactly and as fully as shown below. When shares are held by two or
more persons, all of them should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: _________________________, 1998
--------------------------------------
(Signature)
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(Signature if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
[PROXY CARD FOR CLASS B COMMON SHARES]
CENTRAL NEWSPAPERS, INC.
CLASS B COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 15, 1998
The undersigned appoints Eugene S. Pulliam, Frank E. Russell and Louis A. Weil,
III, or any of them, with full power of substitution, as proxies to vote all
shares of CLASS B COMMON STOCK held by the undersigned at the Annual Meeting of
Shareholders of Central Newspapers, Inc. to be held May 15, 1998, at 10:00 a.m.,
Phoenix time, and at any adjournment thereof, on the following matters:
1. ELECTION OF DIRECTORS
FOR all seven nominees listed WITHHOLDING AUTHORITY to vote
below (except as as marked to the for all nominees listed below
contrary below) [ ] [ ]
WILLIAM A. FRANKE, L. BEN LYTLE, EUGENE S. PULLIAM,
DAN QUAYLE, FRANK E. RUSSELL, RICHARD SNELL, LOUIS A. WEIL, III
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR an amendment to the Articles of Incorporation of Central Newspapers,
Inc. to increase the number of authorized shares of Class A Common Stock
from 75,000,000 to 150,000,000 shares and Class B Common Stock from
50,000,000 shares to 130,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR an amendment to the Articles of Incorporation of Central Newspapers,
Inc. to remove the provisions regarding the indemnification of the
directors and officers of Central Newspapers, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, upon such other business (none of which is known to
management of Central Newspapers, Inc. as of the mailing date of this
proxy) as may properly come before the meeting.
IMPORTANT - This Proxy must be signed and dated on the reverse side.
<PAGE>
(Continued from other side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES LISTED ON THE OTHER SIDE OF THIS PROXY CARD. IF ANY
DIRECTOR NOMINEE SHOULD BE UNABLE TO SERVE, THE SHARES WILL BE VOTED FOR A
SUBSTITUTE NOMINEE SELECTED BY THE BOARD OF DIRECTORS. IF ANY OTHER BUSINESS
COMES BEFORE THE MEETING, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
FAVOR OF THE ACTION RECOMMENDED BY THE BOARD OF DIRECTORS AND, IN THE ABSENCE OF
A RECOMMENDATION, IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDERS.
Please sign exactly and as fully as shown below. When shares are held by two or
more persons, all of them should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: _________________________, 1998
--------------------------------------
(Signature)
--------------------------------------
(Signature if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
