<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE TIMES MIRROR COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF TIMES MIRROR]
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
NOTICE OF ANNUAL MEETING
As a shareholder, you are invited to be represented in person or by proxy at
the Annual Meeting of Shareholders of The Times Mirror Company to be held in
the Harry Chandler Auditorium, Times Mirror Square, First and Spring Streets
in Los Angeles, California on Thursday, May 9, 1996 at 11:00 a.m., Pacific
Daylight Time, for the following purposes:
1. To elect six persons to Class I of the Board of Directors in accordance
with Article VIII, Section 1 of the Company's Certificate of
Incorporation.
2. To consider and act upon a proposal to approve the 1996 Management
Incentive Plan.
3. To consider and act upon a proposal to approve the Non-Employee
Directors Stock Plan.
4. To consider and act upon a proposal to ratify the appointment by the
Board of Directors of Ernst & Young LLP as independent auditors for the
Company and its subsidiaries for the year ending December 31, 1996.
5. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 11, 1996 as
the record date for the determination of shareholders entitled to notice of
and vote at the meeting.
It is important that your shares are represented at the meeting whether or
not you plan to attend in person. Accordingly, you are requested to mark,
sign, date and return the enclosed proxy as promptly as possible. A return
envelope is provided for your convenience.
By Order of the Board of
Directors,
O. Jean Williams
Secretary
March 29, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Notice of Annual Meeting.................................................. Cover
Proxy Statement........................................................... 1
Election of Directors..................................................... 2
Compensation of Directors................................................. 12
Committees of the Board of Directors...................................... 13
Approval of 1996 Management Incentive Plan................................ 15
Approval of Non-Employee Directors Stock Plan............................. 24
Appointment of Independent Auditors....................................... 26
Other Matters............................................................. 26
Ownership of Voting Securities............................................ 27
Executive Compensation.................................................... 32
Report of the Executive Personnel and Compensation Committee.............. 37
Compensation Committee Interlocks and Insider Participation............... 40
Stock Price Performance Graph............................................. 41
Retirement Plans.......................................................... 42
Other Arrangements........................................................ 45
Certain Reports........................................................... 46
Revocation of Proxies..................................................... 46
1997 Annual Meeting....................................................... 46
General................................................................... 46
Exhibit A................................................................. A-1
Exhibit B................................................................. B-1
</TABLE>
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF THE TIMES MIRROR COMPANY
MAY 9, 1996
This Proxy Statement is furnished in connection with the solicitation by the
directors of The Times Mirror Company (the "Company") of proxies for use at
the Annual Meeting of Shareholders to be held on Thursday, May 9, 1996 or at
any adjournment thereof (the "1996 Annual Meeting"), as set forth in the
accompanying notice. This Proxy Statement and the accompanying proxy cards are
first being mailed to shareholders on or about March 29, 1996. A shareholder
giving a proxy may revoke it at any time before it is exercised (see
Revocation of Proxies on page 46). Any proxy which is not revoked will be
voted at the meeting in accordance with the shareholder's instructions. Unless
otherwise directed in the accompanying proxy, the proxy holders named therein
will vote FOR the reelection of the incumbent directors in Class I of the
Board of Directors; FOR approval of the 1996 Management Incentive Plan; FOR
approval of the Non-Employee Directors Stock Plan; and FOR the proposal to
ratify the appointment of Ernst & Young LLP as independent auditors for the
year ending December 31, 1996.
On March 11, 1996, the record date for the determination of Company
shareholders entitled to notice of and to vote at the meeting, 76,783,891
shares of Series A Common Stock, 7,789,276 shares of Conversion Preferred
Stock, Series B (the "Series B Preferred Stock") and 27,824,020 shares of
Series C Common Stock were outstanding. Each share of Series A Common Stock is
entitled to one vote, each share of Series B Preferred Stock is entitled to
one vote, and each share of Series C Common Stock is entitled to ten votes on
all matters. Shareholders have the right to elect directors by cumulative
voting with each share allocated a number of votes equal to the votes to which
the share is entitled times the number of directors to be elected, which votes
may be cast for one candidate or distributed among any two or more candidates.
The six nominees for director who receive the greatest number of votes cast
and entitled to vote at the meeting will be elected. An affirmative vote of a
majority of the shares present and voting at the meeting is required for
approval of each of the other items being submitted to the shareholders for
their consideration. Abstentions and broker non-votes are each included in the
determination of the number of shares present at the meeting. Each is
tabulated separately. Abstentions are counted in tabulations of the votes cast
on proposals presented to shareholders whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
The annual report of the Company for the year ended December 31, 1995 is
being mailed to shareholders with this Proxy Statement.
THE TIMES MIRROR COMPANY
TIMES MIRROR SQUARE, LOS ANGELES, CALIFORNIA 90053
<PAGE>
ELECTION OF DIRECTORS
One of the purposes of the 1996 Annual Meeting is the election of six
persons to Class I of the Board of Directors in accordance with Article VIII,
Section 1 of the Company's Certificate of Incorporation. As indicated above,
shareholders have the right to elect directors by cumulative voting. Unless
instructed to the contrary, the persons named in the accompanying proxy intend
to vote the shares equally for the election of all of the nominees named
herein to Class I of the Board of Directors. However, in the event that votes
are cast for any nominee other than those named herein, the proxy holders will
have full authority to vote cumulatively and to allocate votes among any or
all of the Company's nominees (except to the extent that authority to vote
particular shares for any particular nominee(s) is withheld) in accordance
with their sole discretion, in order to elect the maximum number of the
nominees named herein to Class I of the Board of Directors. Although it is not
contemplated that any nominee will decline or be unable to serve, the shares
will be voted by the proxy holders in their discretion for another person if
such a contingency should arise. The term of each person elected as a director
will continue until that director's term has expired and until his or her
successor is elected and qualified.
All nominees are currently serving as directors in Class I and all were
recommended by the Nominating Committee for reelection at the 1996 Annual
Meeting. The name, age and principal business or occupation of each of the
directors are shown below in the brief description beside the photograph of
each of the directors. The description also includes the year in which each
first became a director of the Company, the committee memberships of each, and
certain other information. The nominees' ownership of equity securities of the
Company at March 11, 1996 is indicated in the section entitled "Ownership of
Voting Securities" beginning on page 27, below.
NOMINEES FOR DIRECTORS
Each of the persons listed below is nominated for election to Class I of the
Board of Directors (to serve three-year terms ending at the Annual Meeting to
be held in 1999 and until their respective successors are elected and
qualified). The current term of directors in Class II will continue until the
Annual Meeting to be held in 1997 and the current term of directors in Class
III will continue until the Annual Meeting in 1998 and, in each case, until
their respective successors are elected and qualified.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES.
2
<PAGE>
NOMINEES FOR DIRECTORS
[PHOTO] C. MICHAEL ARMSTRONG, 57, has been a director of the
Company since 1995 and is a member of the Audit
Committee. He is Chairman of the Board and Chief
Executive Officer of Hughes Electronics Corporation, a
designer and manufacturer of advanced electronic
systems. Prior to assuming his present position in
1992, Mr. Armstrong served as Chairman of the Board of
IBM World Trade Corporation from 1989 to 1992. Mr.
Armstrong earned his bachelor of science degree in
business and economics from Miami University of Ohio
and completed the advanced management curriculum at
Dartmouth Institute. He is also a director of Travelers
Inc. and serves as a trustee of The Johns Hopkins
University and is chairman of the Board of Advisors of
the Johns Hopkins School of Medicine.
[PHOTO] GWENDOLYN GARLAND BABCOCK, 60, has been a director of
the Company since 1976 and is a member of the Finance
Committee. She has been a private investor for more
than five years. Mrs. Babcock is a graduate of Bryn
Mawr College and is a member of the Board of Overseers
of The Huntington Library, Art Collections and
Botanical Gardens. She is also a trustee of the
Chandler Trusts and a director of Chandis Securities
Company. (See the Note on page 12.)
[PHOTO] DONALD R. BEALL, 57, has been a director of the Company
since 1990 and is a member of the Executive Committee,
the Executive Personnel and Compensation Committee and
the Nominating Committee. He is Chairman of the Board
and Chief Executive Officer of Rockwell International
Corporation, a diversified, high-technology company
with leadership market positions in automation,
avionics, semiconductor systems, aerospace, defense
electronics and automotive component systems. Prior to
assuming his present position in February 1988, Mr.
Beall served as President and Chief Operating Officer
of Rockwell International for ten years. Mr. Beall
received a bachelor of science degree from San Jose
State University and a master of business
administration degree from the University of
Pittsburgh. He is also a director of Amoco Corporation
and Procter & Gamble Co.
3
<PAGE>
NOMINEES FOR DIRECTORS
[PHOTO] JOAN A. PAYDEN, 64, has been a director of the Company
since 1993 and is a member of the Audit Committee and
the Finance Committee. She is a founder, president and
chief executive officer of Payden & Rygel, an
investment management firm registered under the 1940
Investment Company Act which manages domestic and
global fixed-income portfolios. She has held those
positions since the formation of the firm in 1983.
Prior thereto, Ms. Payden was the managing partner of
the west coast operation of Scudder, Stevens & Clark.
Ms. Payden has a B.A. in Mathematics and Physics from
Trinity College in Washington, D.C. and completed
graduate study at Columbia University as well as the
Advanced Management Program at Harvard Business School.
She is a chartered financial analyst and is the
incoming President of the Investment Counseling
Association of America. She is also a director of the
Los Angeles Chamber of Commerce, a trustee of the
Pacific Asia Museum and of Loyola Marymount University,
and a member of the Board of Visitors of the Anderson
Graduate School of Management at UCLA.
4
<PAGE>
NOMINEES FOR DIRECTORS
[PHOTO] RICHARD T. SCHLOSBERG III, 51, has been a director of
the Company since 1995. He is Executive Vice President
of the Company and Publisher and Chief Executive
Officer of the Los Angeles Times, with overall
responsibility for all of the Company's newspapers. Mr.
Schlosberg joined the Company in 1983 as Publisher and
Chief Executive Officer of The Denver Post. He was
named President and Chief Operating Officer of the Los
Angeles Times in January 1988. In 1990, Mr. Schlosberg
was named Group Vice President of newspapers and in
1993 was elected Senior Vice President. He was elected
to his current position in January 1994. Mr. Schlosberg
began his newspaper career with Harte-Hanks
Communications in 1975 where he held a variety of
positions including Senior Vice President of Harte-
Hanks Communications and President of Harte-Hanks
Newspaper Operations at the time of his departure in
1983. Mr. Schlosberg is a graduate of the U.S. Air
Force Academy and Harvard University Graduate School of
Business where he received a master's degree in
business administration. He serves on the board of
directors of the Newspaper Association of America, the
Library Foundation of Los Angeles, KCET-TV and United
Way. He also serves on the national board of Junior
Achievement and the advisory board of the Salvation
Army.
[PHOTO] WARREN B. WILLIAMSON, 67, has been a director of the
Company since 1977 and is Chairman of the Executive
Committee, Chairman of the Finance Committee and a
member of the Executive Personnel and Compensation
Committee. He is Chairman and Chief Executive Officer
of Chandis Securities Company and Chairman of the Board
of Trustees of the Chandler Trusts. (See the Note on
page 12.) In 1989, Mr. Williamson retired from Crowell,
Weedon and Co., a stock brokerage firm with which he
had been associated since 1970. Mr. Williamson is a
graduate of Claremont Men's College. He is also a
director of Chandis Securities Company and Hollywood
Park, Inc. In addition, Mr. Williamson is Chairman
Emeritus of the Trustees of the Art Center College of
Design.
5
<PAGE>
CONTINUING DIRECTORS
CLASS II (currently serving until the 1997 Annual Meeting and until their
respective successors are elected and qualified):
[PHOTO] JOHN E. BRYSON, 52, has been a director of the Company
since 1991 and is a member of the Executive Committee,
the Executive Personnel and Compensation Committee and
the Audit Committee. He is Chairman of the Board and
Chief Executive Officer of Edison International Company
and its largest subsidiary, Southern California Edison
Company, a public utility. He has held those positions
since October 1990. Mr. Bryson holds a Bachelor of Arts
Degree from Stanford University and a J.D. degree from
Yale Law School. Mr. Bryson is also a director of The
Boeing Co. and First Interstate Bancorp and is Chairman
of the California Business Roundtable.
[PHOTO] BRUCE CHANDLER, 59, has been a director of the Company
since 1975 and is a member of the Finance Committee. He
has been a private investor since 1989. From 1968 to
1989, he practiced law in the State of California. Mr.
Chandler is a graduate of the University of Southern
California and holds a J.D. degree from the University
of San Diego School of Law. He is also a trustee of the
Chandler Trusts and a director of Chandis Securities
Company. (See the Note on page 12.)
6
<PAGE>
CONTINUING DIRECTORS
[PHOTO] DR. ALFRED E. OSBORNE, JR., 51, has been a director of
the Company since 1980 and is Chairman of the Audit
Committee and a member of the Executive Personnel and
Compensation Committee and the Nominating Committee. He
is Director of the Harold Price Center for
Entrepreneurial Studies and Associate Professor of
Business Economics at the Anderson School at UCLA. He
has been with UCLA since 1972. From August 1977 to July
1979, Dr. Osborne served as a Brookings Institution
Economic Policy Fellow at the Securities and Exchange
Commission. He holds a bachelor's degree in electrical
engineering, a master's degree in economics, a master
of business administration in finance and a doctorate
in business-economics, all from Stanford University. He
is also a director of First Interstate Bank of
California, Greyhound Lines, Inc., Nordstrom, Inc.,
ReadiCare, Inc., SEDA Specialty Packaging Corporation
and United States Filter Corporation. He is an
independent general partner of Technology Funding
Venture Partners V, a 1940 Investment Company Act
company.
[PHOTO] WILLIAM STINEHART, JR., 52, has been a director of the
Company since 1991 and is a member of the Executive
Committee, the Executive Personnel and Compensation
Committee and the Finance Committee. He is a partner in
the law firm of Gibson, Dunn & Crutcher where he has
practiced law since 1969. Gibson, Dunn & Crutcher has
provided legal services to the Company and its
subsidiaries for many years and is expected to do so in
the future. Mr. Stinehart holds a Bachelor of Arts
degree from Stanford University and a J.D. degree from
UCLA Law School, and is a member of the Board of
Trustees of the Harvey and Mildred Mudd Foundation. He
is also a director of Chandis Securities.
7
<PAGE>
CONTINUING DIRECTORS
[PHOTO] DR. EDWARD ZAPANTA, 57, has been a director of the
Company since 1988 and is Chairman of the Nominating
Committee and a member of the Finance Committee. He is
a practicing physician providing neurosurgical care in
the Los Angeles area. He has been in private practice
since 1970. Dr. Zapanta attended the University of
California at Los Angeles, received his medical
doctor's degree from the University of Southern
California School of Medicine, and currently serves as
a trustee of the University of Southern California. Dr.
Zapanta is also Senior Medical Director of HealthCare
Partners Medical Group and a director of Edison
International Company.
8
<PAGE>
CONTINUING DIRECTORS
CLASS III (currently serving until the 1998 Annual Meeting and until their
respective successors are elected and qualified):
[PHOTO] OTIS CHANDLER, 68, has been a director of the Company
since 1962 and is a member of the Nominating Committee.
