<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Hollinger International Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
Hollinger International Inc. Logo
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
MARCH 22, 2000
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Hollinger
International Inc. (the "Company") to be held on Thursday, May 11, 2000, at
11:00 a.m., local time, in the Versailles Room, St. Regis Hotel, Two East 55th
Street at Fifth Avenue, New York, New York 10022.
At the meeting you will be asked to elect 16 directors. The Board of
Directors will also report on the Company's affairs and a discussion period will
be provided for questions and comments. The Board of Directors recommends that
you vote in favor of the proposal to elect the nominated directors.
The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs. Whether or not you plan to attend the Annual Meeting,
it is important that your shares be represented. Accordingly, we request that
you sign, date and mail the enclosed proxy in the postage paid envelope provided
at your earliest convenience.
Very truly yours,
/s/ CONRAD M. BLACK
CONRAD M. BLACK
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE> 3
Hollinger International Inc. Logo
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2000
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Hollinger International Inc. (the "Company") will be held in the
Versailles Room, St. Regis Hotel, Two East 55th Street at Fifth Avenue, New
York, New York 10022, on Thursday, May 11, 2000, at 11:00 a.m., local time, for
the following purposes:
1. To elect 16 directors to serve for a one-year term expiring at the
2001 Annual Meeting of Stockholders and until their successors are duly
elected and qualified (the "Director Election Proposal").
2. To transact such further and other business as may properly come
before the meeting or any adjournments or postponements thereof.
Directors shall be elected by a plurality of the votes cast in person or by
proxy by holders of the Company's Class A Common Stock, par value $.01 per share
("Class A Common Stock"), Class B Common Stock, par value $.01 per share ("Class
B Common Stock," and together with Class A Common Stock, "Common Stock") and
Series C Convertible Preferred Stock, par value $.01 per share ("Series C
Preferred Stock"), voting together as a single class. Class A Common Stock is
entitled to one vote per share, Class B Common Stock is entitled to ten votes
per share and Series C Preferred Stock is entitled to ten votes per share.
The Board of Directors has fixed the close of business on March 16, 2000
(the "Record Date") as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof. A list of stockholders as of the Record Date will be
available for inspection by stockholders at the Company's office located at 712
5th Avenue, New York, New York 10019 during ordinary business hours in the
ten-day period prior to and including the Annual Meeting.
As of the Record Date, Hollinger Inc. directly or indirectly owned all of
the Series C Preferred Stock, all of the Class B Common Stock and 24,639,543
shares of Class A Common Stock, which in the aggregate represented 74.2% of the
outstanding combined voting power of the Common Stock and Series C Preferred
Stock. Therefore, Hollinger Inc. has sufficient voting power to approve the
Director Election Proposal regardless of the vote of any other stockholders.
By Order of the Board of Directors,
LOGO
MARK S. KIPNIS
Vice President-Law and Secretary
March 22, 2000
Whether or not you plan to attend the meeting in person, you are requested
to mark, sign, date and return the enclosed proxy card in the enclosed,
addressed, postage paid envelope provided for that purpose.
<PAGE> 4
Hollinger International Inc. Logo
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2000
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hollinger International Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Annual Meeting") of the Company to be held on May 11, 2000 at 11:00 a.m., local
time, in the Versailles Room, St. Regis Hotel, Two East 55th Street at Fifth
Avenue, New York, New York 10022. This Proxy Statement is being mailed on or
about March 22, 2000. Proxies are being solicited from holders of record as of
the close of business on March 16, 2000 (the "Record Date") of the outstanding
shares of the Company's Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), Class B Common Stock, par value $.01 per share ("Class B Common
Stock," and together with Class A Common Stock, "Common Stock") and Series C
Convertible Preferred Stock, par value $.01 per share ("Series C Preferred
Stock") for use at the Annual Meeting and at any adjournments or postponements
thereof.
At the Annual Meeting, stockholders of the Company will be asked to vote
upon the following:
1. To elect 16 directors to serve for a one-year term expiring at the
2001 Annual Meeting of Stockholders and until their successors are duly
elected and qualified (the "Director Election Proposal").
2. To transact such further and other business as may properly come
before the meeting or any adjournments or postponements thereof.
It is expected that the solicitation will be primarily by mail or
telephone, but proxies may also be solicited personally by regular employees of
the Company. The cost of such solicitation will be borne by the Company. The
Company will not pay any compensation for the solicitation of proxies, but upon
request will reimburse banks, brokers and other nominees for their reasonable
expenses incurred in sending proxy materials to, and obtaining instructions
from, beneficial owners.
1
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE COMPANY................................................. 3
THE ANNUAL MEETING.......................................... 3
General................................................ 3
Record Date............................................ 3
Required Votes......................................... 3
Proxies................................................ 4
Ownership by Hollinger Inc............................. 4
PRINCIPAL STOCKHOLDERS...................................... 6
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 8
Relationship with Hollinger Inc........................ 8
Management Services and Business Opportunities......... 9
Other Transactions..................................... 10
THE DIRECTOR ELECTION PROPOSAL.............................. 12
Information Concerning Nominees as Directors........... 12
Meetings and Committees................................ 15
Directors' Compensation................................ 16
Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 16
Executive Compensation................................. 17
INDEPENDENT AUDITORS........................................ 24
STOCKHOLDER PROPOSALS....................................... 24
OTHER MATTERS............................................... 24
ANNEX A Audit Committee Charter............................. A-1
</TABLE>
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As used in this Proxy Statement, unless the context otherwise requires, (i)
the "Company" refers to Hollinger International Inc. and its consolidated
subsidiaries and affiliated companies; (ii) "Publishing" refers to Hollinger
International Publishing Inc. and its consolidated subsidiaries and affiliated
companies; (iii) "Jerusalem Post" refers to the subsidiaries of the Company
publishing The Jerusalem Post; (iv) "The Telegraph" refers to Telegraph Group
Limited and its consolidated subsidiaries and affiliated companies; (v)
"Hollinger Inc." refers to Hollinger Inc. and its consolidated subsidiaries;
(vi) "Southam" refers to Southam Inc. and its consolidated subsidiaries; (vii)
"HCPH" refers to Hollinger Canadian Publishing Holdings Inc. and its
consolidated subsidiaries; and (viii) "American Publishing" refers to American
Publishing Company and its consolidated subsidiaries.
THE COMPANY
The Company is a leading publisher of English-language newspapers in the
United States, the United Kingdom, Canada and Israel. Included among the 77 paid
daily newspapers which the Company owns or has an interest in are the Chicago
Sun-Times, The Daily Telegraph, the National Post (Canada) and The Jerusalem
Post. In addition, the Company owns or has an interest in 302 non-daily
newspapers as well as magazines and other publications. The Company's strategy
is to achieve growth through acquisitions and improvements in the cash flow and
profitability of its newspapers.
THE ANNUAL MEETING
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors from holders of Common Stock and Series C
Preferred Stock for use at the Annual Meeting.
At the Annual Meeting, stockholders will be asked to vote upon the
following:
1. DIRECTOR ELECTION PROPOSAL: To elect 16 directors to serve for a
one-year term expiring at the 2001 Annual Meeting of Stockholders and
until their successors are duly elected and qualified.
2. OTHER BUSINESS: To transact such further and other business as may
properly come before the meeting or any adjournments or postponements
thereof.
RECORD DATE
The Board of Directors has fixed the close of business on March 16, 2000 as
the Record Date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting. Only holders of record of shares of Common Stock
and Series C Preferred Stock at the close of business on the Record Date will be
entitled to notice of and to vote at the Annual Meeting. On the Record Date,
88,059,945 shares of Class A Common Stock were outstanding and held by
approximately 254 holders of record (and approximately 6,000 beneficial owners),
14,990,000 shares of Class B Common Stock were outstanding and held directly or
indirectly by Hollinger Inc. and 829,409 shares of Series C Preferred Stock were
outstanding and held directly or indirectly by Hollinger Inc. Class A Common
Stock is entitled to one vote per share, Class B Common Stock is entitled to ten
votes per share and Series C Preferred Stock is entitled to ten votes per share.
REQUIRED VOTES
Directors shall be elected by a plurality of the votes cast in person or by
proxy by holders of the Common Stock and the Series C Preferred Stock. An
abstention is deemed "present" but is not deemed a "vote cast." As a result,
abstentions and broker "non-votes" are not included in the tabulation of the
voting results on the election of directors.
As of the Record Date, Hollinger Inc. owns approximately 74.2% of the
combined voting power of the outstanding Common Stock and Series C Preferred
Stock. Consequently, Hollinger Inc. has sufficient voting
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<PAGE> 7
power to elect the Directors regardless of the vote of any other stockholders.
Hollinger Inc. has indicated that it will vote in favor of the nominated
Directors.
PROXIES
Stockholders of record on the Record Date are entitled to cast their votes,
in person or by properly executed proxy, at the Annual Meeting. The presence, in
person or by properly executed proxy, of the holders of one-third of the votes
attributable to the outstanding shares of Common Stock and Series C Preferred
Stock is necessary to constitute a quorum at the Annual Meeting.
All shares represented at the Annual Meeting by properly executed proxies
received prior to or at the Annual Meeting and not properly revoked will be
voted in accordance with the instructions indicated in such proxies. If no
instructions are indicated, such proxies will be voted FOR the Director Election
Proposal. The Board of Directors does not know of any matters, other than the
matters described in the Notice of Annual Meeting attached to this Proxy
Statement, that will come before the Annual Meeting.
If a quorum is not present at the time the Annual Meeting is convened, or
if for any other reason the Company believes that additional time should be
allowed for the solicitation of proxies, the Company may adjourn or postpone the
Annual Meeting by a vote of the stockholders present. If the Company proposes to
adjourn or postpone the Annual Meeting, the persons named in the enclosed proxy
card will vote all shares for which they have voting authority in favor of such
adjournment or postponement.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a date later than the date of the proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at or before the Annual Meeting; or (iii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute revocation of a proxy). Any written
notice revoking a proxy should be sent to: Hollinger International Inc., 401
North Wabash Avenue, Suite 740, Chicago, Illinois 60611, Attention: Secretary.
Proxies are being solicited by and on behalf of the Board of Directors. All
expenses of this solicitation, including the cost of mailing this Proxy
Statement, will be borne by the Company. In addition to solicitation by use of
the mails, proxies may be solicited by directors, officers and employees of the
Company in person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally compensated but
may be reimbursed for out-of-pocket expenses in connection with such
solicitation. Arrangements will be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation material to beneficial owners
held of record by such persons, and the Company may reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith.