He is owner of the Vintage Museum of Transportation and
Wildlife located in Oxnard, California. Mr. Chandler
served as Chairman of the Executive Committee of the
Board of Directors of the Company from January 1, 1986
through December 31, 1991. He also served as Chairman
of the Board of Directors and Editor-in-Chief of the
Company from 1981 through 1985 and as Vice Chairman of
the Board from 1968 through 1980. He was Publisher of
the Los Angeles Times from 1960 through 1980. Mr.
Chandler is a graduate of Stanford University and is a
trustee of the Chandler Trusts and a director of
Chandis Securities Company. (See the Note on page 12.)
[PHOTO] ROBERT F. ERBURU, 65, has been a director of the
Company since 1968. He is a member of the Executive
Committee and the Nominating Committee and is Chairman
of the Retirement Plan Committee. Mr. Erburu served as
President of the Company from 1974 through 1986 and
from 1994 to June 1, 1995. He was Chief Executive
Officer of the Company from 1981 to June 1, 1995 and
Chairman of the Board of Directors from 1986 to January
1, 1996. Mr. Erburu graduated from the University of
Southern California with a B.A. degree in Journalism
and holds a J.D. degree from Harvard Law School. He is
also a director of the Tejon Ranch Company and Cox
Communications, Inc. Mr. Erburu is chairman of the
Board of Trustees of The Huntington Library, Art
Collections and Botanical Gardens and of The J. Paul
Getty Trust, as well as a trustee of the National
Gallery of Art, The Flora and William Hewlett
Foundation, The Ahmanson Foundation and several other
charitable foundations. He is a director of the Pacific
Council on International Policy, the Tomas Rivera
Center, the Los Angeles Annenberg Metropolitan Project
and the Skirball Institute of American Values. He is
also a Fellow of the American Academy of Arts and
Sciences and a member of the Business Council.
9
<PAGE>
CONTINUING DIRECTORS
[PHOTO] CLAYTON W. FRYE, JR., 65, has been a director of the
Company since 1988 and is Chairman of the Executive
Personnel and Compensation Committee and a member of
the Executive Committee, the Audit Committee and the
Finance Committee. He is the Senior Associate of
Laurance S. Rockefeller. He has served in that capacity
since 1973 and is responsible for overseeing and
directing Mr. Rockefeller's business, real estate and
investment interests, among other things. Mr. Frye is a
graduate of Stanford University where he received both
an A.B. and an M.B.A degree. He is also a director of
the Tejon Ranch Company and several privately-held
companies.
[PHOTO] DAVID LAVENTHOL, 62, has been a director since 1987 and
is a member of the Retirement Plan Committee. He is
Editor-at-Large of the Company. He was President of the
Company from January 1, 1987 to December 31, 1993 and
Publisher and Chief Executive Officer of the Los
Angeles Times from August 31, 1989 to December 31,
1993. Mr. Laventhol was a Senior Vice President and a
Vice President of the Company from 1981 through 1986.
He also was Publisher and Chief Executive Officer of
Newsday, Inc. from 1978 until 1986, having been an
officer of that subsidiary of the Company since 1971.
He graduated from Yale University and holds a master of
arts degree from the University of Minnesota. Mr.
Laventhol is Chairman of the Board of Trustees of the
Museum of Contemporary Art and a director of the United
Negro College Fund.
10
<PAGE>
CONTINUING DIRECTORS
[PHOTO] MARK H. WILLES, 54, is Chairman of the Board, President
and Chief Executive Officer of the Company. A director
of the Company since June 1, 1995, Mr. Willes was also
elected President and Chief Executive Officer of the
Company at that time. He was elected Chairman of the
Board effective January 1, 1996 and is a member of the
Retirement Plan Committee. Prior to joining Times
Mirror, Mr. Willes was employed by General Mills, Inc.,
commencing in 1980, where he held a variety of
positions including Chief Financial Officer, President
and Chief Operating Officer and, at the time of his
departure, Vice Chairman of the Board of Directors. He
was also a director of that company. Mr. Willes was
President of the Federal Reserve Bank of Minneapolis
from 1977 to 1980. In 1971, Mr. Willes joined the
Philadelphia Reserve Bank where he held a number of
positions including Director of Research and First Vice
President. He was Assistant Professor of Finance and
Commerce at the University of Pennsylvania from 1967 to
1971. Mr. Willes received an undergraduate degree from
Columbia College and a doctorate from Columbia Graduate
School of Business. He is also a director of The Black
& Decker Corporation, Ryder System, Inc. and Talbots
Inc.
[PHOTO] HAROLD M. WILLIAMS, 68, has been a director since 1983
and is a member of the Executive Committee, the Audit
Committee and the Finance Committee. He is President
and Chief Executive Officer of the J. Paul Getty Trust
in Los Angeles, a charitable trust devoted to the arts
and humanities. Among its activities, the Trust
operates the Getty Museum, an internationally renowned
collection of fine arts, in Malibu, California. Before
assuming his present position in 1981, Mr. Williams
served approximately four years as Chairman of the
Securities and Exchange Commission in Washington, D.C.
Mr. Williams is a graduate of the University of
California at Los Angeles and holds a J.D. degree from
Harvard Law School. Mr. Williams is also a director of
SunAmerica.
11
<PAGE>
NOTE
Four of the Company's present directors (Gwendolyn Garland Babcock,
Bruce Chandler, Otis Chandler and Warren B. Williamson) are cousins
and are among the seven trustees of two trusts known as the "Chandler
Trusts." The other three trustees are Camilla Chandler Frost, Douglas
Goodan and Judy C. Webb. Camilla Chandler Frost is the sister of Otis
Chandler and a cousin of the other directors named above. Douglas
Goodan and Judy C. Webb are also cousins of each of the directors
named above. The trustees and other of their relatives are the
beneficiaries of the Chandler Trusts. The Chandler Trusts, their
trustees and the general family group of which they are members may
be deemed to be "parents" of the Company within the meaning of the
Securities Act of 1933, as amended.
COMPENSATION OF DIRECTORS
The Board of Directors is presently comprised of seventeen directors, three
of whom are salaried employees of the Company. Salaried employees receive no
additional compensation or benefits for their service as directors. Directors
who are not employees of the Company receive an annual retainer of $30,000 and
those directors who chair committees of the Board receive an additional annual
retainer of $5,000. One-half of each such director's aggregate retainer is
paid in cash and, subject to shareholder approval of the Non-Employee
Directors Stock Plan (see page 24), one-half is paid in Series A Common Stock.
In addition, non-employee directors are paid a fee of $1,000 for attendance at
each meeting of the Board of Directors and for attendance at each meeting of a
Board committee of which they are members.
The cash portion of a director's retainer, committee and meeting attendance
fees may be deferred under the Deferred Compensation Plan for Directors which
was adopted by the Company in 1994. Under the Plan, such amounts may be
distributed, in accordance with the director's election at the time the
deferral commitment is made, upon the January following (i) termination of
service, (ii) the later of termination of service or attainment of ages 55,
60, 65, 70, or (iii) after a predetermined number of years. The director's
deferral agreement may provide either a lump sum distribution or annual
installment payments over 5, 10 or 15 years. In addition, certain provisions
have been made for hardship, discounted unscheduled withdrawals and change in
control distributions. The crediting rate applied to the accounts, which takes
into consideration the investments made by the Company to provide a source for
funding distributions, if any, and plan expenses, is determined annually by a
committee appointed by the Executive Personnel and Compensation Committee of
the Board of Directors. Survivors are entitled to receive the unpaid account
balance in the form elected by the director at the time the deferral
commitment was made if a director dies prior to benefit commencement. For each
director who is not an employee, the Company provides $150,000 life insurance
coverage and $100,000 travel accident insurance while traveling on Company
business.
12
<PAGE>
In connection with the adoption of the Non-Employee Directors Stock Plan,
the Board contingently suspended the Non-Employee Directors Stock Option Plan.
Under the Non-Employee Directors Stock Option Plan, options granted had an
exercise price equal to the market value of a share of Times Mirror Series A
Common Stock on the date of grant, were exercisable from grant and were
exercisable for a number of shares equal to the amount of retainer and fees
that the director had elected to receive in the form of options, divided by
the grant date present value of one option as determined pursuant to the
Black-Scholes valuation method.
A non-employee director with at least five years of service is entitled to a
retirement benefit payable for the number of years of service as an outside
director under the Company's Pension Plan for Directors. The amount of the
annual benefit payable upon commencement of retirement is equal to the sum of
the amount of the annual retainer in effect at the time of termination plus
the amount of attendance fees for Board meetings and fees for service on
committees paid or payable for the calendar year preceding termination. In
order to receive a benefit, a director must be a member of the Board in good
standing at the time of his or her retirement and be available for
consultation upon request while receiving benefits.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board are an Executive Committee, an Audit
Committee, an Executive Personnel and Compensation Committee, a Finance
Committee, a Nominating Committee and a Retirement Plan Committee. The
functions of each of these six committees are described and the members of
each are listed below.
The Executive Committee has and may exercise substantially all authority of
the Board of Directors subject to specific exceptions provided by Delaware law
and the Company's bylaws. The members of the Executive Committee are Warren B.
Williamson (Chairman), Donald R. Beall, John E. Bryson, Robert F. Erburu,
Clayton W. Frye, Jr., William Stinehart, Jr. and Harold M. Williams. The
Executive Committee did not meet in 1995.
Each year, the Audit Committee reviews the Company's audit plan, the scope
of activities of the independent auditors and of the internal auditors, the
results of the audit after completion, and the fees for services performed
during the year, and recommends to the Board of Directors the firm to be
appointed as independent auditors. During a portion of each meeting, this
Committee meets with representatives of the independent auditors without
officers or employees of the Company present. The members of the Audit
Committee are Dr. Alfred E. Osborne, Jr. (Chairman), C. Michael Armstrong,
John E. Bryson, Clayton W. Frye, Jr., Joan A. Payden and Harold M. Williams,
none of whom is either an officer or employee of the Company. The Audit
Committee met four times in 1995.
13
<PAGE>
The Executive Personnel and Compensation Committee administers the Company's
employee, management and executive compensation plans, determines the
compensation of executive officers of the Company, authorizes and approves
bonus-incentive compensation programs for executive personnel of the Company
and considers and discusses other matters relating to key executive personnel,
including management succession and promotions. Clayton W. Frye, Jr.
(Chairman), Donald R. Beall, John E. Bryson, Dr. Alfred E. Osborne, Jr.,
William Stinehart, Jr. and Warren B. Williamson, none of whom is either an
officer or employee of the Company, are the members of the Executive Personnel
and Compensation Committee. The Executive Personnel and Compensation Committee
met six times in 1995.
The Finance Committee studies and makes recommendations to the Board of
Directors regarding the investment of assets of the Company's pension and
profit sharing plans. Warren B. Williamson (Chairman), Gwendolyn Garland
Babcock, Bruce Chandler, Clayton W. Frye, Jr., Joan A. Payden, William
Stinehart, Jr., Harold M. Williams and Dr. Edward Zapanta are the members of
the Finance Committee, which met once in 1995.
The Nominating Committee considers and recommends to the Board nominees for
possible election to the Board of Directors and considers other matters
pertaining to the size and composition of the Board of Directors and its
committees. The members of the Nominating Committee are Dr. Edward Zapanta
(Chairman), Donald R. Beall, Otis Chandler, Robert F. Erburu and Dr. Alfred E.
Osborne, Jr. The Nominating Committee met once in 1995. The Nominating
Committee recommended the nomination of all directors in Class I for election
at the 1996 Annual Meeting. The Nominating Committee will give appropriate
consideration to qualified persons recommended by shareholders as possible
nominees if such recommendations are accompanied by information sufficient to
enable the Nominating Committee to evaluate the qualifications of the persons
recommended and such person's consent to be considered. Such recommendations
must be submitted in writing to the Secretary of the Company by no later than
December 31 preceding the annual meeting of shareholders at which directors
are to be elected.
The Retirement Plan Committee is responsible for review, evaluation and
oversight of pension, profit-sharing and other retirement-oriented programs of
the Company and its subsidiaries and the performance of these programs in
relation to their purposes. Robert F. Erburu (Chairman), Mark H. Willes and
David Laventhol are the members of the Retirement Plan Committee. The
Retirement Plan Committee met once in 1995.
In 1995, there were nine meetings of the Board of Directors. During the
year, each of the incumbent directors attended at least 75% of the aggregate
number of meetings of the Board and Committees on which he or she sits.
14
<PAGE>
APPROVAL OF 1996 MANAGEMENT INCENTIVE PLAN
GENERAL
The Board of Directors has adopted, subject to approval of the Company's
shareholders, the 1996 Management Incentive Plan (the "MIP"). The MIP is
designed to enable the Company to attract, retain and motivate its management
and other key employees, and to further align the interests of such employees
with those of the shareholders of the Company, by providing for or increasing
the proprietary interest of such employees in the Company. In connection with
the Board's adoption of the MIP, and subject to shareholder approval and
ratification of the MIP, the Board determined to suspend the Company's 1992
Key Employee Long-Term Incentive Plan (the "1992 Plan") and the Company's 1987
Restricted Stock Plan, such that no further stock options or restricted stock,
as applicable, in the future may be granted under such plans. At the time that
the Board adopted the MIP, 9,225,398 shares of the Company's Series A Common
Stock were authorized and available but not subject to outstanding option or
restricted stock awards under such plans.
The MIP authorizes the grant and issuance of awards that may take the form
of Stock Options, Restricted Stock, Performance Stock and Annual Incentive
Bonuses (any such arrangement, an "Award"). The MIP has various provisions so
that Awards under it may, but need not, qualify for an exemption from the
"short swing liability" provisions of Section 16(b) of the Exchange Act
pursuant to Rule 16b-3 and/or qualify as "performance based compensation" that
is exempt from the $1 million limitation on the deductibility of compensation
under Section 162(m) of the Internal Revenue Code (the "Code"). Shareholder
approval of the MIP is required in order for each of these exemptions to be
satisfied. The following summary of the main features of the MIP is qualified
in its entirety by the complete text of the MIP, which is set out as Exhibit A
to this Proxy Statement.
ELIGIBILITY. Any person, including any director of the Company, who is an
employee, prospective employee, consultant or advisor of the Company or any of
its affiliates is eligible to be selected as a recipient of an Award (a
"Participant") under the MIP. The Executive Personnel and Compensation
Committee of the Board of Directors has not yet determined how many
individuals are ultimately to participate in the MIP. While it is generally
expected that executives and senior middle managers will be eligible to
participate, Awards may from time to time be granted to employees who are not
in these groups but who have otherwise distinguished themselves for their
contributions to the Company. Currently, there are approximately 700
executives and senior middle managers covered under the MIP.
ADMINISTRATION. The MIP will be administered by one or more committees (any
such committee, a "Committee") of the Board of Directors of the Company (the
"Board"). With respect to Awards granted to the Company's executive officers,
the Committee may consist of two or more
15
<PAGE>
directors meeting the requirements necessary for Awards to be exempt from
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 and/or for Awards to
qualify as "performance based compensation" under Section 162(m) of the Code,
to the extent that the Company determines to satisfy such requirements. With
respect to any Award that is not intended to satisfy the conditions of
Exchange Act Rule 16b-3 or Code Section 162(m)(4)(C), the Committee may
delegate all or any of its responsibilities to one or more directors or
officers of the Company, including individuals who participate in the MIP.