OWNERSHIP BY HOLLINGER INC.
Hollinger Inc. directly and indirectly owns 43.0% of the combined equity
interest and 74.2% of the combined voting power of the outstanding Class A
Common Stock, Class B Common Stock and Series C Preferred Stock (without giving
effect to the future issuance of Class A Common Stock in connection with the
Series E Redeemable Convertible Preferred Stock, par value $.01 per share
("Series E Preferred Stock"), of the Company or the Special Shares of HCPH, as
defined in Certain Relationships and Related Transactions section). As a result,
Hollinger Inc. will continue to be able to control the outcome of any election
of directors and to direct management policy, strategic direction and financial
decisions of the Company and its subsidiaries. Hollinger Inc. owns all of the
outstanding Series C Preferred Stock, which shall convert automatically on June
1, 2001 pursuant to the conversion formula set forth in its Certificate of
Designations. The conversion rate is initially 9.8646 shares of Class A Common
Stock for each share of Series C Preferred Stock subject to adjustment as set
forth in its Certificate of Designations. Hollinger Inc. owns all of the
outstanding Series E Preferred Stock, which is convertible at any time into
shares of Class A Common Stock at the initial conversion price of the Canadian
dollar equivalent of $14 per share. Based on the initial conversion price,
952,295 shares of Class A Common Stock would have been issuable as of March 16,
2000.
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Hollinger Inc. is effectively controlled by The Hon. Conrad M. Black,
Chairman of the Board and Chief Executive Officer of Hollinger Inc. and the
Company, through his direct and indirect ownership and control of Hollinger
Inc.'s securities. Mr. Black has advised the Company that Hollinger Inc. does
not presently intend to reduce its voting power in the Company's outstanding
Common Stock to less than 50%. Furthermore, Mr. Black has advised the Company
that he does not presently intend to reduce his voting control over Hollinger
Inc. such that a third party would be able to exercise effective control over
it.
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PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 16, 2000, certain information
regarding those persons or entities known to hold more than 5% of the
outstanding shares of Class A Common Stock, Class B Common Stock and Series C
Preferred Stock and ownership of Class A Common Stock, Class B Common Stock and
Series C Preferred Stock by the named executive officers, the incumbent
directors (whom are all the nominees for directors) and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
CLASS AND
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED (1)(2) OF CLASS (3)
---------------- ------------------------- ------------
<S> <C> <C> <C>
Tweedy, Browne Company LLC,
TBK Partners, L.P., and
Vanderbilt Partners, L.P............. 7,389,700 Class A Common (13) 7.45%
350 Park Avenue
New York, New York 10022
State Street Research & Management
Company.............................. 4,380,687 Class A Common (14) 5.01%
30th Floor
One Financial Center
Boston, Massachusetts 02111
Hollinger Inc. and affiliates.......... 49,851,103 Class A Common (4) 43.7%
10 Toronto Street 14,990,000 Class B Common (4) 100.0%
Toronto, Ontario 829,409 Series C Preferred (4) 100.0%
M5C 2B7 Canada
The Hon. Conrad M Black, P.C., O.C..... 49,851,103 Class A Common (1), (4), (5) 43.7%
14,990,000 Class B Common (4), (5) 100.0%
829,409 Series C Preferred (4) 100.0%
Dwayne O. Andreas...................... 7,500 Class A Common (1), (6) *
Peter Y. Atkinson...................... 77,500 Class A Common (1) *
Barbara Amiel Black.................... 49,851,103 Class A Common (1), (7) 43.7%
14,990,000 Class B Common (7) 100.0%
829,409 Series C Preferred (7) 100.0%
John A. Boultbee....................... 114,250 Class A Common (1) *
Richard R. Burt........................ 7,500 Class A Common (1) *
Raymond G. Chambers.................... 0 Class A Common (1) *
Daniel W. Colson....................... 240,470 Class A Common (1), (11) *
Fredrick A. Creasey.................... 12,500 Class A Common (1) *
John D. Ferguson....................... 26,250 Class A Common (1) *
Paul B. Healy.......................... 79,500 Class A Common (1) *
Cindy E. Horowitz...................... 0 Class A Common (1) *
Mark S. Kipnis......................... 17,500 Class A Common (1) *
Dr. Henry A. Kissinger................. 7,500 Class A Common (1) *
Marie-Josee Kravis, O.C................ 7,500 Class A Common (1) *
Frederic Lebolt........................ 6,250 Class A Common (1) *
Shmuel Meitar.......................... 7,500 Class A Common (1) *
Richard N. Perle....................... 17,700 Class A Common (1), (8) *
F. David Radler........................ 574,601 Class A Common (1), (9) *
Jerry Strader.......................... 77,875 Class A Common (1) *
Robert S. Strauss...................... 17,500 Class A Common (1), (10) *
A. Alfred Taubman...................... 7,500 Class A Common (1), (12) *
James R. Thompson...................... 7,500 Class A Common (1) *
Lord Weidenfeld........................ 7,500 Class A Common (1) *
Leslie H. Wexner....................... 7,500 Class A Common (1) *
All Directors and Executive Officers as 50,771,928 Class A Common (15) 44.5%
a group (25 persons).................
</TABLE>
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(1) Includes shares subject to presently exercisable options or options
exercisable within 60 days of March 16, 2000 held by executive officers and
directors under the Company's 1994 Stock Option Plan (as defined), 1997
Stock Incentive Plan (as defined) and 1999 Stock Incentive Plan (as
defined) as follows: Mr. Black 298,750 shares; Mr. Andreas 7,000 shares;
Mr. Atkinson 77,500 shares; Mrs. Black 37,500 shares; Mr. Boultbee 114,250
shares; Mr. Burt 7,000 shares; Mr. Chambers 0 shares; Mr. Colson 106,250
shares; Mr. Creasey 12,500 shares; Mr. Ferguson 26,250 shares; Mr. Healy
79,500 shares; Ms. Horowitz 0 shares; Mr. Kipnis 17,500 shares; Dr.
Kissinger 7,000 shares; Mrs. Kravis 7,000 shares; Mr. Lebolt 6,250 shares;
Mr. Meitar 7,000 shares; Mr. Perle 2,000 shares; Mr. Radler 298,750 shares;
Mr. Strader 77,875 shares; Mr. Strauss 7,000 shares; Mr. Taubman 7,000
shares; Mr. Thompson 7,000 shares; Lord Weidenfeld 7,000 shares; and Mr.
Wexner 7,000 shares.
(2) The directors and executive officers as a group (25 persons) were the
beneficial owners of 50,771,928 shares of Class A Common Stock (which
includes: presently exercisable options to purchase 1,224,875 shares of
Class A Common Stock, 14,990,000 shares of Class B Common Stock which are
convertible into an equal number of shares of Class A Common Stock; 829,409
shares of Series C Preferred Stock which are convertible into 8,181,788
shares of Class A Common Stock as of March 16, 2000; 134,126 shares of
Series E Preferred Stock which are convertible into 952,295 shares of Class
A Common Stock as of March 16, 2000; and 2,479,456 shares of Hollinger Inc.
Series II Preference Shares ("Series II Shares") which are convertible into
1,140,548 shares of Class A Common Stock as of March 16, 2000) or
approximately 44.5% of the outstanding Class A Common Stock, and were the
beneficial owners of 14,990,000 shares of Class B Common Stock or 100% of
the outstanding Class B Common Stock, as of March 16, 2000.
(3) An asterisk (*) indicates less than one percent of a class of stock.
(4) Includes: 14,990,000 shares of Class A Common Stock into which an equal
number of shares of Class B Common Stock are convertible; 8,181,788 shares
of Class A Common Stock (based upon on an assumed March 16, 2000
conversion) into which 829,409 shares of Series C Preferred Stock are
convertible; 952,295 shares of Class A Common Stock (based upon an assumed
March 16, 2000 conversion) into which 134,126 shares of Series E Preferred
Stock are convertible at any time at the Canadian dollar equivalent of
$14.00 per share. The Ravelston Corporation Limited ("Ravelston"), 10
Toronto Street, Toronto, Ontario, Canada M5C 2B7, effectively controls
Hollinger Inc. through its direct or indirect control or direction
(including through its subsidiary Argus Corporation Limited ("Argus") over
67.1% of the outstanding Retractable Common Shares of Hollinger Inc. Mr.
Black indirectly controls Ravelston. Certain executive officers of the
Company, including Messrs. Black, Radler, Colson, Atkinson, Boultbee and
Creasey are employees of Ravelston. Mr. Black also beneficially owns
1,039,827 shares of Class A Common Stock (which includes 1,611,039 Series
II Shares and options to purchase 298,750 shares of Class A Common Stock of
the Company, as described in note (1), and also includes options to
purchase 37,500 shares owned by his spouse, Barbara Amiel Black; Mr. Black
disclaims beneficial ownership of his spouse's options). As of March 13,
2000, there were 37,196,415 outstanding Retractable Common Shares and
13,575,511 outstanding Series II Shares of Hollinger Inc. Certain of the
executive officers and directors of the Company, including Messrs. Black,
Radler, Colson, Andreas, Atkinson, Boultbee, Creasey, Taubman and Mrs.
Black, also own, directly or indirectly, equity securities of Hollinger
Inc. or own or have the right to acquire equity securities of Hollinger
Inc. through Hollinger Inc.'s Executive Share Option Plan. As of March 13,
2000, all executive officers and directors of the Company and other
entities controlled by Mr. Black beneficially held an aggregate of
24,964,167 Retractable Common Shares and 2,479,456 Series II Shares of
Hollinger Inc., or approximately 67.1% of the outstanding Retractable
Common Shares and 18.3% of the outstanding Series II Shares, respectively.
Mr. Taubman indirectly owns 30,000 Retractable Common shares of Hollinger
Inc. through the A. Alfred Taubman Restated Revocable Trust.
(5) Includes: 9,600 shares of Class A Common Stock which are held by Conrad
Black Capital Corporation; 500 shares of Class A Common Stock owned by Mrs.
Black; and 50 shares of Class A Common Stock owned by Mr. Black's son. Also
includes: 14,990,000 shares of Class B Common Stock; 8,181,788 shares of
Class A Common Stock into which 829,409 shares of Series C Preferred Stock
are convertible; and 952,295 shares of Class A Common Stock into which
134,126 shares of Series E Preferred Stock are
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<PAGE> 11
convertible, all of which are held by Hollinger Inc. and as to which Mr.
Black may be deemed to have indirect beneficial ownership. Also includes
741,077 shares of Class A Common Stock into which 1,611,039 Series II
Shares are convertible.