Subject to the express provisions of the MIP, the Committee has broad
authority to administer and interpret the MIP, including, without limitation,
authority to determine who is eligible to participate in the MIP and to which
of such persons, and when, Awards are granted under the MIP, to determine the
number of shares of Common Stock subject to Awards and the exercise or
purchase price of such shares under an Award, to establish and verify the
extent of satisfaction of any performance goals applicable to Awards, to
prescribe and amend the terms of the agreements evidencing Awards made under
the MIP, and to make all other determinations deemed necessary or advisable
for the administration of the MIP.
STOCK SUBJECT TO THE MIP. The aggregate number of shares of the Company's
Series A Common Stock ("Shares") that can be issued under the MIP may not
exceed 14,500,000. The number of Shares subject to the MIP and to outstanding
Awards under the MIP will be appropriately adjusted by the Board of Directors
if the Company's Series A Common Stock is affected through a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification,
dividend (other than quarterly cash dividends) or other distribution, stock
split, spin-off or sale of substantially all of the Company's assets. For
purposes of calculating the aggregate number of Shares issued under the MIP,
only the number of Shares actually issued upon exercise or settlement of an
Award and not returned to the Company upon cancellation, expiration or
forfeiture of an Award or in payment or satisfaction of the purchase price,
exercise price or tax withholding obligation of an Award shall be counted.
AWARDS. The MIP authorizes the grant and issuance of the following types of
Awards: Stock Options, Restricted Stock, Performance Stock and Annual
Incentive Bonuses:
Stock Options: Subject to the express provisions of the MIP and as
discussed in this paragraph, the Committee has discretion to determine the
vesting schedule of options, the events causing an option to expire, the
number of shares subject to any option, the restrictions on transferability
of an option, and such further terms and conditions, in each case not
inconsistent with the MIP, as may be determined from time to time by the
Committee. Options granted under the MIP may be either Incentive Stock
Options qualifying under Code Section 422 or options which are not intended
to qualify as Incentive Stock Options ("nonqualified options"). The
exercise price for options may not be less than 100% of the fair market
value of the Company's
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<PAGE>
Stock on the date the option is granted, except that (i) the Committee may
grant executive officers who are subject to Exchange Act Section 16 the
opportunity to purchase stock on terms similar to those provided under the
Company's 1996 Employee Stock Purchase Plan, including a purchase price
below 100%, but not below 75%, of the fair market value of the Company's
Stock on the date the opportunity is granted or expires, provided that the
opportunity to purchase stock on such terms may not remain open longer than
27 months, and (ii) in the case of options granted in assumption and
substitution of options held by employees of a company acquired by the
Company, the exercise price of such options may be above or below the fair
market value of the Company's Stock on the date the option is granted. The
exercise price of an option may be paid through various means specified by
the Committee, including in cash or check, by delivering to the Company
shares of the Company's stock, by a reduction in the number of Shares
issuable pursuant to such option, or by a promissory note or other
commitment to pay (including such a commitment by a stock broker).
Annual Incentive Bonus: The MIP authorizes the grant of Annual Incentive
Bonuses pursuant to which a Participant may become entitled to receive an
amount based on satisfaction of such performance criteria as are specified
by the Committee. Subject to the express provisions of the MIP and as
discussed in this paragraph, the Committee has discretion to determine the
terms of any Annual Incentive Bonus, including the target and maximum
amount payable to a Participant as an Annual Incentive Bonus, the
performance criteria (which may be based on financial performance and/or
personal performance evaluations) and level of achievement versus these
criteria which determines the amount payable under an Annual Incentive
Bonus, the fiscal year as to which performance will be measured for
determining the amount of any payment, the timing of any payment earned by
virtue of performance, restrictions on the alienation or transfer of an
Annual Incentive Bonus prior to actual payment, forfeiture provisions, and
such further terms and conditions, in each case not inconsistent with the
MIP, as the Committee may determine from time to time. All or any portion
of an Annual Incentive Bonus may be designed to qualify as "performance
based compensation" that is exempt from the $1 million limit on deductible
compensation under Section 162(m) of the Code. The performance criteria for
any portion of an Annual Incentive Bonus that is intended to satisfy the
requirements for "performance-based compensation" will be a measure based
on one or more "Qualifying Performance Criteria," as that term is defined
below. Notwithstanding satisfaction of any performance goals, the amount
paid under an Annual Incentive Bonus may be reduced by the Committee on the
basis of such further considerations as the Committee in its sole
discretion shall determine. The Committee may permit selected recipients of
Annual Incentive Bonuses to elect to receive a portion of the Annual
Incentive Bonus payment in the form of Shares of Series A Common Stock. In
such circumstances, the Participant will receive that number of Shares with
a fair market value equal to twice the bonus amount that the Participant
elected to receive
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<PAGE>
in the form of Shares, except that one-half of such Shares will be
forfeited and returned to the Company if the Participant thereafter fails
to remain an employee of the Company for at least four years (other than as
a result of death, disability or retirement) or fails to hold the other
half of the shares for at least four years.
Performance Stock: Performance Stock is an Award of Shares, the grant,
issuance, retention and/or vesting of which is subject to such performance
and other conditions as are specified by the Committee. Subject to the
express provisions of the MIP and as discussed in this paragraph, the
Committee has discretion to determine the terms of any Performance Stock
Award, including the number of Shares subject to a Performance Stock Award
or a formula for determining such, the performance criteria and level of
achievement versus these criteria which determine the number of Shares
granted, issued, retainable and/or vested, the period as to which
performance shall be measured for determining achievement of performance,
forfeiture provisions, the effect of termination of employment for various
reasons, and such further terms and conditions, in each case not
inconsistent with the MIP, as may be determined from time to time by the
Committee. The performance criteria upon which Performance Shares are
granted, issued, retained and/or vested may be based on financial
performance and/or personal performance evaluations, except that for any
Performance Stock that is intended by the Committee to satisfy the
requirements for "performance-based compensation" under Code Section 162(m)
the performance criteria shall be a measure based on one or more Qualifying
Performance Criteria (as defined below). Notwithstanding satisfaction of
any performance goals, the number of Shares granted, issued, retainable
and/or vested under a Performance Stock Award may be reduced by the
Committee on the basis of such further considerations as the Committee in
its sole discretion shall determine.
Restricted Stock: Restricted Stock consists of Shares issued to a
Participant in exchange for such cash or other consideration as determined
by the Committee and which may, but need not, be subject during specified
periods of time to such conditions to vesting, to restrictions on sale or
other transfer and/or to repurchase rights as may be determined by the
Committee. Subject to the express provisions of the MIP, the Committee has
discretion to determine the terms of any Restricted Stock, including the
number of Shares to be transferred or sold by the Company to any person,
the price, if any, at which Shares of Restricted Stock shall be sold or
awarded and such further restrictions or conditions as the Committee may
determine.
Qualifying Performance Criteria and Section 162(m) Limits: Subject to
stockholder approval of the MIP, the performance criteria for any Annual
Incentive Bonus or any Performance Stock that is intended to satisfy the
requirements for "performance based compensation" under Code Section 162(m)
shall be any one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to either
18
<PAGE>
the Company as a whole or to a business unit or subsidiary, either
individually, alternatively or in any combination, and measured either on
an absolute basis or relative to a pre-established target, to previous
years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: (a) cash
flow, (b) earnings per share (including earnings before interest, taxes and
amortization), (c) return on equity, (d) total shareholder return, (e)
return on capital, (f) return on assets or net assets, (g) revenue, (h)
income or net income, (i) operating income or net operating income, (j)
operating profit or net operating profit, (k) operating margin, (l) return
on operating revenue, and (m) market share or circulation. The aggregate
number of Shares subject to options granted under the MIP during any
calendar year to any one Participant may not exceed 500,000, unless such
limitation is not required under Section 162(m) of the Code. The aggregate
number of Shares issued or issuable under any Annual Incentive Bonus or
Performance Stock Awards granted under the MIP during any calendar year to
any one Participant shall not exceed 500,000. The maximum amount payable
pursuant to that portion of an Annual Incentive Bonus Award granted for any
fiscal year to any person that is intended to satisfy the requirements for
"performance based compensation" under Code Section 162(m) shall not exceed
five million dollars ($5,000,000).
Other: The Committee may, but need not, provide that the holder of an
Award has a right (such as a stock appreciation right) to receive a number
of Shares or cash, or a combination thereof, the amount of which is
determined by reference to the value of the Award. The Committee may
require as a condition to the grant of any Award that the recipient of the
Award surrender for cancellation some or all of any previously granted
employee benefit arrangement. Former employees and their beneficiaries are
eligible for the grant of Awards under this provision. The Committee may
provide for dividends or dividend equivalent payments to be paid with
respect to outstanding Awards. The Committee may amend any previously
granted Award, subject in certain circumstances to the consent of the
person holding such Award.
CHANGE OF CONTROL. The Committee may provide that in connection with a
Change of Control, Awards will become exercisable, payable, vested, paid, or
canceled, and may provide for an absolute or conditional exercise, payment or
lapse of conditions or restrictions on an Award which would be effective only
if, upon the announcement of a transaction intended or reasonably expected to
result in a Change of Control, no provision is made under the terms of such
transaction for the holder of an Award to realize the full benefit of the
Award. Unless the Committee or the Board provides otherwise, "Change of
Control" is defined in the MIP to include certain transactions that would
result in over 50% of the Company's outstanding shares being held by certain
persons or groups, certain substantial changes in the Board of Directors, or
the approval of certain fundamental changes in the Board of Directors, or the
approval of certain fundamental changes to the Company's structure, such as a
merger, consolidation, reorganization liquidation or dissolution.
19
<PAGE>
TRANSFERABILITY OF AWARDS. Generally, Awards granted under the MIP may not
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner prior to the vesting or lapse of any and all
restrictions applicable thereto, other than by will or the laws of descent and
distribution, except that the Committee may permit an Award to be transferable
to a member or members of the Participant's family or to entities owned or
established for the benefit of a Participant's family.
AMENDMENTS AND TERMINATION. The Board of Directors may alter, amend, suspend
or terminate the MIP or any Award theretofore granted under the MIP, with or
without approval of the Company's shareholders. All Awards granted under the
MIP are subject to, and may not be exercised before, the approval of the MIP
by a majority of the Company's shareholders prior to the first anniversary
date of the Board's adoption of the MIP. No Award granted under the MIP shall
have a term of more than ten years from the date it is granted, and no such
Awards shall be granted pursuant to the MIP more than ten (10) years after the
date of the Board's adoption of the MIP.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS. The following is a brief summary
of the principal United States Federal income tax consequences under current
Federal income tax laws related to Incentive Awards under the MIP. This
summary is not intended to be exhaustive and among other things, does not
describe state or local tax consequences.
Section 162(m): As described above, options granted under the MIP may
qualify as "performance-based compensation" under Section 162 of the Code
in order to preserve Federal income tax deductions by the Company with
respect to any compensation required to be taken into account under Section
162 of the Code that is in excess of $1,000,000 and paid to a "Covered
Employee" (as defined in Section 162). To so qualify, options must have an
exercise price at least equal to the fair market value of the underlying
Shares on the date of grant, be awarded by a Committee consisting of two or
more "outside directors" (as defined in Section 162) and satisfy the
500,000 share limit on the total number of Shares subject to options that
may be awarded to any one participant during any calendar year.
Nonqualified Options: The recipient of a nonqualified option does not
recognize income at the time the option is granted. When the nonqualified
option is exercised, the grantee recognizes ordinary income equal to the
difference between the fair market value on the exercise date of the number
of Shares issued and their exercise price. The Company receives a deduction
equal to the amount of ordinary income recognized by the optionee. The
optionee's basis in the Shares acquired upon exercise of an option is equal
to their exercise price plus the ordinary income recognized upon exercise.
Upon subsequent disposition of the Shares, the optionee will recognize
capital gain or loss, which will be short-term or long-term, depending upon
the length of time the Shares were held since the date the nonqualified
option was exercised.
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<PAGE>
Incentive Stock Options: In general, the recipient of an Incentive Stock
Option will not be subject to tax at the time the Incentive Stock Option is
granted or exercised. However, the excess of the fair market value of the
Shares received upon exercise of the Incentive Stock Option over their
exercise price is potentially subject to the alternative minimum tax. Upon
disposition of the Shares acquired upon exercise of an Incentive Stock
Option, long-term capital gain or loss will be recognized in an amount
equal to the difference between the sales price and the aggregate exercise
price for those Shares provided that the optionee has not disposed of the
Shares within two years of the date the Incentive Stock Option was granted
or within one year from the date the Incentive Stock Option was exercised.
If the optionee disposes of the Shares without satisfying both holding
period requirements (a "Disqualifying Disposition"), the optionee will
recognize ordinary income at the time of such Disqualifying Disposition to
the extent of the difference between the option exercise price and the
lesser of the fair market value of the Shares on the date the Incentive
Stock Option is exercised or the amount realized on such Disqualifying
Disposition. Any remaining gain or loss is treated as a short-term or long-
term capital gain or loss, depending upon how long the Shares have been
held. The Company is not entitled to a tax deduction upon either the
exercise of an Incentive Stock Option or upon disposition of the Shares
acquired pursuant to such exercise, except to the extent that the optionee
recognizes ordinary income in a Disqualifying Disposition.
Special Rules. To the extent an optionee pays all or part of the option
exercise price of a nonqualified stock option by tendering Shares already
owned by the optionee, the tax consequences described above apply except
that the number of Shares received upon such exercise which is equal to the
number of Shares surrendered in payment of the option exercise price shall
have the same basis and tax holding period as the Shares surrendered. If
the Shares surrendered had previously been acquired upon the exercise of an
Incentive Stock Option, the surrender of such Shares may be a Disqualifying
Disposition if the holding period requirements described above have not
been satisfied with respect to such Shares at the time of such exercise.
The additional Shares of the Company Common Stock received upon such
exercise have a tax basis equal to the amount of ordinary income recognized
on such exercise and a holding period which commences on the date of
exercise. Under proposed Treasury regulations, if an optionee exercises an
Incentive Stock Option by tendering Shares previously acquired on the
exercise of an Incentive Stock Option, a Disqualifying Disposition may
occur if the holding period requirements described above have not been
satisfied with respect to such Shares at the time of such exercise, and the
optionee may recognize income and be subject to other basis allocation and
holding period requirements.
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<PAGE>
NEW PLAN BENEFITS.
It is not possible to determine the benefits that any participant or class
of participants will receive under the MIP during any fiscal year. However,
the Committee has granted certain Awards under the MIP that are subject to
approval of the MIP by the Company's shareholders. First, the Committee
granted certain Shares (the "Conversion Shares") in cancellation of
Deferred Cash Incentive Awards outstanding under the 1992 Plan for the
1994-96 and the 1995-97 performance cycles. The Committee determined that
the Deferred Cash Incentive Awards were not a sufficient means of
motivating management because of their complex performance measures and the
absence of a direct correlation to long-term stock price performance. The
number of Conversion Shares granted in cancellation of each Deferred Cash
Incentive Award have a market value as of December 29, 1995 equal to the
target award amount under the cancelled Deferred Cash Incentive Award. If a
recipient of Conversion Shares terminates employment with the Company or
its subsidiaries for a reason other than death, disability or retirement
prior to the end of the award cycle that would have applied under the
Deferred Cash Incentive Award, the Company has the right to repurchase the
Conversion Shares for that amount. Second, as reported in the Summary
Compensation Table and the Option Grants Table at pages 32 and 34 below,
the Committee has granted stock options under the MIP that are contingent
on shareholder approval of the MIP. Each of these options has an exercise
price of $34.00. The Committee also granted stock options covering 40,220
Shares in March 1996 to certain executives, other than the named executive
officers, which options have an exercise price of $35.6250. Finally, in
March 1996 the Committee granted 7,000 Shares of restricted stock to
certain executives employed at subsidiaries of the Company. On March 11,
1996, the market price for a Share was $35.8750.
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<PAGE>
NEW PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
Options Restricted
Conversion Shares Conversion Shares (# of Shares Stock
Name/Position (1994-1996) (1995-1997) underlying) (# of shares)
------------- ----------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C>
Mark H. Willes, Chairman
of the Board, President
and CEO................ -- 17,712 180,200
Richard T. Schlosberg
III, Executive Vice
President.............. 6,642 8,118 75,000
Thomas Unterman, Senior
Vice President and
Chief Financial
Officer................ 4,133 4,871 50,700
Donald F. Wright, Senior
Vice President......... 4,723 5,166 42,800
Edward E. Johnson,
Senior Vice President.. 5,166 5,166 42,800
All current executive
officers (including
those named above)..... 27,955 51,623 551,000
All directors and
director nominees,
other than executive
officers............... 23,616 27,306 --
All employees other than
executive
officers............... 140,879 207,657 2,103,580 7,000
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY HAS ADOPTED THE 1996 MANAGEMENT
INCENTIVE PLAN AND RECOMMENDS A VOTE FOR ITS APPROVAL.
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APPROVAL OF NON-EMPLOYEE DIRECTORS STOCK PLAN
GENERAL
The Board of Directors has adopted, subject to approval of the Company's
shareholders, the Times Mirror Company Non-Employee Directors Stock Plan (the
"Directors Plan"). As discussed under "Compensation of Directors" on page 12
of this Proxy Statement, non-employee directors of the Company currently
receive cash compensation as an annual retainer and as committee and meeting
fees, and under the existing Non-Employee Directors Stock Option Plan (the
"Directors Option Plan") could elect to receive all or a portion of their
retainer and fees in the form of stock options. The Directors Plan is intended
to further the perspective of directors as shareholders, and to promote the
long-term growth and financial success of the Company by enabling the Company
to attract, retain and motivate such persons by providing for or increasing
their proprietary interest in the Company. Under the Directors Plan, if
approved by shareholders, non-employee directors will receive one-half of
their quarterly directors' retainer in the form of Series A Common Stock. In
connection with its adoption of the Directors Plan, the Board of Directors
determined to suspend the Directors Option Plan, subject to shareholder
approval and ratification of the Directors Plan.
The following summary of the main features of the Directors Plan is
qualified in its entirety by reference to the complete text of the Directors'
Plan which is set out as Exhibit B to this Proxy Statement.
ELIGIBILITY. Each director on the Board of Directors who on any date when
the Company pays directors' retainer fees is not an employee of the Company or
a subsidiary of the Company is automatically a participant in the Directors
Plan. If each of the nominees for election to the Board of Directors named in
this proxy statement are reelected, then following the Company's 1996 Annual
Meeting of Stockholders 14 directors would qualify as participants under the
Directors Plan.
ADMINISTRATION. The timing, amount and recipients of stock under the
Directors Plan are prescribed by the terms of the Directors Plan and requires
no discretionary action by any administrative body. Subject to the foregoing,
the Directors Plan is administered by the Executive Personnel and Compensation
Committee of the Board of Directors (or by any successor committee designated
by the Board of Directors) and by such persons to whom it may delegate any
ministerial duties. The Directors Plan is intended to operate in a manner that
exempts grants of stock under the Directors Plan from Section 16(b) of the
Exchange Act and that does not affect the status of participants in the
Directors Plan as "disinterested administrators" under Exchange Act Rule 16b-
3, for purposes of their administering other stock-based plans of the Company.
STOCK SUBJECT TO THE DIRECTORS PLAN. The aggregate number of shares of the
Company's Series A Common Stock that can be issued under the Directors Plan
may not exceed
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<PAGE>
500,000. Such number of shares shall be appropriately adjusted by the Board of
Directors if the Company's Series A Common Stock is affected through a
reorganization, merger, consolidation, recapitalization, restructuring,
reclassification, dividend (other than quarterly cash dividends) or other
distribution, stock split, spin-off or sale of substantially all of the
Company's assets. Stock may not be issued under the Directors Plan more than
ten years after the date of shareholder approval of the Directors Plan.
STOCK AWARDS. If the Directors Plan is approved by shareholders, then on
each date following the date of shareholder approval on which directors'
retainer fees are paid by the Company, each participant in the Directors Plan
will receive one-half of his or her retainer (including any retainer for
chairing a Board committee) in the form of shares of Series A Common Stock.
The number of shares to be received by a participant is equal to the amount
which the director is to receive in the form of Series A Common Stock divided
by the average high and low price per share of the Series A Common Stock
reported for each of the five business days preceding the date that retainer
fees are paid. The number of shares to be received by any one director is not
determinable in advance because such number is dependent both on the amount of
directors' fees payable to such director and the trading price of the
Company's Series A Common Stock. For further information regarding the
compensation of the Company's directors, see "Compensation of Directors" on
page 12 of this Proxy. Participants shall have full beneficial ownership of
shares awarded under the Directors Plan, including the right to vote and to
receive any dividends payable with respect to such shares, subject to any
restrictions on transferability required under Exchange Act Rule 16b-3.
AMENDMENTS AND TERMINATION. The Board of Directors may alter, amend, suspend
or terminate the Directors Plan, with or without shareholder approval, except
that if required under Exchange Act Rule 16b-3 the provisions of the Directors
Plan designating persons eligible to participate in the Directors Plan and
specifying the amount of directors' fees payable in the form of stock and the
amount and timing of grants under the Directors Plan may not be amended more
than once every six months other than to comport with changes in the Internal
Revenue Code, the Employees Retirement Income Security Act, or the rules
thereunder.
THE BOARD OF DIRECTORS OF THE COMPANY HAS ADOPTED THE NON-EMPLOYEE DIRECTORS
STOCK PLAN AND RECOMMENDS A VOTE FOR ITS APPROVAL.
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APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, on the recommendation of its Audit
Committee (consisting of directors who are neither officers nor employees of
the Company--see page 13), has appointed Ernst & Young LLP as independent
auditors for the Company and its subsidiaries for 1996. As a matter of
corporate practice, the Company is submitting the appointment of Ernst & Young
LLP to shareholders for ratification. If shareholders fail to ratify the
appointment, the Audit Committee will review its selection for subsequent
years.
Ernst & Young LLP has served as independent auditors for the Company since
1936. One or more members of the firm will attend the Annual Meeting. Ernst &
Young LLP has indicated that it does not presently intend to make a statement
at the Annual Meeting, but a member of the firm will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
OTHER MATTERS
Management does not know of any matter to be acted upon at the meeting other
than the matters described above. If any other matter properly comes before
the meeting, however, the proxy holders will vote thereon in accordance with
their best judgment.
26
<PAGE>
OWNERSHIP OF VOTING SECURITIES
BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table sets forth the ownership of the outstanding shares of
the voting securities of the Company as of March 11, 1996 (except as otherwise
noted), held by persons known to the Company to beneficially own more than 5%
of the outstanding shares of the voting securities of the Company and by
certain employee benefit trusts maintained by the Company for various
qualified retirement plans for employees of the Company and its subsidiaries.
<TABLE>
<CAPTION>
Series A Percent Series B Percent Series C Percent
Name and Address of Common of Preferred of Common of
Beneficial Owner Stock Series Stock Series Stock Series
- ----------------------- ---------- ------- --------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
The Trustees of the 18,668,546 24.31% -- -- 20,757,246 74.60%
Chandler Trusts(A)
c/o Chandis Securities
Company
350 West Colorado Bou-
levard,
Suite 230
Pasadena, CA 91105
The Times Mirror Stock -- -- 269,853 3.46% 631,729 2.27%
Trust(B)
Times Mirror Square
Los Angeles, CA 90053
The Times Mirror Em- 2,859,545 3.72% -- -- 2,133,374 7.67%
ployee Stock
Ownership Trust(C)
Times Mirror Square
Los Angeles, CA 90053
Times Mirror Savings 2,447,263 3.19% 206,266 2.65% 251,186 .90%
Plus Plan Trust(D)
Times Mirror Square
Los Angeles, CA 90053
George Soros(E) 5,871,800 7.28% -- -- -- --
c/o Soros Fund Manage-
ment
888 Seventh Avenue,
33rd Floor
New York, NY 10106
Clay Finlay(F) -- -- 511,579 6.57% -- --
200 Park Avenue
New York, New York
10166
Dodge & Cox(F) -- -- 1,010,462 12.97% -- --
1 Sansome Street
San Francisco, Cali-
fornia 94104
</TABLE>
- ---------
(A) On March 11, 1996, the Chandler Trusts owned in the aggregate 18,668,546
shares of Series A Common Stock, 20,757,246 shares of Series C Common
Stock and 442,596 shares of Cumulative Redeemable Preferred Stock, Series
A ("Series A Preferred Stock"), which is a nonvoting stock. Chandis
Securities Company, a corporation, owned 8,581,432 shares of Series
27
<PAGE>
A Common Stock, 9,656,432 shares of Series C Common Stock and 380,972
shares of Series A Preferred Stock. Substantially all of the outstanding
stock of Chandis Securities Company is owned by one of the Chandler Trusts
and the amounts set forth in the above table opposite the Chandler Trusts
include the holdings of Chandis Securities Company. In addition to their
interests in shares held by the Chandler Trusts, Mrs. Babcock (individually
and as trustee) and her husband hold 2,301 shares of Series A Common Stock
and 18,069 shares of Series C Common Stock, and Otis Chandler (individually
and as trustee) and his wife hold an aggregate of 58,991 shares of Series A
Common Stock (of which Mr. Chandler has sole voting and dispositive power
over 1,452 shares) and 62,789 shares of Series C Common Stock (of which Mr.
Chandler has sole voting and dispositive power over 42 shares), including
1,410 shares of Series A Common Stock which Otis Chandler may acquire upon
the exercise of outstanding stock options. The above shares do not include
11,898 shares of Series A Common Stock and 32,978 shares of Series C Common
Stock owned by Mr. Chandler's adult children who do not reside with him,
and 6,132 shares of Series A Common Stock and 3,380 shares of Series C
Common Stock owned by Mrs. Babcock's adult children who do not reside with
her. Three other trustees of the Chandler Trusts own Series A Common Stock
individually or as trustees as follows: 177,236 shares by Camilla Chandler
Frost (of which Mrs. Frost has sole voting and dispositive power over
131,691 shares), 500 shares by Douglas Goodan (over all of which Mr. Goodan
has sole voting and dispositive power), and 280 shares by Judy C. Webb
(over all of which Mrs. Webb has sole voting and dispositive power). On
March 11, 1996, the individuals who act as trustees of the Chandler Trusts
beneficially owned, directly or indirectly, in their capacities as
individuals and as trustees of the Chandler and other trusts an aggregate
of 18,907,854 shares of Series A Common Stock and 20,820,675 shares of
Series C Common Stock (including shares owned by the Chandler Trusts and
Chandis Securities Company), constituting 24.62% of the shares of Series A
Common Stock and 74.83% of the shares of Series C Common Stock outstanding
on that date, representing 62.60% of the total voting interests of all
outstanding shares of Series A and Series C Common Stock and Series B
Preferred Stock. Unless otherwise indicated, all beneficial ownership
figures reported in this footnote represent shares over which the
beneficial owner shares voting and dispositive power with others.
(B) This Trust holds stock on behalf of The Times Mirror Pension Plan and
various retirement plans for employees of the Company's subsidiaries. All
decisions as to the voting and disposition of such common stock are under
the authority and responsibility of the Trust's two trustees, Robert F.
Erburu and David Laventhol.
(C) Shares of Times Mirror stock allocated to participants' accounts in The
Times Mirror Employee Stock Ownership Plan ("ESOP") are voted by the
participants themselves on matters presented at meetings of shareholders,
while shares with respect to which no participant directions are received
are voted by the trustee. The trustee of the ESOP, The Northern Trust
Company, has authority and responsibility for the disposition of the
stock.
28
<PAGE>
(D) Shares of Times Mirror stock held in the Times Mirror Savings Plus Plan
accounts or allocated to participants' Payroll-Based Stock Ownership Plan
("PAYSOP") accounts are voted by the participants themselves on matters
presented at meetings of stockholders. Shares allocated to the Times
Mirror Savings Plus Plan accounts with respect to which no participant
directions are received remain unvoted. Shares allocated to the PAYSOP
accounts with respect to which no participant directions are received are
voted by The Northern Trust Company as trustee of the Times Mirror Savings
Plus Plan.
(E) The following information is based solely on a Schedule 13D dated December
20, 1995 which was filed with the Securities and Exchange Commission. The
aggregate number of shares of Series A Common Stock of which George Soros
(the "Reporting Person") may be deemed a beneficial owner is 5,871,900,
representing approximately 7.28% of the outstanding shares of Series A
Common Stock based upon 80,614,598 shares of Series A Common Stock
outstanding on November 9, 1995. The Reporting Person may be deemed the
beneficial owner of (i) 5,347,500 shares of Series A Common Stock held for
the account of Quantum Partners, LDC ("Quantum Partners"), a Cayman
Islands exempted limited duration company which has granted investment
discretion to Soros Fund Management ("SFM"), an investment advisory firm
of which the Reporting Person is the sole proprietor, and (ii) 524,400
shares of Series A Common Stock held for the account of Lupa Family
Partners ("Lupa"), of which the Reporting Person is one of two general
partners. Stanley Druckenmiller, a managing director of SFM, also serves
as President and Chairman of the Board of Directors of Priority Investment
Management, Inc. ("Priority"), a registered investment adviser. Accounts
of investment advisory clients over which Priority exercises investment
discretion hold 918,700 shares of Series A Common Stock, representing
approximately 1.14% of the total Series A shares outstanding at November
9, 1995. In such Schedule 13D, the Reporting Person expressly disclaimed
beneficial ownership of any shares of Series A Common Stock not held
directly by Quantum Partners or Lupa.
(F) Based solely on a Form 13F filed with the Securities and Exchange
Commission as of December 31, 1995 in which the entity reported having
sole voting authority over shares that it held on such date.
In addition to the entities listed in the above table, in filings with the
Securities and Exchange Commission, Fidelity Management reported holding
investment discretion over greater than five percent (5%) of the Company's
Series A Common Stock as of December 31, 1995.