(6) Mr. Andreas is the Chairman Emeritus and a current director of
Archer-Daniels-Midland Co., which owns 1,759,929 shares of Class A Common
Stock. Mr. Andreas disclaims beneficial ownership of such securities.
(7) Mrs. Black may be deemed to have beneficial ownership of the shares of
Common Stock, Series C Preferred Stock and Series E Preferred Stock held by
Hollinger Inc., Conrad Black Capital Corporation and Mr. Black. Mrs. Black
disclaims beneficial ownership of such securities. See Note (5) above.
(8) Includes 5,000 shares of Class A Common Stock held by Mr. Perle's wife and
1,600 shares of Class A Common Stock held by the Perle Defined Pension Plan
as to which Mr. Perle may be deemed to have indirect beneficial ownership.
(9) Includes 9,000 shares of Class A Common Stock held by F.D. Radler Ltd., 200
shares of Class A Common Stock held by Mr. Radler's wife, 200 shares of
Class A Common Stock held by one daughter, and 200 shares of Class A Common
Stock held by another daughter, as to which Mr. Radler may be deemed to
have indirect beneficial ownership. Mr. Radler disclaims beneficial
ownership of the Class A Common Stock held by his wife and daughters. Also
includes 265,751 shares of Class A common Stock into which 577,720 Series
II Shares are convertible.
(10) Includes 10,000 shares of Class A Common Stock held by Robert and Helen
Strauss Family Partnership.
(11) Includes 133,720 shares of Class A Common Stock into which 290,697 Series
II Shares are convertible.
(12) Includes 500 shares of Class A Common Stock held by the A. Alfred Taubman
Restated Revocable Trust.
(13) The information concerning the beneficial ownership of Tweedy, Browne
Company LLC, TBK Partners, L.P. and Vanderbilt Partners, L.P., has been
obtained from a Schedule 13D filed with the Commission by such persons on
November 2, 1999 and an amendment to such Schedule 13D filed on February
29, 2000. Such information has not been independently verified by the
Company.
(14) The information concerning the beneficial ownership of State Street
Research & Management Company has been obtained from a Schedule 13D filed
with the Commission by such person on February 1, 2000. Such information
has not been independently verified by the Company.
(15) See notes (1) through (14).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH HOLLINGER INC.
GENERAL. Prior to its initial public offering in May 1994, the Company had
been a wholly owned subsidiary of Hollinger Inc. Hollinger Inc. presently has
the exclusive right to vote shares constituting approximately 74.2% of the total
voting power of the Common Stock and Series C Preferred Stock (without giving
effect to the future issuance of Class A Common Stock in connection with the
Series E Preferred Stock of the Company, the Series II Shares or the Special
Shares of HCPH) and the ability to elect the entire Board of Directors. Four of
the nominees (Messrs. Black, Colson, Radler and Mrs. Black) for election to the
Board of Directors of the Company are officers or directors of Hollinger Inc.
SECURITY FOR HOLLINGER INC. CREDIT FACILITIES. All of the shares of the
Company owned by Hollinger Inc. and its wholly-owned subsidiaries are pledged to
a syndicate of Canadian chartered banks as security for Hollinger Inc.'s
Cdn.$140 million term facility, Cdn.$90 million revolving facility, and Cdn.$150
million non-revolving bridge loan, and to a Canadian chartered bank as security
for Hollinger Inc.'s Cdn.$10 million operating facility.
8
<PAGE> 12
On July 29, 1997, Hollinger Inc. made an issuer bid (the "Debenture Offer")
for all of its outstanding 7% Southam-linked debentures ("Debentures"), with the
consideration offered per Cdn.$1,000 principal amount of Debentures being, at
the option of a tendering holder of Debentures, (i) Cdn.$1,342.86 or (ii)
Cdn.$771.43 and 57.143 non-voting special shares ("HCPH Special Shares") of
HCPH, a subsidiary of the Company. 4,146,007 HCPH Special Shares were issued in
consideration for non-voting special shares ("Newco Special Shares") of 3396754
Canada Limited ("Newco"), a wholly-owned subsidiary of Hollinger Inc. Pursuant
to the terms of an exchange agreement (the "Exchange Agreement") between HCPH,
Newco and the Company, the Newco Special Shares are exchangeable at any time
after December 23, 1997, at the option of the holder, into Class A Common Stock
to be delivered by Newco on the same basis as the 4,146,007 HCPH Special Shares
are exchangeable for Class A Common Stock with the Company.
All or any part of the exchange obligation for the Newco Special Shares can
also be settled, at the option of Newco, by a cash payment of an amount
equivalent to the Current Market Price (as defined in the Exchange Agreement) of
the Class A Common Stock to be delivered upon any exchange of Newco Special
Shares. Hollinger Inc. has unconditionally agreed to provide Newco with
sufficient Class A Common Stock and/or cash for Newco to meet its obligations
upon an exchange of Newco Special Shares. The number of shares of Class A Common
Stock which Hollinger Inc. may be required to provide to Newco for optional
exchange prior to the mandatory exchange date, June 26, 2000, is between
2,114,465 and 2,495,896. If exchanges do not occur prior to such date, a
mandatory exchange will occur on such date in respect of which Hollinger Inc.
will be required to provide to Newco that number of shares of Class A Common
Stock (or the cash equivalent thereof) equal to US $36,816,542 divided by 95% of
the Current Market Price at such date.
OTHER ARRANGEMENTS. Additional or modified arrangements and transactions
may be entered into in the future by the Company and Hollinger Inc. and their
respective subsidiaries. Any such future arrangements and transactions will be
determined through negotiation between the Company and Hollinger Inc. and it is
possible that conflicts of interest will be involved. In general, the Audit
Committee of the Board of Directors is responsible for recommending to the Board
of Directors policies and procedures for dealing with conflicts of interest and
for reviewing any such arrangements and transactions.
MANAGEMENT SERVICES AND BUSINESS OPPORTUNITIES
Concurrently with the consummation of the Company's initial public offering
in 1994, the Company and Hollinger Inc. entered into agreements for the purpose
of defining their ongoing relationships, including a services agreement, to
which Publishing later became a party, and a Business Opportunities Agreement.
These agreements were developed in the context of a parent-subsidiary
relationship and, therefore, were not the result of arms-length negotiations
between independent parties. The Business Opportunities Agreement was
subsequently amended, with the approval of the Audit Committee, in 1995 and 1996
(as so amended, the "Business Opportunities Agreement"). In 1998, the management
services arrangements were restructured to reflect the transformation of
Hollinger Inc. primarily into a holding company for the Company and the
provision by The Ravelston Corporation Limited ("Ravelston") of management
services. New agreements (the "Services Agreements") were entered into between
Ravelston and the Company and Southam. The Services Agreements are generally
consistent in their scope and terms with the prior agreements which they
superseded.
MANAGEMENT SERVICES. Pursuant to the Services Agreements, Ravelston
provides advisory, consultative, procurement and administrative services to the
Company, Southam and their respective subsidiaries including, among other
things, strategic advice, planning and financial services (including advice and
assistance with respect to acquisitions, divestitures or joint venture
arrangements); consulting services regarding risk management and insurance
coverage; and assistance in operational matters. In 1999 and 1998 in the
aggregate approximately $38 million and $32 million, respectively, was paid in
fees pursuant to the Services Agreements. The fees paid by the Company were
approved by the Audit Committee as reasonable for the services rendered. The
fees paid by Southam were approved by a Committee of the Board of Directors of
Southam (which was a public company until January 22, 1999) comprised of
directors independent of Ravelston. The amount of fees payable pursuant to the
Services Agreements for 2000 and future years will be determined annually by
agreement between Ravelston and the Audit Committee. The Services Agreements may
be terminated by
9
<PAGE> 13
either party upon 180 days prior written notice. Ravelston's affiliates include
Messrs. Black, Radler, Colson, Atkinson, Boultbee and Creasey and Mrs. Black,
who are officers and/or directors of both Hollinger Inc. and the Company and
who, with the exception of Mrs. Black, do not receive compensation directly from
the Company in their capacities as executive officers of the Company or
Hollinger Inc. Additionally, $2.3 million was paid to Ravelston's affiliate,
Moffat Management, for services provided to the Company's Community Newspaper
Group.
BUSINESS OPPORTUNITIES. The Business Opportunities Agreement provides that
the Company is Hollinger Inc.'s principal vehicle for engaging in and effecting
acquisitions in the newspaper business and in related media business in the
United States, Israel and, through The Telegraph, the United Kingdom, the rest
of the European Community, Australia and New Zealand (the "Telegraph
Territory"). Hollinger Inc. has reserved to itself the ability to pursue all
media (including newspaper) acquisition opportunities outside the United States,
Israel and the Telegraph Territory and all media acquisition opportunities
unrelated to the newspaper business in the United States, Israel and the
Telegraph Territory. As newspaper acquisition opportunities arise in the United
States, Israel and the Telegraph Territory, the Company has the right to pursue
such opportunities directly or through The Telegraph. If Hollinger Inc. acquires
a newspaper business in the United States or Israel, Hollinger Inc. will be
obligated to offer such business for sale to the Company on terms no less
favorable to the Company than those obtained by Hollinger Inc. Under the
Business Opportunities Agreement, as newspaper or media acquisitions arise in
Canada, Hollinger Inc. has the right to pursue such opportunities. Likewise, if
the Company acquires a newspaper business in Canada, the Company will be
obligated to offer such business for sale to Hollinger Inc. on terms no less
favorable to Hollinger Inc. than those obtained by the Company. Hollinger Inc.,
through wholly owned subsidiaries, may continue to acquire newspapers in Canada,
although it is the intention of Hollinger Inc. and the Company that Hollinger
Canadian Newspapers, Limited Partnership be the principal vehicle for owning,
acquiring, disposing of, and operating community newspapers in Canada. Any
decision by the Company with respect to a particular acquisition from Hollinger
Inc. shall be subject to the review and approval of the Audit Committee. In
addition, the Business Opportunities Agreement does not restrict newspaper
companies in which Hollinger Inc. has a minority investment from acquiring
newspaper or media businesses in the United States or Israel, nor does it
restrict subsidiaries of Hollinger Inc. from acquiring up to 20% interests in
publicly-held newspaper businesses in the United States. For purposes of the
Business Opportunities Agreement, "newspaper business" means the business of
publishing and distributing newspapers, magazines and other paid or free
publications having national, regional, local or targeted markets, including
publications having limited or no news or editorial content such as shoppers or
other total market coverage publications and similar publications. "Media
business" means the business of broadcasting radio, television, cable and
satellite programs (including national, regional or local radio, television,
cable and satellite programs). The Business Opportunities Agreement will remain
in effect so long as Hollinger Inc. holds at least 50% of the voting power of
the Company, subject to termination by either party under certain specified
circumstances.
OTHER TRANSACTIONS
In order to facilitate the rendering of management and advisory services by
Messrs. Black and Radler, and to enhance the business interests of the Company
within the financial community, the newspaper industry and otherwise, a
subsidiary of the Company purchased apartments in New York and Chicago in 1994
for the use of Messrs. Black and Radler, respectively, on a rent-free basis
while they are in the United States. The cost to the Company of building out and
maintaining the apartments for Messrs. Black and Radler was $143,500 and
$25,700, respectively, during 1999. The Company has granted options to Messrs.
Black and Radler, respectively, to acquire at any time the Company's interest in
the New York and Chicago apartments, respectively, at their then fair market
values. The Company's subsidiary has agreed to sell the apartments upon exercise
of the option by Mr. Black or Mr. Radler, respectively, or by a third party in
the event of Mr. Black's or Mr. Radler's respective termination as both an
officer and a director of the Company, their respective deaths or permanent
disability or upon notice by Mr. Black or Mr. Radler, respectively.
Effective April 1, 1999, the Company sold approximately 18 properties of
the Company's U.S. community newspaper group for an aggregate consideration of
approximately $47 million to a company
10
<PAGE> 14
formed by a former Vice President of American Publishing. Certain members of the
Board of Directors and senior management of the Company are shareholders of such
company. The transaction received an independent fairness opinion and was
unanimously approved by the independent Directors of the Company as a market
value transaction.
11
<PAGE> 15
THE DIRECTOR ELECTION PROPOSAL
Sixteen persons are being nominated for election as directors. The Board of
Directors is elected annually and may consist of such number of directors as the
Board of Directors may by resolution from time to time determine. Any newly
created directorship or vacancy may be filled by a majority of the remaining
members of the Board of Directors then in office. The occurrence of a vacancy
which is not filled within 90 days of the vacancy will constitute a
determination by the Board of Directors that the number of directors is to be
reduced so as to eliminate such vacancy, unless the Board of Directors specifies
otherwise. Unless authority to vote is withheld, shares of Common Stock and
Series C Preferred Stock represented by proxies properly executed will be voted
in favor of each of the persons named below, all of whom are presently directors
of the Company. The Company has no reason to believe that any of the nominees
will be unable to serve as a director but, if that should occur for any reason
prior to the meeting, it is intended that discretionary authority shall be
exercised by the persons designated as proxies to vote the proxies for the
election of any other nominee or nominees of management. Each director elected
at the meeting will hold office until the 2001 Annual Meeting of Stockholders
and until his or her successor is duly elected and qualified.
The stockholders of the Company are not entitled to vote cumulatively in
the election of directors. The holders of Class A Common Stock, Class B Common
Stock and Series C Preferred Stock are entitled to vote in the election of
directors and vote together as a single class. Hollinger Inc., which controls
approximately 74.2% of the combined voting power of both classes of Common Stock
and the Series C Preferred Stock has indicated its intention to vote in favor of
all the persons named below for election as directors.
INFORMATION CONCERNING NOMINEES AS DIRECTORS
The following table and the notes thereto set forth the names and ages (as
of March 1, 2000) of the 16 persons nominated for election as directors and all
positions and offices with the Company held by them:
<TABLE>
<CAPTION>
NAME AND AGE POSITION(S) WITH THE COMPANY
------------ ----------------------------
<S> <C>
Dwayne O. Andreas, 81........................ Director
Barbara Amiel Black, 59...................... Vice President, Editorial and Director
The Hon. Conrad M. Black, P.C., O.C., 55..... Chairman of the Board, Chief Executive
Officer and Director
The Hon. Richard R. Burt, 53................. Director
Raymond G. Chambers, 57...................... Director
Daniel W. Colson, 52......................... Vice Chairman and Director, Deputy Chairman
Chief Executive Officer and Director of the
Telegraph
Dr. Henry A. Kissinger, 76................... Director
Marie-Josee Kravis, O.C., 50................. Director
Shmuel Meitar, 56............................ Director
The Hon. Richard N. Perle, 58................ Co-Chairman of Hollinger Digital Inc. and
Director
F. David Radler, 57.......................... Deputy Chairman, President, Chief Operating
Officer and Director
The Hon. Robert S. Strauss, 81............... Director
A. Alfred Taubman, 76........................ Director
The Hon. James R. Thompson, 63............... Director
Lord Weidenfeld, 80.......................... Director
Leslie H. Wexner, 62......................... Director
</TABLE>
The name, principal occupation, business experience and tenure as a
director of the Company is set forth below for each nominee for election as a
director. Unless otherwise indicated, all principal occupations have been held
for more than five years.
12
<PAGE> 16
DWAYNE O. ANDREAS, Director. Mr. Andreas has served as a Director since
February 1996. Mr. Andreas served as the Chairman of Archer-Daniels-Midland Co.,
a publicly traded Fortune 500 company, from 1970 to January, 1999, when Mr.
Andreas became Chairman Emeritus of ADM, and currently serves as a director of
such company and served as its Chief Executive Officer from 1966 to 1997. Mr.
Andreas was Chairman of President Reagan's Task Force on International Private
Enterprise from 1983 to 1985. He served as a Director of Salomon, Inc., an
investment banking firm in New York, from 1982 to 1997. Mr. Andreas also serves
on the Company's International Advisory Board.
BARBARA AMIEL BLACK, Vice President, Editorial and Director. Mrs. Black has
served as Vice President, Editorial since September 1995 and as a Director since
February 1996. Mrs. Black is the wife of Mr. Black. Mrs. Black is currently a
columnist for The Daily Telegraph. After an extensive career in both on and off
air television production, Mrs. Black was the editor of The Toronto Sun from
1982 to 1984, a columnist of The Times and The Sunday Times of London from 1986
to 1994 and a columnist of McLean's magazine since 1976. Mrs. Black also serves
as Vice President, Editorial of Hollinger Inc. and Hollinger Canadian Newspapers
G.P. Inc. ("HCNGP"), the general partner of Hollinger Canadian Newspapers,
Limited Partnership, a public reporting company in Canada, and as a Director of
Hollinger Inc., Jerusalem Post and Southam.
THE HON. CONRAD M. BLACK, P.C., O.C., Chairman of the Board of Directors,
Chief Executive Officer and Director. Mr. Black has served as Chairman of the
Board of Directors and Chief Executive Officer since October 25, 1995, and has
served as a Director since 1990. Mr. Black served as Deputy Chairman of the
Board of Directors from 1991 to October 25, 1995. Mr. Black has served for the
past five years as the Chairman of the Board and Chief Executive Officer of
Hollinger Inc. He currently serves as the Chairman and as a Director of The
Telegraph, as Chairman and as a Director of Southam and Jerusalem Post, as
Chairman of the Board, Chief Executive Officer and a Director of Argus and of
HCNGP, and as a Director of EdperBrascan Limited and the Canadian Imperial Bank
of Commerce, both of which are public reporting companies in Canada, and as a
director of Sotheby's Holding Inc. Mr. Black is a Member of the Advisory Board
of Gulfstream Aerospace Corporation.
THE HON. RICHARD R. BURT, Director. Mr. Burt has served as a Director since
September 1994. Mr. Burt has served as Chairman of IEP Advisors L.L.P., an
emerging markets investment banking and advisory services firm, since 1994. He
was a partner with McKinsey & Company, Inc. from 1991 to 1994. Mr. Burt has
served as Chief Negotiator in Strategic Arms Reduction Talks from 1989 to 1991
and as the United States Ambassador to the Federal Republic of Germany from 1985
to 1989. Mr. Burt currently serves as a Director of Anchor Gaming, Weirton Steel
Corp., Archer-Daniels-Midland Co., Homestake Mining Inc., and HCL Technologies,
Ltd. all of which are United States public reporting companies.
RAYMOND G. CHAMBERS, Director. Mr. Chambers is Chairman of the Executive
Committee of America's Promise -- The Alliance for Youth. He is Co-Chairman of
the New Jersey Performing Arts Center and The National Mentoring Partnership. He
founded and is a Trustee of the Amelior Foundation and is the Founding Chairman
of the Points of Light Foundation. Mr. Chambers is also a Board Member of
YankeeNets, LLC.
DANIEL W. COLSON, Vice Chairman and Director of the Company, and Deputy
Chairman, Chief Executive Officer and Director of The Telegraph. Mr. Colson has
served as a Director of the Company since February 1995 and as Vice Chairman
since May 1998. He has served as Deputy Chairman of The Telegraph since 1995 and
as Chief Executive Officer of The Telegraph since 1994, and was Vice Chairman of
The Telegraph from 1992 to 1995. Mr. Colson also currently serves as Chairman
and as a Director of UniMedia Company and Hollinger Telegraph New Media Ltd. and
as Vice Chairman and Director of Hollinger Digital Inc. and Southam. He also
serves as Vice Chairman and as a Director of Hollinger Inc., Hollinger Canadian
Publishing Holdings Inc. and HCNGP, and as a director of Argus and Molson Inc.,
all of which are Canadian public reporting companies. Mr. Colson also serves as
Deputy Chairman and Director of Interactive Investor International Ltd.
DR. HENRY A. KISSINGER, Director. Dr. Kissinger has served as a Director
since February 1996. Dr. Kissinger has served as Chairman of Kissinger
Associates Inc., an international consulting firm, since 1982. Dr. Kissinger
served as the 56th Secretary of State from 1973 to 1977. He also served as
Assistant to the
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<PAGE> 17
President for National Security Affairs from 1969 to 1975 and as a member of the
President's Foreign Intelligence Advisory Board from 1984 to 1990. Dr. Kissinger
served as a director of American Express Company from 1986 to 1996 and currently
serves as Advisor to the Board of Directors of American Express Company,
Counselor to the Chase Manhattan Bank and as a member of its International
Advisory Committee, as Chairman of the International Advisory Board of American
International Group, Inc., and as a Director of Continental Grain Company,
Freeport-McMoran Copper and Gold Inc., all of which are United States public
reporting companies. Dr. Kissinger also serves as a Senior Advisor on the
Company's International Advisory Board.