29
<PAGE>
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership as of March 11, 1996 of
the Company's common and preferred stock, including shares as to which a right
to acquire ownership exists within the meaning of Rule 13d-3(d)(1) under the
Securities Exchange Act, of each director, each executive officer listed in
the table on page 32, and as a group of such persons and other executive
officers. For this purpose, the rules of the Securities and Exchange
Commission require that every person who has or shares the power to vote or
dispose of shares of stock be reported as a "beneficial owner" of all shares
as to which such power exists. As a consequence, many persons may be deemed to
be the "beneficial owners" of the same securities and for this reason all
shares of Series A Common Stock, Series C Common Stock and Series A Preferred
Stock held by the trustees of the Chandler Trusts as trustees of the Chandler
Trusts and by Chandis Securities Company (see Note (A) on page 27) are
included in the shares reported in the table below as "beneficially owned" by
each director who is also a trustee of the Chandler Trusts.
<TABLE>
<CAPTION>
Series A Common Series C Common Series A Series B
Stock Stock Preferred Stock Preferred Stock
--------------------------- ------------------------ ------------------ ------------------
Percent Percent Percent Percent
of of of of
Name Total(1) Series Total(1) Series Total Series Total Series
---- ---------- ------- ---------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Michael Armstrong.... -- (3) -- -- -- -- -- -- --
Gwendolyn Garland
Babcock................ 18,670,558(2)(4) 24.32% 20,757,886(2)(4) 74.60% 823,568(2) 100% -- --
Donald R. Beall......... 1,000(4) * -- -- -- -- -- --
John E. Bryson.......... -- (3) -- -- -- -- -- -- --
Bruce Chandler ......... 18,668,546(2) 24.31% 20,757,246(2) 74.60% 823,568(2) 100% -- --
Otis Chandler........... 18,726,127(2)(3)(4) 24.39% 20,820,035(2)(4) 74.83% 823,568(2) 100% -- --
Robert F. Erburu........ 170,170(3) * 1,042,864(5) 3.75% -- -- 395,643(5) 5.08%
Clayton W. Frye, Jr..... 4,810 * 190 * -- -- -- --
Edward E. Johnson....... 20,062(3) * 1,404 * -- -- -- --
David Laventhol......... 33,000(3) * 653,529(6) 2.35% -- -- 269,853(6) 3.46%
Dr. Alfred E. Osborne,
Jr..................... 490 * 385 * -- -- 375 *
Joan A. Payden.......... 1,000 * -- -- -- -- -- --
Richard T. Schlosberg
III.................... 18,694(3) * 295,585(7) 1.06% -- -- 125,790(7) 1.61%
William Stinehart, Jr... 500(4) * -- -- -- -- -- --
Thomas Unterman......... 25,298(3) * 258 * -- -- -- --
Mark H. Willes.......... 60,100(4) * -- -- -- -- -- --
Harold M. Williams...... 200 * 200 * -- -- -- --
Warren B. Williamson.... 18,668,546(2) 24.31% 20,757,246(2) 74.60% 823,568(2) 100% -- --
Donald F. Wright........ 17,788(3) * 299,802(7) 1.08% -- -- 125,790(7) 1.61%
Dr. Edward Zapanta...... 2,722 * -- -- -- -- -- --
All directors and
officers as a group (30
persons, including
those named above) (8). 24,480,706 31.88% 24,868,463 89.38% 823,568 100% 602,284 7.73%
</TABLE>
- ---------
* Less than 1%
(notes continued on following page)
30
<PAGE>
(1) Includes shares held under the Company's Savings Plus Plan (including
PAYSOP) and Employee Stock Ownership Plan and allocated to the accounts of
the executive officers as of November 30, 1995.
(2) See Note (A) on page 27.
(3) Does not include shares that may be acquired upon the exercise of
outstanding stock options and that are currently exercisable within 60 days
of March 11, 1996 as follows: 2,465 by Mr. Armstrong; 3,653 by Mr. Bryson;
1,410 by Mr. O. Chandler; 265,508 by Mr. Erburu; 144,669 by Mr. Laventhol;
75,739 by Mr. Schlosberg; 38,295 by Mr. Unterman; 65,527 by Mr. Wright; and
70,633 by Mr. Johnson.
(4) Includes shares held in trust, or other capacities, as to which beneficial
ownership is disclaimed.
(5) Includes shares held by Pfaffinger Foundation and The Times Mirror Stock
Trust as to which Mr. Erburu disclaims beneficial ownership.
(6) Includes shares held by The Times Mirror Stock Trust as to which Mr.
Laventhol disclaims beneficial ownership.
(7) Includes shares held by Pfaffinger Foundation as to which Messrs.
Schlosberg and Wright disclaim beneficial ownership.
(8) Includes shares held by The Times Mirror Employee Stock Ownership Trust,
Pfaffinger Foundation, The Times Mirror Stock Trust and the Times Mirror
Savings Plus Plan Trust, as well as shares owned by the Chandler family.
31
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation of
the present chief executive officer of the Company and each of the four most
highly compensated executive officers of the Company (other than the chief
executive officer) serving in such capacity at December 31, 1995. It also
includes information with respect to a former chief executive officer, Robert
F. Erburu, who resigned as such effective June 1, 1995. This table includes
information for each individual for services in all capacities to the Company
for the fiscal years ended December 31, 1993, 1994 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- -------------------------------
Awards Payouts
--------------------- -------
Securities
Restricted Underlying
Other Annual Stock Stock LTIP All Other
Name and Salary Bonus Compensation Awards ($) Options Payouts Compensation
Principal Position Year ($) ($) ($) (5) (#) (6) ($) ($) (8)
---------------------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark H. Willes(1) 1995 409,616 1,396,875(3) 226,365(4) 595,000 288,200(7) -- --
Chairman of the Board,
President and Chief
Executive Officer
Richard T. Schlosberg
III 1995 523,077 400,000 -- -- 75,000 268,000 4,500
Executive Vice 1994 472,115 450,000 -- -- 51,910 0 4,500
President 1993 399,038 150,000 -- -- 87,993 -- 4,497
Thomas Unterman 1995 413,019 250,000 -- -- 50,700 160,800 4,500
Senior Vice President 1994 362,020 250,000 84,587 453,125 29,615 0 4,500
and Chief Financial 1993 324,375 175,000 56,288 -- 55,724 -- 4,497
Officer
Donald F. Wright 1995 404,230 150,000 -- -- 42,800 214,400 4,500
Senior Vice President 1994 384,231 225,000 -- -- 31,385 0 4,500
1993 364,712 125,000 -- -- 67,059 -- 4,497
Edward E. Johnson 1995 399,038 125,000 -- -- 42,800 241,200 4,500
Senior Vice President 1994 373,077 175,000 -- -- 31,385 0 4,500
1993 324,519 120,000 -- -- 73,935 -- 4,497
Robert F. Erburu(2) 1995 949,039 0 59,100 -- -- 964,800 4,500
1994 923,077 1,000,000 -- -- 165,942 0 4,500
1993 875,001 300,000 -- -- 323,375 -- 4,497
</TABLE>
- ---------
(1) Mr. Willes was elected President and Chief Executive Officer of the
Company effective June 1, 1995 and Chairman of the Board effective January
1, 1996.
(2) Mr. Erburu served as President and Chief Executive Officer of the Company
until June 1, 1995 and Chairman of the Board until January 1, 1996.
32
<PAGE>
(3) Comprised of annual incentive bonus in the amount of $525,000 and $871,875
as the present value of 25,000 shares of Series A Common Stock granted to
Mr. Willes in February 1996 in lieu of cash for housing differential
allowance. (See page 39.)
(4) Includes $213,738 in relocation assistance.
(5) Restricted stock grants relate to the Company's Series A Common Stock.
Dollar amounts shown in this column equal the number of shares of
restricted stock awarded multiplied by the closing market price of the
Company's Series A Common Stock on the grant date, net of any
consideration paid. The restricted shares vest 25% commencing on the
second anniversary of the date of award and 25% on each successive
anniversary of the award date. As of December 31, 1995, the number and
value of restricted stock award holdings were as follows: 35,000
($1,185,625) by Mr. Willes and 25,000 ($846,875) by Mr. Unterman.
Dividends are payable on restricted stock to the extent paid on the
Company's Series A Common Stock.
(6) As a result of a reorganization of the Company which was completed in
February 1995, adjustments were made to the number and price of
outstanding stock options pursuant to the antidilution provision of the
stock option plans. Amounts in this column have been restated to reflect
such adjustments.
(7) Mr. Willes received two grants of stock options in 1995; one for 108,000
upon joining the Company and the other for 180,200 at the usual grant
cycle. (See page 39.)
(8) Amounts in this column are Company contributions to individual Savings
Plus Plan (401(k)) accounts.
33
<PAGE>
OPTION GRANTS TABLE
The following table sets forth all grants of stock options in 1995 to the
named executive officers of the Company under the Company's 1996 Management
Incentive Plan (except as otherwise noted) for which shareholder approval is
being sought pursuant to this Proxy Statement.
Option Grants in Fiscal Year 1995
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------------------------------------------
% of
Number of Total
Securities Options Grant
Underlying Granted Exercise Date
Options to or Base Present
Granted (1) Employees Price Expiration Value (3)
Name (#) in 1995 ($/Sh) Date ($)
- --------------------- ----------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Mark H. Willes 108,000(2) 3.80 18.06 05/01/05 619,920(4)
180,200 6.33 34.00 12/07/05 1,600,176
Richard T. Schlosberg
III 75,000 2.64 34.00 12/07/05 666,000
Thomas Unterman 50,700 1.78 34.00 12/07/05 450,216
Donald F. Wright 42,800 1.50 34.00 12/07/05 380,064
Edward E. Johnson 42,800 1.50 34.00 12/07/05 380,064
</TABLE>
- ---------
(1) Except as otherwise noted, these options were granted at fair market value
on December 7, 1995. These options have a ten-year term and may be
initially exercised as to 25% of the underlying shares on the first
anniversary of the grant date, an additional 25% becoming exercisable on
each successive anniversary date, with full vesting on the fourth
anniversary date. These options were granted under the Company's 1996
Management Incentive Plan ("MIP") which is subject to shareholder
approval. Upon a change in control as described under the MIP, any
previously unexercisable portion of the options become exercisable.
(2) These options were granted under the Company's 1992 Key Employee Long-Term
Incentive Plan (the "Plan") which has since been suspended. The options
were granted at fair market value on May 1, 1995 and fully vest on January
1, 1998. Upon a change in control as described under the Plan, any
previously unexercisable portion of the options become exercisable.
(3) Based on the Black-Scholes option pricing model. Except as otherwise noted
(see footnote 4), the model assumes (a) volatility of 0.2732 derived by
averaging the average historical volatility of the Company over the 7 year
period prior to October 31, 1995 (the "Measurement Period") with the
average historical volatility of its peer group for such period; (b) a
risk-free rate of return based on the rate (5.93%) available on the grant
date on zero-coupon U.S. government issues with a remaining term equal to
the expected life of the options (7 years); and (c) a dividend yield of
2.93% derived by averaging the average dividend yield of the Company for
34
<PAGE>
the Measurement Period with the average dividend yield of its peer group
for such period. The yield and volatility components of the Black-Scholes
option pricing model were determined, in part, by reference to a group of
companies that were among the Company's peers on the grant date. This
technique was used because of changes in the Company's lines of business
during the Measurement Period that caused its historical volatility and
yield to not be representative. The options vest at a rate of 25% per year
over a 4 year period commencing on the first anniversary of the grant date.
A 3% risk of forfeiture was used. The Black-Scholes ratio was applied to
the average of the closing prices for the most recent 20 trading days
ending December 5, 1995.
(4) Based on the Black-Scholes option pricing model. The model assumes (a)
volatility of 0.2659 derived by averaging the average historical
volatility of the Company over the 7 year period prior to April 30, 1995
(the "Measurement Period") with the average historical volatility of its
peer group for such period; (b) a risk-free rate of return based on the
rate (6.96%) available on the grant date on zero-coupon U.S. government
issues with a remaining term equal to the expected life of the options (7
years); and (c) a dividend yield of 2.98% derived by averaging the average
dividend yield of the Company for the Measurement Period with the average
dividend yield of its peer group for such period. The yield and volatility
components of the Black-Scholes option pricing model were determined, in
part, by reference to a group of companies that were among the Company's
peers on the grant date. This technique was used because of changes in the
Company's lines of business during the Measurement Period that caused its
historical volatility and yield to not be representative. A 3% risk of
forfeiture was used. The Black-Scholes ratio was applied to the average of
the closing prices for the most recent 20 trading days ending April 28,
1995.
35
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995 AND
OPTION VALUES AT DECEMBER 31, 1995
The following tables set forth the number of securities underlying
unexercised options held by the named executive officers at December 31, 1995
and the value of unexercised in-the-money options as of December 31, 1995
(including performance vesting options that became exercisable in the first
quarter of 1996 based on results for performance periods ending in 1995). None
of the named executive officers exercised any stock options during 1995.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options
December 31, 1995 at December 31, 1995(1)
---------------------------- ----------------------------
Name Exercisable(2) Unexercisable Exercisable(2) Unexercisable
- ---- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Mark H. Willes.......... 0 288,200 $ 0 $1,707,750
Richard T. Schlosberg
III.................... 75,739 167,247 1,056,988 1,439,061
Thomas Unterman......... 38,295 104,552 555,349 839,820
Donald F. Wright........ 65,527 103,800 903,757 950,429
Edward E. Johnson....... 70,633 105,570 980,373 977,642
Robert F. Erburu........ 265,508 319,120 3,714,217 4,972,846
</TABLE>
- ---------
(1) Represents the difference between the closing price of the Company's
Series A Common Stock on December 29, 1995 ($33.8750) and the option
exercise price.
(2) Exercisable options include performance vesting options that vested in the
first quarter of 1996 based on results for performance periods ending in
1995.
36
<PAGE>
The following material is not deemed to be part of a document filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, and is not to be deemed to be incorporated by reference in
any documents filed under the Securities Act of 1933, as amended, without the
express consent of the persons named below.
REPORT OF THE EXECUTIVE PERSONNEL
AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Committee Charter: The Board of Directors of The Times Mirror Company (the
"Company") has delegated to the Executive Personnel and Compensation Committee
(the "Committee") the authority to review, consider and determine the
compensation of the Company's executive officers. This Committee was first
established in 1962 and its activities have included the review and development
of executive compensation programs and the award of incentive payments under
those programs. The names of the Committee's members appear below. None of the
members of the Committee is employed by the Company and none is employed by
companies whose boards of directors include an officer of the Company.
Compensation Policies: The Committee's policies are designed to assist the
Company in attracting, retaining and motivating qualified executives by
providing competitive levels of compensation that align directly shareholders'
and executives' financial interests, reward achievement of the Company's annual
and long-term performance goals, and recognize individual initiative and
achievements. The Company's specific implementation of its compensation
policies was considered extensively in 1995, resulting in a decision to
generally replace the Company's 1992 Key Employee Long-Term Incentive Plan with
the 1996 Management Incentive Plan (the "Incentive Plan") upon receipt of
shareholder approval of the replacement plan. As a result, the Committee
discontinued its practice of granting long-term cash incentive awards and
options that vest on the basis of complex performance measures. The Committee
intends to instead grant annual cash incentive awards based on pre-established
performance goals selected by the Committee under the Incentive Plan and on
individual performance, and to rely on stock-based arrangements. The Incentive
Plan implements the Committee's approach of providing total compensation which
is leveraged based upon individual, corporate and business unit performance.