MARIE-JOSEE KRAVIS, O.C., Director. Mrs. Kravis has served as a Director
since February 1996. She has served as a Senior Fellow of the Hudson Institute
Inc. since 1994. She has served as a Director of The Seagram Company Ltd. since
1985, a Canadian public reporting company, and as a Director of Hasbro Inc.
since 1995 and Ford Motor Company since 1995, both of which are United States
public reporting companies. Mrs. Kravis also serves as a Director of Campagnie
UniMedia, Canadian Imperial Bank of Commerce and StarMedia Network, Inc.
SHMUEL MEITAR, Director. Mr. Meitar has served as a Director since February
1996. Mr. Meitar also serves as Vice Chairman of Aurec Ltd., a leading provider
of communications, media and information services since 1991. Prior to 1991, Mr.
Meitar served as President of the Aurec Group, which includes Golden Channels,
the largest cable television franchise in Israel, and Golden Pages, the Israeli
Yellow Pages. Mr. Meitar has been a director of Jerusalem Post since 1992 and
also serves as a director of Golden Pages Ltd.
THE HON. RICHARD N. PERLE, Director. Mr. Perle has served as a Director
since June 1994. Mr. Perle has served as Resident Fellow of the American
Enterprise Institute for Public Policy Research since 1987. He was the Assistant
Secretary for the United States Department of Defense, International Security
Policy from 1981 to 1988. Mr. Perle is Co-Chairman of Hollinger Digital Inc. and
a Director of Jerusalem Post, both of which are subsidiaries of the Company. Mr.
Perle has served as a director of GeoBiotics, Inc. since 1996, and as a director
of E.Certify since 1999.
F. DAVID RADLER, Deputy Chairman, President, Chief Operating Officer and
Director. Mr. Radler has served as President and Chief Operating Officer since
October 25, 1995, as Deputy Chairman since May 1998 and as a Director since
1990. Mr. Radler was Chairman of the Board of Directors from 1990 to October 25,
1995. Mr. Radler has served for the past five years as President and Chief
Operating Officer and Deputy Chairman of Hollinger Inc. He currently serves as a
Director of HCNGP, The Telegraph and as Deputy Chairman, Associate Chief
Executive Officer and Director of Southam, and as a Director of Argus, Dominion
Malting Limited and West Fraser Timber Co. Ltd., all of which are Canadian
public reporting companies. Mr. Radler also serves as a Director of Jerusalem
Post.
THE HON. ROBERT S. STRAUSS, Director. Mr. Strauss has served as a Director
since February 1996. Mr. Strauss was a founder of, and is currently a Partner
of, Akin, Gump, Strauss, Hauer & Feld, a national law firm. Mr. Strauss served
as United States Ambassador to the Soviet Union beginning in 1991, and following
the dissolution of the Soviet Union, as United States Ambassador to the Russian
Federation until 1992 when he resigned and rejoined his former law firm. He has
also served from 1981 to the present as a Director of Archer-Daniels-Midland
Co., a United States public reporting company, and from 1993 to 1998 as a
director of Gulfstream Aerospace Corporation.
A. ALFRED TAUBMAN, Director. Mr. Taubman has served as a Director since
February 1996. Since 1983, Mr. Taubman has been the largest shareholder, and a
Director of Sotheby's Holdings Inc., the international art auction house. Mr.
Taubman also serves as Chairman of The Taubman Company and Taubman Centers,
Inc., companies engaged in the regional retail shopping center business.
THE HON. JAMES R. THOMPSON, Director. Mr. Thompson has served as a Director
since June 1994. Mr. Thompson has served as the Chairman of Winston & Strawn,
attorneys at law, since 1991. Mr. Thompson served as the Governor of the State
of Illinois from 1977 to 1991. Mr. Thompson currently serves as a director of
FMC Corp., Prime Retail, Inc., Prime Group Realty Trust, Navigant Consulting
Inc., Metfal Management Inc., Jefferson Smurfit Group plc, Union Pacific
Resources and American National Can, all of which are
14
<PAGE> 18
United States public reporting companies with the exception of Jefferson Smurfit
Group, which is an Irish company. Mr. Thompson also currently serves as a
Director of Prime Retail Company.
LORD WEIDENFELD, Director. Lord Weidenfeld has served as a Director since
February 1996. Lord Weidenfeld has served as Chairman of Weidenfeld & Nicolson
Ltd., a book publisher, since 1948. Lord Weidenfeld served as a Director of
Hollinger Inc. from September 1993 until 1995. Lord Weidenfeld is a Director of
Jerusalem Post.
LESLIE H. WEXNER, Director. Mr. Wexner has served as a Director since
February 1996. Mr. Wexner has served as Chairman and Chief Executive Officer of
The Limited, Inc., a company whose activities include the retail sale of apparel
and personal care items, since 1963. He also currently serves as a Chairman of
Intimate Brands Inc. and as Chairman of Abercrombie & Fitch. Mr. Wexner served
as Chairman of the Board of Trustees of The Ohio State University until 1991.
MEETINGS AND COMMITTEES
The Board of Directors met four times in 1999. With the exception of
Messrs. Kissinger and Wexner, each incumbent director named above attended 75%
or more of the aggregate of the total number of meetings of the Board of
Directors and the total number of meetings of the committees on which such
director served. The Company maintains an Executive Committee, an Audit
Committee, a Compensation Committee and a Stock Option Committee. The Company
does not have a nominating committee.
The Executive Committee acted by unanimous written consent twenty-two times
in 1999. The Executive Committee consists of Mr. Black, Chairman, and Messrs.
Perle and Radler. The Executive Committee, to the extent permitted by law, the
Company's Amended and Restated By-Laws and resolutions of the Board of
Directors, exercises all the power and authority of the Board of Directors.
The Audit Committee met four times in 1999. The 2000 Audit Committee
consists of Mr. Thompson, Chairman, Mr. Burt and Mrs. Kravis. The Audit
Committee's duties include reviewing internal financial information, monitoring
cash flow, budget variances and credit arrangements, reviewing the audit
program, reviewing with the Company's accountants the results of all audits upon
their completion, annually selecting and recommending independent public
accountants, overseeing the quarterly unaudited reporting process and taking
such other action as may be necessary to assure the adequacy and integrity of
all financial information distributed by the Company.
In addition, pursuant to the Services Agreements, the Audit Committee is
responsible for reviewing the cost of services charged by Ravelston, and
monitoring the Company's decisions with respect to related party acquisition
opportunities and the exercise of the Company's rights under its Business
Opportunities Agreement with Hollinger Inc. See "Certain Relationships and
Related Transactions." The Audit Committee also has authority to recommend to
the Board policies and procedures for dealing with conflicts of interest and to
review the application of such policies and procedures.
The Audit Committee reports that it has: (i) reviewed and discussed the
audited financial statements with management; (ii) discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61; and (iii) received certain disclosures from the
auditors regarding the auditors' independence as required by the Independence
Standards Board Standard No. 1, and discussed with the auditors the auditors'
independence. Based on such review and discussions, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for 1999 for filing with
the Commission. On May 5, 1999, the Audit Committee adopted, and the Board of
Directors ratified, the Hollinger International Inc. Audit Committee Charter, a
copy of which is attached hereto as Annex A.
The foregoing report has been furnished by James R. Thompson, Richard R.
Burt and Marie-Josee Kravis.
The Compensation Committee met once in 1999. The 2000 Compensation
Committee consists of Mr. Thompson, Chairman, and Mr. Burt. The Compensation
Committee recommends compensation levels of
15
<PAGE> 19
senior management (other than for those executive officers who receive their
compensation from Hollinger Inc. or Ravelston), works with senior management on
benefit and compensation programs for Company employees and monitors local and
national compensation trends to ensure the Company's compensation program is
competitive within the newspaper industry.
The Stock Option Committee acted by unanimous written consent three times
in 1999. The Stock Option Committee, which consists of Mr. Thompson, Chairman,
and Mr. Meitar, administers the Company's 1994 Stock Option Plan, 1997 Stock
Incentive Plan and 1999 Stock Incentive Plan.
DIRECTORS' COMPENSATION
During 1999 each director, including each director who is an executive
officer, was entitled to receive an annual director's fee of $27,500 per annum
and a fee of $2,000 for each board or committee meeting attended. Non-employee
directors were each entitled to receive an option to purchase 4,000 shares of
Class A Common Stock pursuant to the 1999 Stock Incentive Plan and a one time
grant of 500 shares of Class A Common Stock. Directors are reimbursed for
expenses incurred in attending the meetings. Members of the Executive Committee
do not receive meeting fees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the directors and executive officers and
any persons holding more than 10% of any equity security of the Company are
required to report their initial ownership of any equity security and any
subsequent changes in that ownership to the Commission. Specific due dates for
these reports have been established by the Commission, and the Company is
required to disclose in this Proxy Statement any failure to file such reports by
those dates during 1999. To the Company's knowledge, based upon a review of the
copies of the reports furnished to the Company and written representations that
no other reports were required, all of these filing requirements were satisfied,
except that a report on Form 5 for each of Messrs. J.D. Ferguson and Frederic
Lebolt and Ms. Linda Loye was filed in February of 2000 evidencing late Form 3s;
and a joint Form 4 filing due in November of 1999 was filed in December of 1999
on behalf of Hollinger Inc., Ravelston, and Mr. and Mrs. Black.
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<PAGE> 20
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the three
fiscal years ended December 31, 1999 for the Chief Executive Officer and the
four most highly compensated executive officers whose salary and bonus for the
year ended December 31, 1999 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(2)
- --------------------------- ---- ------ ----- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CONRAD M. BLACK............. 1999 $466,967(3) --(3) -- 245,000(4) $128,156(5)
Chairman and 1998 455,785(3) --(3) -- 150,000(6) 126,899(7)
Chief Executive Officer 1997 428,768(3) --(3) -- 95,000(8) 112,001(9)
F. DAVID RADLER............. 1999 $ --(3) --(3) -- 245,000(4) $154,915(5)
President and 1998 --(3) --(3) -- 150,000(6) 152,697(7)
Chief Operating Officer 1997 --(3) --(3) -- 95,000(8) 129,939(9)
DANIEL W. COLSON............ 1999 $245,280(3) --(3) (1) 170,000(4) $136,980(5)
Chief Executive Officer 1998 234,121(3) --(3) (1) 120,000(6) 117,075(7)
of The Telegraph 1997 238,966(3) --(3) -- 45,000(8) 102,419(9)
J. A. BOULTBEE.............. 1999 $ --(3) --(3) -- 85,000(4) $ 29,206(5)
Executive Vice President 1998 --(3) --(3) -- 60,000(6) 23,615(7)
1997 --(3) --(3) -- 35,000(8) 15,155(9)
PETER Y. ATKINSON........... 1999 $ --(3) --(3) -- 85,000(4) $ 35,063(5)
Vice President 1998 --(3) --(3) -- 60,000(6) 20,916(7)
1997 --(3) --(3) -- 35,000(8) --(9)
</TABLE>
- ---------
(1) Pursuant to the Company's deferred compensation plan, discretionary
contributions are credited to the participants' retirement accounts as
deferred compensation. See "Deferred Compensation Plan."
(2) Certain executive officers of the Company, including Messrs. Black, Radler,
Colson, Atkinson and Boultbee are participants in the Hollinger Inc.
Executive Share Option Plan and the Hollinger Canadian Newspapers, Limited
Partnership Unit Option Plan. As of March 16, 2000, 232,000 Hollinger Inc.
Executive Share options had vested and no Hollinger Canadian Newspapers,
Limited Partnership options had vested. Mr. Black holds vested options to
acquire 62,500 Hollinger Inc. Retractable Common Shares, unvested options to
acquire 187,500 Hollinger Inc. Retractable Common Shares and unvested
options to acquire 95,000 limited partnership units of Hollinger Canadian
Newspapers, Limited Partnership ("Partnership Units"); Mr. Radler holds
vested options to acquire 57,500 Hollinger Inc. Retractable Common Shares,
unvested options to acquire 172,500 Hollinger Inc. Retractable Common Shares
and unvested options to acquire 95,000 Partnership Units; Mr. Colson holds
vested options to acquire 40,000 Hollinger Inc. Retractable Common Shares,
unvested options to acquire 120,000 Retractable Common Shares of Hollinger
Inc. and unvested options to acquire 60,000 Partnership Units; Mr. Boultbee
holds vested options to acquire 23,750 Hollinger Inc. Retractable Common
Shares, unvested options to acquire 71,250 Retractable Common Shares of
Hollinger Inc. and unvested options to acquire 35,000 Partnership Units and
Mr. Atkinson holds vested options to acquire 20,000 Hollinger Inc.
Retractable Common Shares, unvested options to acquire 60,000 Retractable
Common Shares of Hollinger Inc. and unvested options to acquire 35,000
Partnership Units.
(3) With the exception of salaries paid to Messrs. Black and Colson by The
Telegraph (which salaries were paid in pounds sterling and Canadian dollars,
respectively, and have been converted into U.S. dollars at the 1999 average
rate of 1.6172 and 0.6732, the 1998 average rate of 1.6574 and 0.6747, and
the 1997 average rate of 1.6334 and 0.7222, respectively, for purposes of
this disclosure), Messrs. Black, Radler, Colson, Atkinson and Boultbee do
not receive salaries or bonuses directly from the Company. Under the
17
<PAGE> 21
Services Agreements with Ravelston, the Company pays a management fee
relating to, among other matters, management and administrative services
provided to the Company by such executives. See "Certain Relationships and
Related Transactions."
(4) Options granted pursuant to the 1997 Stock Incentive Plan to purchase shares
of Class A Common Stock. Options may be exercised upon the payment of $11.63
per share exercise price and vest over a four year period beginning February
12, 2000 in equal increments. See "1997 Stock Incentive Plan" below.
(5) With respect to Messrs. Black, Radler and Colson, reflects quarterly and
meeting attendance fees paid for services as a director during 1999. With
respect to Messrs. Black, Radler, Colson, Boultbee and Atkinson, reflects
quarterly and meeting attendance fees paid for services as a director of
Southam during 1999 (which fees were paid in Canadian Dollars and have been
converted to U.S. Dollars at the 1999 average rate of 0.6732 for purposes of
this disclosure). With respect to Messrs. Black and Radler reflects fees
paid for services as a director of American Publishing and Jerusalem Post
during 1999. With respect to Mr. Radler, reflects fees paid for services as
a Senior Director of APAC-95, Inc., a subsidiary of the Company, during
1999. With respect to Messrs. Black, Colson and Radler, also reflects fees
paid for services as a director of The Telegraph (which fees were paid in
pounds sterling and have been converted into U.S. Dollars at the 1999
average rate of 1.6172 for purposes of this disclosure).
(6) Options granted on February 23, 1998 pursuant to the 1997 Stock Incentive
Plan to purchase shares of Class A Common Stock. Options were to be
exercised upon the payment of $15.06 per share exercise price and vested
over a four year period beginning February 23, 1999 in equal increments.
Effective as of February 26, 1999, the Company and said employees agreed to
cancel such options, with the employees foregoing one year of vesting, in
return for new options for the respective same number of shares to be
exercised upon the payment of $12.25 per share exercise price which vest
over a four year period beginning February 26, 2000 in equal increments. See
"1997 Stock Incentive Plan" below.
(7) With respect to Messrs. Black, Radler and Colson, reflects quarterly and
meeting attendance fees paid for services as a director during 1998. With
respect to Messrs. Black, Radler, Colson, Boultbee and Atkinson, reflects
quarterly and meeting attendance fees paid for services as a director of
Southam during 1998 (which fees were paid in Canadian Dollars and have been
converted to U.S. Dollars at the 1998 average rate of 0.6747 for purposes of
this disclosure). With respect to Messrs. Black and Radler reflects fees
paid for services as a director of American Publishing and Jerusalem Post
during 1998. With respect to Mr. Radler, reflects fees paid for services as
a Senior Director of APAC-95, Inc., a subsidiary of the Company, during
1998. With respect to Messrs. Black, Colson and Radler, also reflects fees
paid for services as a director of The Telegraph (which fees were paid in
pounds sterling and have been converted into U.S. Dollars at the 1998
average rate of 1.6574 for purposes of this disclosure).
(8) Options granted pursuant to the 1997 Stock Incentive Plan to purchase shares
of Class A Common Stock. Options may be exercised upon the payment of $10.06
per share exercise price and vest over a four year period beginning May 1,
1998 in equal increments. See "1997 Stock Incentive Plan" below.
(9) With respect to Messrs. Black, Radler and Colson, reflects quarterly and
meeting attendance fees paid for services as a director during 1997. With
respect to Messrs. Black, Radler, Colson, Boultbee and Atkinson, reflects
quarterly and meeting attendance fees paid for services as a director of
Southam during 1997 (which fees were paid in Canadian Dollars and have been
converted to U.S. Dollars at the 1997 average rate of 0.7222 for purposes of
this disclosure). With respect to Messrs. Black and Radler reflects fees
paid for services as a director of American Publishing and Jerusalem Post
during 1997. With respect to Mr. Radler, reflects fees paid for services as
a Senior Director of APAC-95, Inc., a subsidiary of the Company, during
1997. With respect to Messrs. Black, Colson and Radler, also reflects fees
paid for services as a director of The Telegraph (which fees were paid in
pounds sterling and have been converted into U.S. Dollars at the 1997
average rate of 1.6334 for purposes of this disclosure).
DEFERRED COMPENSATION PLAN. The Company, through a subsidiary, provides a
deferred compensation plan to certain executives under which contributions may
be made by the Board of Directors of such subsidiary during the course of each
year. Such contributions are discretionary in amount, time and form of payment
and, when made, are credited to the retirement accounts established for each
participant which vest 10% per year after five years of service. Mr. Strader
participates in this program. Mr. Colson received a
18
<PAGE> 22
pension contribution from The Telegraph in the amount of $60,304, which was
originally paid in pounds sterling and which has been converted into U.S.
dollars at the average rate of 1.6172 for purposes of this disclosure.
1994 STOCK OPTION PLAN. Prior to the Company's initial public offering in
May 1994, Hollinger Inc., the parent company of the Company, adopted and
approved a stock option plan for the Company which was subsequently amended on
September 9, 1996 (as amended, the "1994 Stock Option Plan"), under which stock
option awards have been made to eligible employees and officers. The purpose of
the 1994 Stock Option Plan was to promote the interests of the Company and its
stockholders by establishing a direct link between the financial interests of
eligible employees and officers and the performance of the Company and by
enabling the Company to attract and retain highly competent employees and
officers. On May 1, 1997, the stockholders adopted a new stock option plan (see
"1997 Stock Incentive Plan," described below) which replaced the 1994 Stock
Option Plan. No new grants have or will be made under the 1994 Stock Option
Plan. Awards under the 1994 Stock Option Plan made prior to May 1, 1997 are not
affected by the adoption of the 1997 Stock Incentive Plan.
1997 STOCK INCENTIVE PLAN. On May 1, 1997, the Company adopted, and the
Company's stockholders approved, a new compensation plan known as the Hollinger
International Inc. 1997 Stock Incentive Plan (the "1997 Stock Incentive Plan").
The 1997 Stock Incentive Plan replaced the Company's 1994 Stock Option Plan.
Awards previously made under the 1994 Stock Option Plan are not affected. The
purpose of the 1997 Stock Incentive Plan was to assist in attracting and
retaining highly competent employees and directors and to act as an incentive in
motivating selected officers and other key employees and directors to achieve
long-term corporate objectives. The 1997 Stock Incentive Plan provided for
awards of up to 5,156,915 shares of Class A Common Stock. This total included
189,640 shares that remained available under the 1994 Stock Option Plan, which
shares were rolled into the 1997 Stock Incentive Plan, and 4,967,275 additional
shares. The number of shares available for issuance under the 1997 Stock
Incentive Plan was subject to anti-dilution adjustments upon the occurrence of
significant corporate events. The shares offered under the 1997 Stock Incentive
Plan were either authorized and unissued shares or issued shares which had been
reacquired by the Company. On May 5, 1999, the stockholders adopted a new stock
option plan (see "1999 Stock Incentive Plan", described below) which replaced
the 1997 Stock Incentive Plan. No new grants have been or will be made under the
1997 Stock Incentive Plan. Awards under the 1997 Stock Incentive Plan made prior
to May 5, 1999 are not affected by the adoption of the 1999 Stock Incentive
Plan.
1999 STOCK INCENTIVE PLAN. On May 5, 1999, the Company adopted, and the
Company's stockholders approved, a new compensation plan known as the Hollinger
International Inc. 1999 Stock Incentive Plan (the "1999 Stock Incentive Plan").
The 1999 Stock Incentive Plan replaces the Company's 1997 Stock Incentive Plan.
Awards previously made under the 1997 Stock Incentive Plan are not affected. The
purpose of the 1999 Stock Incentive Plan is to assist in attracting and
retaining highly competent employees and directors and to act as an incentive in
motivating selected officers and other key employees and directors to achieve
long-term corporate objectives. The 1999 Stock Incentive Plan provides for
awards of up to 8,500,000 shares of Class A Common Stock. The number of shares
available for issuance under the 1999 Stock Incentive Plan shall be subject to
anti-dilution adjustments upon the occurrence of significant corporate events.