The specific objectives of the executive compensation program are to (a) link
directly shareholder and executive interests; (b) balance rewards for achieving
short-term and long-term performance objectives (financial and strategic); (c)
ensure that total compensation costs vary in direct correlation with the
Company's financial results; (d) simplify plan design, performance measurements
and pay-out provisions; and (e) encourage executives to acquire and retain
Company stock.
37
<PAGE>
For 1995, executives' total compensation packages typically consisted of
salary, an annual incentive bonus award and the annual payout or vesting of
long-term incentives. The allocation of types of compensation varied depending
on level, position and function, with more senior executives having a greater
portion of their compensation packages tied to performance achievements. Based
on a regular review of survey data of other companies of comparable size,
complexity and industry focus provided by independent, nationally recognized
compensation consulting firms, the Committee generally set executives' base
salaries at median levels and executives' bonus and long-term incentive targets
slightly above the median. The compensation survey data reviewed by the
Committee includes information on pay levels for companies within the
media/communications industry against which the Company may compete in whole or
in part for business or talent.
The amount of annual incentive bonus awards for 1995 was determined in a
manner consistent with this leveraged approach. Consideration was given to 1995
results, notably the $1.63 billion after-tax gain on the disposition of the
cable television operations and the $554 million after-tax charges related to
the restructuring program. The Committee noted that the Company's earnings per
share, excluding special items, exceeded its targeted earnings despite the
continued negative effect of external economic conditions, especially in the
first two quarters of the year. However, the impact of this achievement was
moderated by the Company's overall lackluster performance in relation to its
peers. In addition to weighing short-term performance, the Committee considered
favorably the strategic actions taken in 1995 to focus on long-term development
of the Company's information and news business and, through the restructuring
program, set the stage for future growth. The Committee also believed it
important to reward the individual contributions of several of the named
executives in refocusing the Company's direction and spearheading the
restructuring program.
Payouts of long-term incentive awards (both cash and vesting of options) were
made to the named executives based on individual targets and on the formula set
forth in the 1992 Key Executive Long-Term Incentive Plan (the "1992 Plan") for
the 1993-1995 three-year performance cycle. This formula calls for a comparison
of the Company's total shareholder return over the three year performance cycle
with the total shareholder return of an identified group of peer companies. The
Company's percentile ranking against its peers determined what percentage the
executive received of his target cash award. Twenty-five months into the three-
year performance cycle, the Company disposed of its cable television operations
in a very complex transaction. The Committee concluded that the appropriate
application of the 1992 Plan formula to this transaction and the Company's
results for the three year cycle ended December 31, 1995 resulted in a
percentile ranking for the Company of 64.3 and in a payout of 107.2% of the
target cash awards established at the beginning of the performance cycle.
Additionally, as a result of achieving this percentile ranking, the executives'
performance vesting stock options granted for the performance cycles beginning
in 1992 and 1993 vested.
38
<PAGE>
Compensation of Robert F. Erburu, the Chief Executive Officer through May 31,
1995. The Committee's consideration of the compensation of Mr. Erburu was
strongly influenced by the contribution Mr. Erburu has made during his 34-year
career with the Company, his role as a representative of the Company in its
industry, its community and national affairs and in the creation and
realization of the value in the Company's cable television operations. Based on
these factors, the Committee set Mr. Erburu's 1995 base compensation at
$950,000. Mr. Erburu's long-term incentive bonus payouts and option vesting for
1995 pursuant to the 1992 Plan were made in accordance with the formula
described above.
Compensation of Mark H. Willes, the Chief Executive Officer since June 1,
1995. The Committee's initial consideration in setting the compensation of Mr.
Willes was incenting him to leave his position of Vice Chairman at General
Mills, a company he had been associated with for fifteen years in a variety of
capacities including Chief Financial Officer, Chief Operating Officer,
President, and Vice Chairman. Mr. Willes proposed that his compensation, and
that of other Company executives, be determined on a leveraged basis that was
heavily weighted toward performance to align executives' interests with those
of the shareholders. The Committee adopted this approach and agreed to pay Mr.
Willes base compensation of $750,000 per annum, to grant him options on 108,000
shares of Series A Common Stock with an exercise price of $18.06 (the stock's
market price on the date of grant) and to award him 35,000 shares of restricted
stock at the time of his employment offer in May 1995. The Committee also
agreed to pay Mr. Willes' relocation and interim housing costs and to consider
at a later date payment of a housing differential after Mr. Willes had the
opportunity to assess the Los Angeles housing market as contrasted to the
Minneapolis housing market.
In early December 1995, the Committee reviewed Mr. Willes' performance to
date in 1995 and increased his base compensation to $800,000 and granted him
options on 180,200 shares of Series A Common Stock with an exercise price of
$34.00 (the stock's market price on the date of grant). Consistent with Mr.
Willes' philosophy of leveraged compensation, he requested that the present
value of his housing differential allowance be paid in shares of stock rather
than in cash. The Committee agreed to do so and issued 25,000 shares of Series
A Common Stock to Mr. Willes in February 1996 in satisfaction of this
allowance.
In March 1996, the Committee awarded Mr. Willes a bonus of $525,000 with
respect to 1995. Key factors in such award were Mr. Willes' pivotal role in
refocusing the Company's direction as a news and information company and his
careful review of the assets and operations of the Company and its subsidiaries
that laid the foundation for the 1995 restructuring program. The Committee also
considered Mr. Willes' success in revitalizing the Company and incenting its
executives to achieve significant internal growth.
39
<PAGE>
Company Policy Regarding Section 162(m) of the Internal Revenue
Code: Under the 1993 Omnibus Budget Reconciliation Act ("OBRA"), income tax
deductions for compensation paid by publicly-traded companies may be limited
to the extent total compensation (including base salary, annual bonus,
restricted stock awards, stock option exercises, and non-qualified benefits)
for certain executive officers exceeds $1 million in any one year. Under
OBRA, the deduction limit does not apply to payments which qualify as
"performance-based." To qualify as "performance-based," compensation
payments must be made from a plan that is administered by a committee of
outside directors. In addition, the material terms of the plan must be
disclosed to and approved by shareholders, and the committee must certify
that the performance goals were achieved before payments can be awarded.
The Committee intends generally to design the Company's compensation
programs to conform with the OBRA legislation and related regulations so
that total compensation paid to any employee will not exceed $1 million in
any one year, except for compensation payments in excess of $1 million which
qualify as "performance-based." Accordingly, the Incentive Plan is designed
so that option and restricted stock grants and annual incentive bonuses paid
under the Incentive Plan may be qualified as "performance-based." However,
the Company may pay compensation which is not deductible in limited
circumstances when sound management of the Company so requires.
Clayton W. Frye, Jr., Chairman Alfred E. Osborne, Jr.
Donald R. Beall William Stinehart, Jr.
John E. Bryson Warren B. Williamson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Messrs. Frye, Beall, Bryson, Osborne, Stinehart and
Williamson served on the Executive Personnel and Compensation Committee. Mr.
Stinehart is a partner in the law firm of Gibson, Dunn & Crutcher, which
firm provided legal services to the Company and its subsidiaries in the
Company's 1995 fiscal year and in the current fiscal year.
40
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The stock price performance graph depicted below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The graph below compares the cumulative total return of Times Mirror, the
S&P 500 Stock Index and the following group of peer companies: A. H. Belo
Corporation, Dow Jones & Co., Inc., E. W. Scripps Company, Gannett, Inc.,
Knight-Ridder, Inc., McClatchy Newspapers, Inc., McGraw Hill, Inc., Media
General, Inc., Meredith Corporation, New York Times, Tribune Company, and the
Washington Post Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1) (2)
OF TIMES MIRROR, S&P 500 AND PEER GROUP (3)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------------
Times Mirror (3) $100 $120 $125 $138 $134 $164
- ------------------------------------------------------------------------------------
S&P 500 $100 $126 $132 $141 $139 $187
- ------------------------------------------------------------------------------------
Peer Group $100 $118 $134 $159 $150 $180
</TABLE>
(1) Assumes $100 invested on December 31, 1990 in common stock of Times Mirror
and the peer group companies. Total Shareholder Return assumes full
reinvestment of dividends.
41
<PAGE>
(2) S&P 500 Stock Index and Peer Group data weighted by market capitalization
as of the beginning of each year.
(3) The peer group used in preparing this graph excludes two companies that
were included in the performance graph in the Company's 1995 annual proxy
statement: Multimedia, Inc. and Capital Cities ABC, Inc. These companies
were excluded because they have been (or are about to be) acquired since
the date of such proxy statement. Additionally, in determining the Black-
Scholes value of options granted in December 1995, the Compensation
Committee used information concerning a group of peer companies that it
believed were the Company's most direct competitors for executive talent:
Dow Jones & Co., Inc., Dun & Bradstreet, Gannett, Inc., Knight-Ridder,
Inc., McGraw Hill, Inc., New York Times, Tribune Company and the
Washington Post Company. The Total Shareholder Return for such peer group
calculated on the same basis used in preparing the chart above would be
1990-$100; 1991-$122; 1992-$137; 1993-$159; 1994-$145 and 1995-$181.
(4) The above graph reflects distributions received in connection with the
divestiture of the Company's cable operations as a dividend. Such dividend
is assumed to have been reinvested in the Company's common stock as of the
date of such divestiture.
RETIREMENT PLANS
The following table illustrates the maximum annual benefits payable as a
single life annuity under the basic benefit formula in the Pension Plan (see
below) to an officer or employee retiring at age 65 with the specified
combination of final average salary and years of credited service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Final
Average Years of Credited Service at Retirement
Salary (5 --------------------------------------------
years) 15 20 25 30 35
- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 400,000........................ $105,000 $140,000 $175,000 $210,000 $245,000
500,000........................ 131,250 175,000 218,750 262,500 306,250
600,000........................ 157,500 210,000 262,500 315,000 367,500
700,000........................ 183,750 245,000 306,250 367,500 428,750
800,000........................ 210,000 280,000 350,000 420,000 490,000
900,000........................ 236,250 315,000 393,750 472,500 551,250
1,000,000........................ 262,500 350,000 437,500 525,000 612,500
1,100,000........................ 288,750 385,000 481,250 577,500 673,750
1,200,000........................ 315,000 420,000 525,000 630,000 735,000
</TABLE>
42
<PAGE>
The Company maintains a retirement income plan (the "Pension Plan") which is
a funded, qualified, non-contributory, defined benefit plan that covers
substantially all salaried employees including executive officers. The Pension
Plan provides benefits based on the participant's highest average salary for
five consecutive years within the ten years prior to retirement and the
participant's length of service. Benefit amounts will be offset by a portion
of the primary Social Security benefit to be received by the participant. A
survivor's annuity for the spouse of a vested participant is also provided.
In general, compensation covered by the Pension Plan includes salary and
wages, but does not include bonuses, overtime pay, or other unusual or
extraordinary compensation. For the executive officers whose compensation is
shown in the table on page 32 up to $150,000 paid in 1995 and designated as
salary in that table is covered by the Pension Plan. Credited years of service
under the Pension Plan as of December 31, 1995 were approximately 35 years for
Mr. Erburu, 8 years for Mr. Schlosberg, 3 years for Mr. Unterman, 18 years for
Mr. Wright, and 11 years for Mr. Johnson.
The amounts shown in the table above have been calculated without adjustment
for Social Security benefits, and thus may be subject to reduction to
recognize primary Social Security benefits to be received by the participant.
The amounts shown in the table above have also been calculated without
reference to the maximum limitations ($120,000 in 1995) imposed by Section 415
of the Internal Revenue Code on benefits which may be paid under a qualified
defined benefit plan. Optional forms of payment available under the Pension
Plan may result in substantially reduced payments to an employee electing such
an option.
In addition to the amounts shown in the above table, certain active
participants employed on March 29, 1985 are eligible for a past service
benefit improvement as a single sum equal to 2% of their 1984 base salary (for
SERP participants, 2% of their aggregated 1984 base salary and 1984 annual
bonus) multiplied by the years of credited service before 1985. This amount
will be increased by an amount equal to interest, currently at 7 1/2% per
annum, until termination or retirement and then may be paid as a single sum or
converted into an equivalent annuity commencing at retirement. The estimated
annual retirement benefit from the Pension Plan and the SERP for the officers
named in the table on page 32 and employed by the Company on March 29, 1985 is
$12,972 for Mr. Wright, $509 for Mr. Johnson and $64,474 for Mr. Erburu.
The Company also maintains an Employee Stock Ownership Plan (the "ESOP").
Benefits provided by the ESOP are coordinated with benefits provided under the
Pension Plan so that benefits payable under the ESOP will be offset against
benefits otherwise payable under the Pension Plan. Officers of the Company are
eligible to participate in the ESOP and, subject to applicable limitations
imposed by the Internal Revenue Code and by the Employee Retirement Income
Security Act of 1974, will be entitled to receive shares allocated to their
accounts and other benefits provided by the
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<PAGE>
ESOP. Estimated individual account balances of Series A and Series C Common
Stock (aggregated for each individual) as of December 31, 1995 were as
follows: 2,680 shares for Mr. Schlosberg, 556 shares for Mr. Unterman, 4,480
shares for Mr. Wright, 3,442 shares for Mr. Johnson and 6,827 shares for Mr.
Erburu.
The Company also maintains a Supplemental Executive Retirement Plan (the
"SERP") to provide retirement benefits for certain officers of the Company
designated by the Executive Personnel and Compensation Committee (the
"Compensation Committee"). Participants in the SERP will be entitled to
receive vested benefits thereunder in addition to benefits payable under all
other employee benefit plans. Of the named officers on page 32, the
Compensation Committee has designated Messrs. Willes, Schlosberg, Unterman,
Wright, Johnson, and Erburu as participants in the SERP.
Benefits payable under the SERP will be determined in substantially the same
manner as under the Pension Plan except that (a) covered compensation includes
both base salary and awards under the bonus-incentive program, (b) benefits
are payable as a 50% joint and survivor annuity, and (c) the amount payable
shall be calculated without regard to the provisions of Section 415 of the
Internal Revenue Code or other legal limits on benefits under a qualified
pension plan. The SERP provides that each participant shall receive benefits
thereunder at least equal to the difference between the amount such
participant is entitled to receive under the Pension Plan and the amount he or
she would have been entitled to receive without regard to the maximum
limitations imposed by the Internal Revenue Code. If a married participant
dies, his or her spouse will be entitled to receive a lifetime annuity equal
to approximately one-half the amount the participating officer would have been
entitled to receive under the SERP as of the date of the participant's death.
The SERP is unfunded. Participants become vested under the same schedule as
in the qualified pension plan or upon a change in control and each such
participant shall be entitled to receive his or her benefits under the SERP
commencing upon retirement, provided that any such benefit commencing prior to
age 65 shall be actuarially reduced to reflect its commencement prior to
age 65.
The Company has established an ERISA excess retirement plan (the "Excess
Plan") to provide pension benefits for certain employees including officers of
the Company but excluding participants in the SERP. The Excess Plan provides
that each participant will receive benefits thereunder equal to the difference
between the amount such participant is entitled to receive under the Pension
Plan and the amount he or she would have been entitled to receive without
regard to the maximum limitations imposed by the Internal Revenue Code.
Participants will be vested under the Excess Plan under the same vesting
provisions as the Pension Plan. The Excess Plan is unfunded.