The shares offered under the 1999 Stock Incentive Plan are either authorized and
unissued shares or issued shares which have been reacquired by the Company.
HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP UNIT OPTION PLAN. In
conjunction with the formation of Hollinger Canadian Newspapers, Limited
Partnership (the "Partnership"), the board of directors of the general partner
implemented a Unit Option Plan for the Partnership (the "Unit Option Plan"). The
Unit Option Plan is designed to (i) provide incentives to directors, officers
and certain employees of the Partnership and its subsidiaries ("Eligible
Persons") who are in positions which enable them to make significant
contributions to the longer term objectives of the Partnership, (ii) give
suitable recognition to the ability and industry of those Eligible Persons and
(iii) attract and retain persons of ability and industry in the service of the
Partnership and its subsidiaries.
19
<PAGE> 23
Under the Unit Option Plan, options to purchase limited partnership units
of the Partnership ("Units") may be granted from time to time by the board of
directors of the general partner (or a committee of the board) to an Eligible
Person. The exercise price of the option is determined by the board based on the
fair value of the Unit on the date of grant. In general, the exercise price will
be the weighted average price for all board lots of Units traded on The Toronto
Stock Exchange on each of the ten consecutive trading days ending on the third
day preceding the date of the grant. The maximum number of Units that may be
issued under the Unit Option Plan (subject to adjustments for unit splits,
consolidations and other reorganizations) is 850,000 Units. Options must be
exercised no later than six years from the date of grant or any lesser period
determined by the board of directors of the general partner or required by
applicable regulatory authorities.
OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table sets forth
information concerning the issuance of options to purchase Class A Common Stock
in 1999 to the named executive officers pursuant to the 1997 Stock Incentive
Plan.
1999 ORIGINAL INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE GRANT
UNDERLYING GRANTED TO OF BASE DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- ---------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Conrad M. Black........................... 245,000 11.1% $11.63 2/11/09 $962,850
F. David Radler........................... 245,000 11.1% $11.63 2/11/09 $962,850
Daniel W. Colson.......................... 170,000 7.71% $11.63 2/11/09 $668,100
Barbara Amiel Black....................... 55,000 2.49% $11.63 2/11/09 $216,150
Peter Y. Atkinson......................... 85,000 3.85% $11.63 2/11/09 $334,050
J. A. Boultbee............................ 85,000 3.85% $11.63 2/11/09 $334,050
Frederick A. Creasey...................... 15,000 0.68% $11.63 2/11/09 $ 58,950
John D. Ferguson.......................... 35,000 1.59% $11.63 2/11/09 $137,550
Paul B. Healy............................. 45,000 2.04% $11.63 2/11/09 $176,850
Mark S. Kipnis............................ 40,000 1.81% $11.63 2/11/09 $157,200
Frederic Lebolt........................... 15,000 0.68% $11.63 2/11/09 $ 58,950
Jerry J. Strader.......................... 50,000 2.27% $11.63 2/11/09 $196,500
</TABLE>
- ---------
(1) The options vest in 25% annual increments on each of the first, second,
third and fourth anniversaries of their respective grant dates, beginning
February 12, 2000.
(2) These values are determined using the Black-Scholes Option Pricing Model.
The Black-Scholes Option Pricing Model is one of the methods permitted by
the Commission for estimating the present value of options. The actual value
of the stock options that an executive officer may realize, if any, will
depend on the excess of the market price on the date of exercise over the
exercise price. The Black-Scholes Option Pricing Model is based on
assumptions as to certain variables described in the following sentence, so
there is no assurance that an individual will actually realize the option
values presented in this table. The values listed above were based on the
following assumptions: volatility (estimated) -- 32.7%; risk-free rate of
return -- 6.4%; dividend yield -- 4.5%; time of exercise -- 10 years.
20
<PAGE> 24
1998 REISSUED ORIGINAL INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE GRANT
UNDERLYING GRANTED TO OF BASE DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- ---------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Conrad M. Black........................... 150,000 10.8% $12.25 2/25/09 $570,000
F. David Radler........................... 150,000 10.8% $12.25 2/25/09 $570,000
Daniel W. Colson.......................... 120,000 8.7% $12.25 2/25/09 $456,000
Barbara Amiel Black....................... 35,000 2.5% $12.25 2/25/09 $133,000
Peter Y. Atkinson......................... 60,000 4.3% $12.25 2/25/09 $228,000
J. A. Boultbee............................ 60,000 4.3% $12.25 2/25/09 $228,000
Frederick A. Creasey...................... 20,000 1.4% $12.25 2/25/09 $ 76,000
John D. Ferguson.......................... 30,000 2.2% $12.25 2/25/09 $114,000
Paul B. Healy............................. 45,000 3.3% $12.25 2/25/09 $171,000
Mark S. Kipnis............................ 30,000 2.2% $12.25 2/25/09 $114,000
Frederic Lebolt........................... 10,000 0.7% $12.25 2/25/09 $ 38,000
Jerry J. Strader.......................... 50,000 3.6% $12.25 2/25/09 $190,000
</TABLE>
- ---------
(1) The options vest in 25% annual increments on each of the first, second,
third and fourth anniversaries of their respective grant dates, beginning
February 26, 2000. As previously reported, effective as of February 26,
1999, the Company and said employees agreed to cancel options issued on
February 23, 1998, having an exercise price of $15.06 per share, with the
employees foregoing one year of vesting, in return for new options for the
respective same number of shares, having an exercise price of $12.25 per
share.
(2) 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 Commission for estimating the present value 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 Black-Scholes Option Pricing Model is based on
assumptions as to certain variables described in the following sentence, so
there is no assurance that an individual will actually realize the option
values presented in this table. The values listed above were based on the
following assumptions: volatility (estimated) -- 32.7%; risk-free rate of
return -- 6.4%; dividend yield -4.5%; time of exercise -- 10 years.
EMPLOYMENT AGREEMENTS. The Company has entered into employment agreements
with certain of its executive officers and all of the regional managers of its
community newspaper group, providing generally for year-to-year employment.
Subject to certain limited exceptions, the employment agreements generally
prohibit the executives and regional managers from competing with the Company
for a period of three years after termination of employment (i) in any community
in which the Company at that time publishes, or has commenced negotiations to
acquire, a newspaper or shopper, or (ii) within a 50-mile radius of any such
community. The Company has also entered into employment agreements with Mr.
Healy and Ms. Horowitz which calls for, among other things, lump sum severance
payments.
REPORT ON EXECUTIVE COMPENSATION. The following Report on Executive
Compensation has been furnished by the Compensation Committee. The Board of
Directors has delegated to the Compensation Committee authority to review and
approve the executive remuneration package for senior executives compensated
directly by the Company. The Report reflects the Compensation Committee's
policies toward executive compensation; however, the compensation of certain
executive officers (including Messrs. Black, Radler, Colson, Boultbee, Atkinson
and Creasey) is determined by Ravelston, the parent corporation of Hollinger
Inc., and is paid pursuant to the Services Agreements, except to the extent that
the Company compensates such persons directly in the form of stock options and
other stock-related programs.
21
<PAGE> 25
As of March 1, 2000, the Compensation Committee consisted of two directors,
neither of whom are officers or employees of the Company, and neither
participates in any executive compensation plan reviewed by the Compensation
Committee.
The Committee has previously noted that in the past base pay constituted
the most significant portion of executive pay. The Compensation Committee has
recognized that it is important to move to a system that provides a more
balanced executive compensation package, placing greater emphasis on annual and
long term incentives and a reduced role for annual base salary. Such an approach
is consistent with many other public companies.
Consequently, as has been done in prior year executive pay packages, the
Compensation Committee will attempt to follow the following strategy:
(i) Motivate executives to achieve their strategic goals by tying
their compensation to the performance of the Company, their individual
operating units and their individual performance;
(ii) Be competitive with other leading companies so as to attract and
retain the best possible executive talent; and
(iii) Align the interests of the executives with the long-term
interest of the Company's stockholders through the award of stock options
and other stock-related programs.
The first step toward this executive compensation strategy was implemented
in 1994 with the establishment of the 1994 Stock Option Plan. Since 1994, key
members of management have been awarded stock options under the 1994 Stock
Option Plan and the 1997 Stock Incentive Plan. In 1999, the Hollinger
International Inc. 1999 Stock Incentive Plan was established to continue to make
stock options and other stock-related programs available as incentives for key
members of management, and will provide for automatic stock option grants to
non-employee directors of the Company.
Section 162(m) of the Code provides that public companies are denied a
Federal income tax deduction for compensation in excess of $1 million to any
covered employee except to the extent the compensation is performance based. The
Compensation Committee believes that all compensation paid by the Company in
1999 complied with the Section 162(m) limitation. It is the present intention of
the Compensation Committee to seek to ensure that all compensation payable to
executives that is otherwise tax deductible will continue to be tax deductible.
However, the Compensation Committee reserves the right to take whatever action
with respect to the compensation of executive officers that it deems appropriate
and in the best interests of the Company and its stockholders.
The foregoing report has been furnished by James R. Thompson and Richard R.
Burt.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. There are no
compensation committee interlocks or insider participation in compensation
decisions.
22
<PAGE> 26
STOCKHOLDER RETURN PERFORMANCE GRAPH. The following graph compares the
percentage change in the Company's cumulative total stockholder return on its
Class A Common Stock (assuming all dividends were reinvested at the market price
on the date of payment) against the cumulative total stockholder return of the
NYSE Market Index and the Media General Industry Group Index -- Newspapers for
the period commencing with January 1, 1995 through December 31, 1999. The Class
A Common Stock has been listed on the NYSE under the symbol "HLR".
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, DEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
[LINE GRAPH]
<TABLE>
<CAPTION>
HOLLINGER INTERNATIONAL INC. PUBLISHING - NEWSPAPERS NYSE MARKET INDEX
---------------------------- ----------------------- -----------------
<S> <C> <C> <C>
1994 100 100 100
1995 96.12 126.58 129.66
1996 109.01 157.31 156.2
1997 137.28 202.22 205.49
1998 141.04 203.43 244.52
1999 136.87 260.96 267.75
</TABLE>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(804) 649-6826
The information in the graph was prepared by Media General Financial
Services. The graph assumes an initial investment of $100 and reinvestment of
dividends during the period presented.