44
<PAGE>
OTHER ARRANGEMENTS
The Company has an agreement with Mr. Otis Chandler, a director of the
Company, under which he is entitled to receive supplemental payments from the
Company sufficient to provide an aggregate of $300,000 each year from (i)
payments made to or for Mr. Chandler's account under the Company's Pension
Plan and ESOP, and (ii) supplemental payments to be made by the Company. That
agreement also provides for payment of supplemental benefits to Mr. Chandler's
widow following his death sufficient to provide her, from her survivor's
annuity under the Company's Pension Plan and a supplemental benefit from the
Company, an aggregate of one-half of the amount Mr. Chandler is entitled to
receive. Mr. and Mrs. Chandler are also entitled to continuation of life
insurance on Mr. Chandler's life and medical and dental coverage provided for
certain active and retired officers.
The Company entered into an agreement with Mr. Willes relating to the terms
of his employment with the Company. Under that agreement, Mr. Willes is to
serve as President and Chief Executive Officer and, after January 1, 1996,
Chairman of the Board, at a salary of not less than $750,000 per year and with
a target annual incentive bonus of not less than $450,000, subject in 1995 to
proration for the number of months Mr. Willes was employed by the Company. The
agreement provided for Mr. Willes to receive a stock option grant for 108,000
shares and 35,000 shares of restricted stock, for a target deferred cash award
of $600,000 for the 1995 through 1997 performance cycle under the Company's
1992 Key Employee Long-Term Incentive Plan (the "1992 Plan"), and for the
Company to assume various costs and obligations in connection with Mr. Willes'
relocation to Los Angeles. Mr. Willes is entitled to participate in
retirement, deferred compensation, insurance and other employee benefit
programs, and will receive a benefit under the SERP which shall be not less
than a supplemental benefit based on the amount he would have received under a
similar plan maintained by his former employer. The agreement further provides
that if Mr. Willes terminates employment with the Company prior to age 60 for
"good reason" or if his employment is terminated other than for "cause" or
disability (as those terms are defined in the agreement), the Company will (i)
pay two years' salary and bonus, (ii) pay Mr. Willes' target annual bonus
incentive award for the year of termination, pro rated for the number of
months of active employment in such year, (iii) treat such termination as an
early termination for purposes of determining benefits under various benefit
plans, (iv) seek to have the restrictions on his restricted stock treated
according to the terms applicable in situations of early retirement, (v)
provide for continued participation and service credit under various
retirement, deferred compensation, insurance and other employee benefit
programs, and (vi) provide such other benefits as are offered to retiring
officers.
45
<PAGE>
CERTAIN REPORTS
In February 1995, James R. Simpson filed a report under Section 16(a) of the
Securities Exchange Act in which he inadvertently reported a gift of Series C
Common Stock as a gift of Series A Common Stock. However, the number of shares
was accurately set forth. After the due date for reporting the transaction,
Mr. Simpson filed a form correcting the reference to the proper class of
stock.
REVOCATION OF PROXIES
Any shareholder may revoke a proxy by written notice of revocation delivered
to the Company's transfer agent, Harris Trust and Savings Bank, P. O. Box
3504, Chicago, Illinois 60690-3504, or to the Secretary of the Company at
Times Mirror Square, Los Angeles, California 90053, by executing another proxy
bearing a later date, or by voting the shares in person at the meeting of
shareholders.
1997 ANNUAL MEETING
Shareholder proposals must be received by the Company on or before November
29, 1996 to be considered for inclusion in the proxy statement and
presentation at the 1997 Annual Meeting of Shareholders, which is expected to
be held on May 8, 1997.
GENERAL
The cost of soliciting proxies will be borne by the Company. Proxy cards and
materials will also be distributed to beneficial owners of stock through
brokers, dealers, banks, voting trustees, custodians, nominees and other like
parties and the Company will reimburse such parties for their charges and
expenses in connection therewith at the rates approved by the New York Stock
Exchange. The Company has retained D. F. King & Co. to assist in the
solicitation of proxies. D. F. King & Co. may solicit proxies by mail,
telephone, facsimile and personal solicitation, and will request brokerage
houses and other nominees, fiduciaries and custodians nominally holding shares
of Series A Common Stock of record to forward proxy soliciting material to the
beneficial owners of such shares. For these services, the Company will pay D.
F. King & Co. a fee estimated not to exceed $17,000 plus reimbursement of
expenses. In addition, following the original mailing of the proxy soliciting
material, directors, officers and regular employees of the Company may solicit
proxies by mail, telephone, facsimile and personal interview, for which they
will receive no additional compensation.
O. Jean Williams
Secretary
March 29, 1996
46
<PAGE>
EXHIBIT A
THE TIMES MIRROR COMPANY
1996 MANAGEMENT INCENTIVE PLAN
SECTION 1. PURPOSE OF PLAN
The purpose of this 1996 Management Incentive Plan ("Plan") of The Times
Mirror Company, a Delaware corporation (the "Company"), is to enable the
Company to attract, retain and motivate its management and other key
employees, and to further align the interests of such employees with those of
the stockholders of the Company, by providing for or increasing the
proprietary interest of such employees in the Company.
SECTION 2. ADMINISTRATION OF THE PLAN
2.1 Composition of Committee. The Plan shall be administered by one or more
committees (any such committee, the "Committee") of the Board of Directors of
the Company (the "Board"). If no persons are designated by the Board to serve
on the Committee, the Plan shall be administered by the Board and all
references herein to the Committee shall refer to the Board. The Board shall
have the sole discretion to appoint, add, remove or replace members of the
Committee, and shall have the sole authority to fill vacancies on the
Committee. Unless otherwise provided by the Board: (i) with respect to any
Award (as defined in Section 5) for which the Committee determines that it is
necessary or desirable for the grant or issuance thereof to be exempt under
Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
Committee shall consist of two or more directors who are permitted under that
Rule to make grants or awards that are exempt from the operation of Exchange
Act Section 16(b), and (ii) with respect to any Award that is intended to
qualify as "performance based compensation" under Section 162(m)(4)(C) of the
Internal Revenue Code (the "Code"), the Committee shall consist of two or more
directors, each of whom is an "outside director" (as such term is defined
under Section 162(m) of the Code). With respect to any Award that is not
intended to satisfy the conditions of Exchange Act Rule 16b-3 or Code Section
162(m)(4)(C), the Committee may delegate all or any of its responsibilities
hereunder to any director(s) or, except to the extent prohibited under
applicable law, to any officer(s) of the Company (any of whom also may be a
Participant (as defined in Section 4) who has been granted or is eligible to
be granted Awards under the Plan), and in the context of such Awards,
references in this Plan to the "Committee" shall refer to both the Committee
and, unless otherwise provided by the Committee, to any such delegate(s) of
the Committee.
2.2 Committee Action. A majority of the Committee's members shall constitute
a quorum, and all determinations of the Committee shall be made by not less
than a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members (whether in counterpart or on
the same copy) shall be fully as effective as if it had been made by a
majority vote
A-1
<PAGE>
of its members at a meeting duly called and held. The Committee may designate
the Secretary of the Company or other Company employees to assist the
Committee in the administration of the Plan, and may grant authority to such
persons to execute agreements evidencing Awards made under this Plan or other
documents entered into under this Plan on behalf of the Committee or the
Company.
2.3 Committee Expenses. All expenses and liabilities incurred by the
Committee in the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants or other persons.
2.4 Powers of the Committee. Subject to the express provisions of this Plan,
the Committee shall be authorized and empowered to do all things necessary or
desirable in connection with the administration of this Plan with respect to
the Awards over which such Committee has authority, including, without
limitation, the following:
(a) to prescribe, amend and rescind rules and regulations relating to
this Plan and to define terms not otherwise defined herein; provided that,
unless the Committee shall specify otherwise, for purposes of this Plan (i)
the term "fair market value" shall mean, as of any date, the mean between
the high and the low market prices for a Share reported for that date on
the composite tape for securities listed on the New York Stock Exchange or,
if no Shares traded on the New York Stock Exchange on the date in question,
then for the next preceding date for which Shares traded on the New York
Stock Exchange; and (ii) the term "Company" shall mean the Company and its
subsidiaries and affiliates, unless the context otherwise requires;
(b) to determine which persons are Employees (as defined in Section 4
hereof), to which of such Employees, if any, Awards shall be granted
hereunder and the timing of any such Awards;
(c) to determine the number of Shares subject to Awards and the exercise
or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of any performance
goals applicable to Awards;
(e) to prescribe and amend the terms of the agreements evidencing Awards
made under this Plan (which need not be identical);
(f) to determine whether, and the extent to which, adjustments are
required pursuant to Section 11 hereof;
(g) to interpret and construe this Plan, any rules and regulations under
the Plan and the terms and conditions of any Award granted hereunder, and
to make exceptions to any such provisions in good faith and for the benefit
of the Company; and
A-2
<PAGE>
(h) to make all other determinations deemed necessary or advisable for
the administration of the Plan.
2.5 Determinations of the Committee. All decisions, determinations and
interpretations by the Committee or the Board regarding the Plan shall be
final and binding on all Employees and Participants. The Committee or the
Board, as applicable, shall consider such factors as it deems relevant, in its
sole and absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice
of any officer of the Company or Employee and such attorneys, consultants and
accountants as it may select.
SECTION 3. STOCK SUBJECT TO PLAN
3.1 Aggregate Limits. Subject to adjustment as provided in Section 11, at
any time, the aggregate number of shares of the Company's Series A Common
Stock, $1 par value ("Shares"), issued and issuable pursuant to all Awards
(including all ISOs (as defined in Section 5.1 hereof)) granted under this
Plan shall not exceed 14,500,000; provided that no more than 2,000,000 of such
Shares may be issued pursuant to all Annual Incentive Bonuses, Performance
Stock Awards and Restricted Stock Awards granted under the Plan. The Shares
subject to the Plan may be either Shares reacquired by the Company, including
Shares purchased in the open market, or authorized but unissued Shares.
3.2 Code Section 162(m) Limits. The aggregate number of Shares subject to
Options granted under this Plan during any calendar year to any one Employee
shall not exceed 500,000. The aggregate number of Shares issued or issuable
under any Annual Incentive Bonus or Performance Stock Awards granted under
this Plan during any calendar year to any one Employee shall not exceed
500,000. Notwithstanding anything to the contrary in the Plan, the foregoing
limitations (i) shall not apply if such limitations are not required in order
for Awards to qualify as "performance based compensation" under Code Section
162(m); and (ii) shall be subject to adjustment under Section 11 only to the
extent that such adjustment will not affect the status of any Award intended
to qualify as "performance based compensation" under Code Section 162(m).
3.3 ISO Limits. The aggregate number of Shares issued and issuable pursuant
to all ISOs granted under this Plan shall not exceed 14,500,000. Such maximum
number does not include the number of Shares subject to the unexercised
portion of any ISO granted under this Plan that expires or is terminated.
Notwithstanding anything to the contrary in the Plan, such aggregate number of
Shares shall be subject to adjustment under Section 11 only to the extent that
such adjustment will not affect the status of any ISO granted under this Plan.
3.4 Issuance of Shares. For purposes of Section 3.1, the aggregate number of
Shares issued under this Plan at any time shall equal only the number of
Shares actually issued upon exercise or
A-3
<PAGE>
settlement of an Award and not returned to the Company upon cancellation,
expiration or forfeiture of an Award or in payment or satisfaction of the
purchase price, exercise price or tax withholding obligation of an Award.
SECTION 4. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an employee,
prospective employee, consultant or advisor of the Company (an "Employee")
shall be eligible to be considered for the grant of Awards hereunder. For
purposes of this Plan, the Chairman of the Board's status as an Employee shall
be determined by the Board. For purposes of Awards addressed in Section 10.5,
the term "Employee" shall also include a former Employee or any person
(including any estate) who is a beneficiary of a former Employee. A
"Participant" is any current or former Employee to whom an Award has been made
and any person (including any estate) to whom an Award has been assigned or
transferred pursuant to Section 10.1.
SECTION 5. PLAN AWARDS
5.1 Award Types. The Committee, on behalf of the Company, is authorized
under this Plan to enter into certain types of arrangements with Employees and
to confer certain benefits on them. The following such arrangements or
benefits are authorized under the Plan if their terms and conditions are not
inconsistent with the provisions of the Plan: Stock Options, Restricted Stock,
Performance Stock and Annual Incentive Bonuses. Such arrangements and benefits
are sometimes referred to herein as "Awards." The authorized types of
arrangements and benefits for which Awards may be granted are defined as
follows:
Stock Options: A Stock Option is a right granted under Section 6 to
purchase a number of Shares at such exercise price, at such times, and on
such other terms and conditions as are specified in or determined pursuant
to the agreement evidencing the Award (the "Option Agreement"). Options
intended to qualify as Incentive Stock Options ("ISOs") pursuant to Code
Section 422 and Options which are not intended to qualify as ISOs
("Nonqualified Options") may be granted under Section 6 as the Committee in
its sole discretion shall determine.
Annual Incentive Bonus: An Annual Incentive Bonus is a bonus opportunity
awarded under Section 7 pursuant to which a Participant may become entitled
to receive an amount based on satisfaction of such performance criteria as
are specified in the agreement evidencing the Award (the "Annual Incentive
Bonus Agreement").
Performance Stock: Performance Stock is an award of Shares made under
Section 8, the grant, issuance, retention and/or vesting of which is
subject to such performance and other conditions as are expressed in the
agreement evidencing the Award (the "Performance Stock Agreement").
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<PAGE>
Restricted Stock: Restricted Stock is a right granted under Section 9 to
Shares issued or issuable under the Plan but subject during specified
periods of time to such conditions on vesting, restrictions on
transferability and/or repurchase rights as are expressed in the agreement
evidencing the Award (the "Restricted Stock Agreement").
5.2 Grants of Awards. An Award may consist of one such arrangement or
benefit or two or more of them in tandem or in the alternative.
5.3 Method of Share Acquisition. Shares may be issued pursuant to an Award
for any lawful consideration as determined by the Committee, including,
without limitation, services rendered by the recipient of such Award.
SECTION 6. STOCK OPTION GRANTS
The Committee may grant an Option or provide for the grant of an Option,
either from time-to-time in the discretion of the Committee or automatically
upon the occurrence of specified events, including, without limitation, the
achievement of performance goals, the satisfaction of an event or condition
within the control of the recipient of the Award or within the control of
others, the exercise or settlement of a previous Option or a Change of
Control.
6.1 Option Agreement. Each Option Agreement shall contain provisions
regarding (a) the number of Shares which may be issued upon exercise of the
Option, (b) the purchase price of the Shares and the means of payment for the
Shares, (c) the term of the Option, (d) such terms and conditions of
exercisability as may be determined from time to time by the Committee, (e)
restrictions on the transfer of the Option and forfeiture provisions, and (f)
such further terms and conditions, in each case not inconsistent with the Plan
as may be determined from time to time by the Committee. Option Agreements
evidencing ISOs shall contain such terms and conditions as may be necessary to
comply with the applicable provisions of Section 422 of the Code.
6.2 Option Price. The price per Share of the Shares subject to each Option
granted under the Plan shall be not less than 100% of the fair market value of
such Stock on the date the Option is granted, except that the Committee may
specifically provide that the exercise price of an Option may be higher or
lower in the case of an Option granted to employees of a company acquired by
the Company in assumption and substitution of options held by such employees
at the time such company is acquired.