23
<PAGE> 27
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP as independent auditors of
the Company for the year ending December 31, 2000. Representatives of KPMG LLP
will be present at the Annual Meeting, will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Proposals that stockholders desire to have included in the Company's proxy
materials for the 2001 Annual Meeting of Stockholders of the Company must be
received by the Secretary of the Company at its principal executive office no
later than November 28, 2000.
For a stockholder proposal that is not intended to be included in the
Company's proxy materials but is intended to be raised by the stockholder from
the floor at the 2001 Annual Meeting of Stockholders, the stockholder must
provide timely advance notice. Advance notice must be received by the Secretary
of the Company at its principal executive offices no later than February 5, 2001
in order to be timely. If a proposal is received after that date, the Company's
proxy for the 2001 Annual Meeting will confer discretionary authority to vote on
such matter without any discussion of such matter in the proxy statement for the
2001 Annual Meeting.
OTHER MATTERS
The Board of Directors does not know of any other business which will come
before the Annual Meeting for action by the stockholders other than the matters
specified in the accompanying Notice of the Annual Meeting. If any other matters
requiring a stockholder vote properly come before the meeting, the persons
appointed in the enclosed proxy will vote in accordance with their discretion
with respect to such matters.
LOGO
Mark S. Kipnis
Vice President-Law and Secretary
Chicago, Illinois
March 22, 2000
24
<PAGE> 28
ANNEX A
HOLLINGER INTERNATIONAL INC.
AUDIT COMMITTEE CHARTER
A. ORGANIZATION. The Audit Committee shall be comprised of a minimum of
three (3) directors, each of whom shall be independent and financially literate
or become financially literate within a reasonable period of time after his or
her appointment to the Audit Committee. Further, at least one member of the
Audit Committee shall have accounting or related financial management expertise.
Members of the Audit Committee shall be considered independent if they have no
relationship to the corporation that may interfere with the exercise of their
independence from management and the corporation. Audit Committee members and
the committee chairman shall be designated by the full Board of Directors. The
duties and responsibilities of a member of the Audit Committee are in addition
to those duties set out for a member of the Board of Directors.
B. STATEMENT OF POLICY. The Audit Committee shall provide assistance to
the Board of Directors in fulfilling their responsibility to the shareholders
related to corporate accounting, reporting practices of the corporation and the
quality and integrity of the financial reports of the corporation. In carrying
out this statement of policy, the Audit Committee shall be guided by the
following principles:
Principle 1: MONITORING THE OTHER COMPONENT PARTS OF THE AUDIT
PROCESS. The Audit Committee shall oversee the work of
management and the outside auditors to endorse the processes
and safeguards employed by each. In particular, the Audit
Committee shall encourage procedures that promote
accountability among these players, ensuring that management
properly develops and adheres to a sound system of internal
control and that the outside auditors, through their own
review, assess management's practices.
Principle 2: INDEPENDENT COMMUNICATION AND INFORMATION FLOW BETWEEN THE
AUDIT COMMITTEE AND OUTSIDE AUDITORS. Only through open,
regular, frank and confidential dialogue will the Audit
Committee be in a position to utilize the knowledge of the
outside auditors in assessing internal controls, management
and the impact of each on the quality and reliability of the
financial statements. In addition, the Audit Committee shall
promote a culture that values objective and critical analysis
of management. In this regard, the Audit Committee shall
ensure that the outside auditors have provided the committee
with the information that would be required to be disclosed by
GAAS, including the topics covered by SAS 54, 60, 61 and 82.
Principle 3: CANDID DISCUSSIONS WITH MANAGEMENT AND OUTSIDE AUDITORS
REGARDING ISSUES IMPLICATING JUDGMENT AND IMPACTING
QUALITY. The Audit Committee shall discuss with the outside
auditor the auditor's judgments about the quality, not only
the acceptability, of the corporation's accounting principles
as applied in its financial reporting; the discussions shall
include such issues as the clarity of the corporation's
financial disclosures and degree of aggressiveness or
conservatism of the corporation's accounting principles and
underlying estimates and other significant decisions made by
management in preparing the financial disclosure.
Principle 4: DILIGENT AND KNOWLEDGEABLE AUDIT COMMITTEE MEMBERSHIP. The
Audit Committee shall carefully consider further
qualifications for those who serve on the Audit Committee.
C. RESPONSIBILITIES. In carrying out its responsibilities, the Audit
Committee believes its policies and procedures should remain flexible, in order
to best react to changing conditions and to ensure to the directors and
shareholders that the corporate accounting and reporting practices of the
corporation are in accordance with all requirements. In carrying out these
responsibilities, the Audit Committee will:
1. Provide an open avenue of communication between the outside auditor
and the Board of Directors.
A-1
<PAGE> 29
2. Review and update the committee's charter annually.
3. As the outside auditor is ultimately accountable to the Board of
Directors and the Audit Committee, as representatives of the
shareholders, the Audit Committee shall have the authority and
responsibility to select, evaluate and, where appropriate, recommend
replacement of the outside auditor.
4. The Audit Committee is responsible for ensuring its receipt from the
outside auditors of a formal written statement delineating all
relationships between the auditor and the corporation, consistent with
Independence Standards Board Standard 1; the Audit Committee is also
responsible for actively engaging in a dialogue with the auditor with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the auditor and for taking, or
recommending that the full Board take, appropriate action to ensure the
independence of the outside auditor.
5. Confirm and assure the independence of the outside auditor, including
a review of non-audit related services provided by the outside auditor.
6. Consider and review with the outside auditor:
(a) The adequacy of the corporation's internal controls; and
(b) Any related significant findings and recommendations of the outside
auditor together with management's responses thereto.
7. Review with management and the outside auditor at the completion of
the examination:
(a) The corporation's annual financial statements and related
footnotes;
(b) The outside auditor's audit of the financial statements and report
thereon;
(c) Any significant changes required in the outside auditor's audit
plan;
(d) Any serious difficulties or disputes with management encountered
during the course of the audit; and
(e) Other matters related to the conduct of the audit which are to be
communicated to the Audit Committee under generally accepted
auditing standards.
8. Meet with the outside auditor and management in separate executive
sessions to discuss any matters that the Audit Committee or these groups
believe should be discussed privately with the Audit Committee.
9. Report Audit Committee actions to the Board of Directors with such
recommendations as the Audit Committee may deem appropriate.
10. The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the Audit Committee's scope of
responsibilities. The Audit Committee shall be empowered to retain
independent counsel, accountants or others to assist it in the conduct
of any investigation.
11. The Audit Committee shall meet as frequently as circumstances
require. The Audit Committee may ask members of management or others to
attend the meeting and provide pertinent information as necessary.
12. The Audit Committee will perform such other functions as assigned by
law, the corporation's charter or bylaws or the Board of Directors.
A-2
<PAGE> 30
- --------------------------------------------------------------------------------
HOLLINGER INTERNATIONAL INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
P OF HOLLINGER INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 11, 2000
R
The undersigned holder of shares of Class A Common Stock, par value $.01
O per share ("Class A Shares"), and/or Class B Common Stock, par value $.01
per share ("Class B Shares"), and/or Series C Convertible Preferred Stock,
X par value $.01 per share ("Series C Preferred Shares") of Hollinger
International Inc, ("Hollinger International"), hereby appoints Mark S.
Y Kipnis and Paul B. Healy, individually, with full power of substitution in
each of them, as proxy or proxies to represent the undersigned and vote all
Class A Shares, and/or Class B Shares, and/or Series C Preferred Shares
of Hollinger International which the undersigned would be entitled to vote
if personally present and voting at the Annual Meeting of Stockholders of
Hollinger International to be held on May 11, 2000 at 11:00 a.m. local
time, in the Versailles Room, St. Regis Hotel, Two East 55th Street at
Fifth Avenue, New York, New York 10022, and at any adjournments or
postponements thereof, upon all matters coming before such meeting. Said
proxies are directed to vote as set forth below and, in their discretion,
upon such other matters as may properly come before the meeting.
(1) Nominees to serve for a one-year term expiring at the 2001 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified:
(01) Dwayne O. Andreas; (02) Barbara Amiel Black; (03) Hon. Conrad M.
Black; (04) Hon. Richard R. Burt; (05) Raymond G. Chambers; (06) Daniel W.
Colson; (07) Hon. Henry A. Kissinger; (08) Marie-Josee Kravis; (09) Shmuel
Meitar; (10) Hon. Richard N. Perle; (11) F. David Radler; (12) Hon. Robert
S. Strauss; (13) A. Alfred Taubman; (14) Hon. James R. Thompson; (15) Lord
Weidenfeld; and (16) Leslie H, Wexner.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOLLINGER
INTERNATIONAL. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
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PLEASE SEE
OTHER SIDE.
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/\ A FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY BY MAIL /\
PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING
YOUR PROXY BY TELEPHONE OR INTERNET
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<S> <C>
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[X] Please mark your | 4252
votes as in this |
example. |
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The Board of Directors recommends a vote FOR all of the nominees
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FOR WITHHELD
1. Election of 2. OTHER BUSINESS. The proxies shall be authorized to vote on any other
Directors [ ] [ ] business properly brought before the meeting and any adjournments or
(see reverse) postponements thereof in accordance with their discretion.
For, except vote withheld from the following nominee(s) Mark this box it you will [ ]
attend the Annual
Meeting
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Mark this box
if you will not attend the [ ]
Annual Meeting.
NOTE: please sign EXACTLY as your name appears hereon.
When signing as executor, trustee, etc. or as
officer of a corporation give full title as such.
For joint accounts, please obtain both signatures.
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE --------------------------------------------------------
ENCLOSED POSTAGE PAID ENVELOPE IF YOU ARE VOTING BY MAIL. SIGNATURE(S) DATE
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/\ A FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY BY MAIL /\
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HOLLINGER INTERNATIONAL INC.
Dear Stockholder:
We encourage you to vote your shares electronically this year either by
telephone or via the Internet. This will eliminate the need to return your proxy
card. You will need your proxy card and Social Security Number (where
applicable) when voting your shares electronically. The Voter Control Number
that appears in the box above, just below the perforation, must be used in order
to vote by telephone or via the Internet.
The EquiServe Vote by Telephone and Vote by Internet systems can be accessed
24-hours a day, seven days a week up until May 10, 2000, the day before the
meeting.
To Vote by Telephone:
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Using a touch-tone phone call Toll-free: 1-877-PRX-VOTE (1-877-779-8683)
To Vote by Internet:
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Log on to the Internet and go to the website: HTTP://WWW.EPROXYVOTE.COM/HIR
Note: If you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will be responsible.