6.3 Option Term. The "Term" of each Option granted under the Plan, including
any ISOs, shall be ten (10) years from the date of its grant, unless the
Committee in its sole discretion shall provide for a shorter Term.
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6.4 Option Vesting. The ability to exercise Options granted under the Plan
shall be subject to the following provisions:
(a) Options granted under the Plan shall be exercisable at such time and
in such installments during the period prior to the expiration of the
Option's Term as determined by the Committee in its sole discretion. The
Committee shall have the right to make the timing of the ability to
exercise any Option granted under the Plan subject to such performance
requirements as deemed appropriate by the Committee. At any time after the
grant of an Option the Committee may, in its sole discretion, reduce or
eliminate any restrictions surrounding any Participant's right to exercise
all or part of the Option.
(b) Notwithstanding any other provision of this Plan, the aggregate fair
market value (determined at the time that the ISO is granted) of the Shares
with respect to which Options that are intended to qualify as ISOs are
exercisable for the first time by a Participant during any calendar year
(under this Plan and any other plans of the Company) shall not exceed
$100,000.
6.5 Termination of Employment. Subject to Section 12, upon a termination of
employment by a Participant prior to the full exercise of an Option, the
following procedures shall apply unless determined otherwise by the Committee
in its sole discretion or, in the case of an ISO, unless other procedures are
necessary to comply with the provisions of Section 422, 424 or 425 of the
Code:
(a) Death or Disability. Upon the death of the Employee or a
determination of the Employee's disability, or upon any other termination
of an Employee's employment with the Company for which the Committee so
provides, and prior to the full exercise of an Option, any remaining
unexercised portion of the Option shall become immediately available for
exercise by the Participant, and shall be exercisable until the expiration
of the remaining Term of the Option.
(b) Normal Retirement. Upon the Normal Retirement of an Employee, or in
other circumstances specified by the Committee, prior to the full exercise
of an Option, the portion of the Option eligible for exercise shall be
determined by (i) multiplying the number of shares represented by the
Option by a ratio equal to the number of full months of the Employee's
service with the Company following the date of grant of the Option divided
by 36, which result shall not be less than the number of shares represented
by the Option available, or previously available, for exercise, and (ii)
subtracting from this amount any shares represented by the Option that were
previously exercised by the Participant. Any portion of an Option made
eligible for exercise based on this calculation may not be exercised unless
and until any performance restrictions associated with the Option are
satisfied. Once such portion of the Option is available for exercise, it
may be exercised by the Participant until the expiration of the remaining
Term of the Option. Unless otherwise specified by the Committee, Normal
Retirement shall be the Employee's termination of employment at or after
attainment of age 65.
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(c) Early Retirement. Upon the Early Retirement of an Employee, or in
other circumstances specified by the Committee, prior to the full exercise
of an Option, the portion of the Option eligible for exercise shall be
determined by (i) multiplying the number of shares represented by the
Option by a ratio equal to the number of full months of the Employee's
service with the Company following the date of grant of the Option divided
by 48, which result shall not be less than the number of shares represented
by the Option available, or previously available, for exercise, and (ii)
subtracting from this amount any shares represented by the Option that were
previously exercised by the Participant. Any portion of an Option made
eligible for exercise based on this calculation may not be exercised unless
and until any performance restrictions associated with the Option are
satisfied. Once such portion of the Option is available for exercise, it
may be exercised by the Participant until the expiration of the remaining
Term of the Option. Unless otherwise specified by the Committee, Early
Retirement shall be the Employee's termination of employment between ages
55 and 65, provided the Employee has at least 5 years of service with the
Company as of termination of employment.
(d) Other Forms of Termination. Upon a termination of an Employee's
employment for any reason other than death, disability or retirement or in
other circumstances specified by the Committee, and prior to the full
exercise of an Option, the right to exercise any portion of that Option not
already available for exercise on the date of such termination of
employment shall be forfeited. In such event, any portion of the Option
that is available for exercise as of the date of the Employee's termination
of employment must be exercised within the shorter of 30 days following the
Employee's termination of employment or the remaining Term of the Option.
6.6 Option Exercise.
(a) Partial Exercise. An exercisable Option may be exercised in whole or in
part. However, an Option shall not be exercisable with respect to fractional
Shares and the Committee may require, by the terms of the Option Agreement, a
partial exercise to include a minimum number of Shares.
(b) Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery to the representative of the Company designated
for such purpose by the Committee all of the following: (i) notice of exercise
specifying the number of Shares to be purchased signed by the Participant,
(ii) full payment of the exercise price for such number of Shares, (iii) such
representations and documents as the Committee, in its sole discretion, deems
necessary or advisable to effect compliance with all applicable provisions of
the Securities Act of 1933, as amended, and any other federal, state or
foreign securities laws or regulations, (iv) in the event that the Option
shall be exercised pursuant to Section 10.1 by any person or persons other
than the Employee, appropriate proof of the right of such person or persons to
exercise the Option, and (v) such representations and
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documents as the Committee, in its sole discretion, deems necessary or
advisable to provide for the tax withholding pursuant to Section 13. Unless
provided otherwise by the Committee, no Participant shall have any right as a
stockholder with respect to any Shares purchased pursuant to any Option until
the registration of Shares in the name of such person, and no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights for which the record date
is prior to the date such Shares are so registered. Shares shall be so
registered as soon as administratively practicable after exercise of any
Option, subject to reasonable delays and to delays beyond the reasonable
control of the Company such as but not limited to completion of registration
of said Shares with the Securities and Exchange Commission or compliance with
any federal or state laws, rules or regulations.
(c) Payment of Exercise Price. The exercise price of an Option shall be paid
in the form of one of more of the following, as the Committee shall specify,
either through the terms of the Option Agreement or at the time of exercise of
an Option: (i) cash or certified or cashiers' check, (ii) shares of capital
stock of the Company that have been held by the Participant for such period of
time as the Committee may specify, (iii) other property deemed acceptable by
the Committee, (iv) a reduction in the number of Shares or other property
otherwise issuable pursuant to such Option, (v) a promissory note of or other
commitment to pay by the Participant or of a third party, the terms and
conditions of which shall be determined by the Committee, or (vi) any
combination of (i) through (v).
6.7 Executive Stock Purchase Options. Notwithstanding anything to the
contrary in this Article VI, the Committee may grant one or more Employees who
are subject to Exchange Act Section 16 one or a series of Options to purchase
up to a maximum number and/or maximum aggregate purchase price of Shares as
the Committee may specify, and may permit the exercise price of any such
Options to be paid with amounts accumulated through payroll deductions, and
may specify such other terms and conditions to be applicable to any such
Options and/or to any Shares purchased upon exercise of any such Options as
are generally applicable to options granted and Shares purchased under the
Company's 1996 Employee Stock Purchase Plan or as the Committee in its sole
discretion shall specify. The term of any Option granted under this Section
6.7 shall not exceed twenty-seven (27) months. Notwithstanding anything to the
contrary in Section 6.2, the exercise price of any Option granted under this
Section 6.7 shall be the lesser of such percentage, as specified by the
Committee (which shall not be less than seventy-five percent (75%)), of (1)
the fair market value per Share on the date the Option is granted; or (2) the
fair market value per Share on the expiration date of the Option.
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SECTION 7. ANNUAL INCENTIVE BONUS
Each Annual Incentive Bonus Award will confer upon the Employee the
opportunity to earn a future payment tied to the level of achievement with
respect to one or more performance criteria established for a fiscal year.
7.1 Annual Incentive Bonus Agreement. Each Annual Incentive Bonus Agreement
shall contain provisions regarding (a) the target and maximum amount payable
to the Participant as an Annual Incentive Bonus, (b) the performance criteria
and level of achievement versus these criteria which shall determine the
amount of such payment, (c) the fiscal year as to which performance shall be
measured for determining the amount of any payment, (d) the timing of any
payment earned by virtue of performance, (e) restrictions on the alienation or
transfer of the Annual Incentive Bonus prior to actual payment, (f) forfeiture
provisions, and (g) such further terms and conditions, in each case not
inconsistent with the Plan as may be determined from time to time by the
Committee. The maximum amount payable as an Annual Incentive Bonus may be a
multiple of the target amount payable, but the maximum amount payable pursuant
to that portion of an Annual Incentive Bonus Award granted under this Plan for
any fiscal year to any Participant that is intended to satisfy the
requirements for "performance based compensation" under Code Section 162(m)
shall not exceed five million dollars ($5,000,000).
7.2 Performance Criteria. The Committee shall establish the performance
criteria and level of achievement versus these criteria which shall determine
the target and maximum amount payable under an Annual Incentive Bonus Award,
which criteria may be based on financial performance and/or personal
performance evaluations. The Committee may specify the percentage of the
target Annual Incentive Bonus that is intended to satisfy the requirements for
"performance-based compensation" under Code Section 162(m). Notwithstanding
anything to the contrary herein, the performance criteria for any portion of
an Annual Incentive Bonus that is intended by the Committee to satisfy the
requirements for "performance-based compensation" under Code Section 162(m)
shall be a measure based on one or more Qualifying Performance Criteria (as
defined in Section 10.2 hereof) selected by the Committee and specified at the
time the Annual Incentive Bonus Award is granted. The Committee shall certify
the extent to which any Qualifying Performance Criteria has been satisfied,
and the amount payable as a result thereof, prior to payment of any Annual
Incentive Bonus that is intended by the Committee to satisfy the requirements
for "performance-based compensation" under Code Section 162(m).
7.3 Timing of Payment. The Committee shall determine the timing of payment
of any Annual Incentive Bonus. The Committee may provide for or, subject to
such terms and conditions as the Committee may specify, may permit a
Participant to elect for the payment of any Annual Incentive Bonus to be
deferred to a specified date or event.
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7.4 Termination of Employment. Subject to Section 12, upon a termination of
employment by an Employee prior to the end of a fiscal year, the following
procedures shall apply as to any Annual Incentive Bonus Award for such fiscal
year, unless determined otherwise by the Committee in its sole discretion:
(a) Death, Disability or Retirement. Following the death or retirement of
the Employee or a determination of the Employee's disability, the
Participant shall be entitled to receive a pro-rata portion of any Annual
Incentive Bonus Award amount payable based upon performance for such fiscal
year. Such pro-rata portion shall be determined by multiplying (i) the
amount of the Annual Incentive Bonus Award that the Committee determines,
either upon completion of the fiscal year or based upon an evaluation
during the fiscal year Performance Period, would have been payable to the
Participant for the fiscal year, times (ii) a ratio equal to the number of
full months of the Employee's employment with the Company during the fiscal
year divided by 12.
(b) Other Forms of Termination. Subject to Section 12, unless the
Committee provides otherwise, upon a termination of an Employee's
employment with the Company for any reason other than death, disability, or
retirement prior to the end of a fiscal year, the right to receive any
payment from the Annual Incentive Bonus for that fiscal year shall be
forfeited.
7.5 Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the amount paid under an Annual Incentive Bonus Award on
account of either financial performance or personal performance evaluations
may be reduced by the Committee on the basis of such further considerations as
the Committee in its sole discretion shall determine.
7.6 Form of Payment. The Committee may provide for any such Participant(s)
as it shall designate to have the option for his or her Annual Incentive
Bonus, or such portion thereof as the Committee may specify, to be paid in
whole or in part in Shares on the following terms and conditions:
(a) The number of Shares issued in the name of the Participant shall be
determined by dividing the amount of the Annual Incentive Bonus which the
Committee has permitted the Participant, and the Participant has elected,
to receive in the form of Shares by fifty percent of the fair market value
of a Share as of such date as the Committee may specify.
(b) Fifty percent of the Shares issued in the name of the Participant
shall be fully vested on the date of issuance (such vested Shares, the
"Bonus Shares") and shall be held in escrow by the Company or by such agent
as the Committee may select but, subject to Section 7.6(c), may be
withdrawn from escrow by the Participant at any time.
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(c) The remaining Shares issued in the name of the Participant (the
"Matching Shares") shall be held in escrow by the Company or by such agent
and shall remain unvested and subject to forfeiture unless and until the
corresponding number of Bonus Shares have been held in escrow for four (4)
years from the date of their issuance (such condition, the "Holding Period
Requirement"). Upon satisfaction of the Holding Period Requirement, the
Matching Shares shall become vested and such Matching Shares and the
corresponding Bonus Shares shall be released from the escrow. The Committee
may provide that a temporary withdrawal of Bonus Shares from escrow in
order to pay the exercise price of a stock option granted by the Company
(regardless of whether granted under this Plan) shall not result in
forfeiture of any Matching Shares if the Participant instructs the Company
to deposit into the escrow a number of Shares issued upon exercise of such
stock option equal to the number of Bonus Shares withdrawn for purposes of
exercising such stock option, and the subsequent holding period of such
redeposited Shares shall be added to the prior holding period of such
withdrawn Bonus Shares for purposes of satisfying the Holding Period
Requirement. Subject to the preceding sentence and to Section 7.6(d), in
the event that any of a Participant's Bonus Shares are withdrawn from
escrow prior to satisfaction of the Holding Period Requirement, a
corresponding number of Matching Shares shall be forfeited and transferred
back to the Company.
(d) Upon a termination of employment by an Employee prior to satisfaction
of the Holding Period Requirement for any Bonus Shares under Section
7.6(c), the following procedures shall apply as to any Matching Shares held
in the name of the Participant, unless determined otherwise by the
Committee in its sole discretion: (i) upon the death or retirement of the
Employee or a determination of the Employee's disability, or upon any other
termination of an Employee's employment with the Company for which the
Committee so provides, and provided that the Holding Period Requirement
under Section 7.6(c) is satisfied, Matching Shares shall become vested on
the same terms and at the same time as if the Employee's employment with
the Company had continued; and (ii) upon a termination of an Employee's
employment for any reason other than death, disability or retirement or in
other circumstances specified by the Committee, and prior to the
satisfaction of the Holding Period Requirement under Section 7.6(c), all
unvested Matching Shares shall be forfeited and transferred back to the
Company. The Committee may provide as a further condition to the vesting of
Matching Shares that following the retirement of the Employee or a
determination of the Employee's disability, or such other termination for
which the Committee so provides, any Matching Shares shall be forfeited if
the Participant competes with the Company during the four year holding
period provided for under Section 7.6(c).
(e) Except to the extent provided otherwise by the Committee, a
Participant shall be entitled to vote and to receive dividends on any Bonus
Shares and Matching Shares held in escrow pursuant to this Section 7.6.
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(f) Notwithstanding the terms of Section 7.6(a) through (e), the
Committee may specify such other methods or formula by which Shares shall
be valued for purposes of determining the number of Shares issuable in
settlement of any Annual Incentive Bonus, and may alter or waive any of the
provisions of Section 7.6(a) through (e) or may impose such further or
different conditions upon the grant, retention and/or vesting of such
Shares as it shall determine in its sole discretion.
SECTION 8. PERFORMANCE STOCK
Performance Stock consists of an award of Shares, the grant, issuance,
retention and/or vesting of which shall be subject to such performance
conditions and to such further terms and conditions as the Committee deems
appropriate.
8.1 Performance Stock Agreement. Each Performance Stock Agreement shall
contain provisions regarding (a) the number of Shares subject to such Award or
a formula for determining such, (b) the performance criteria and level of
achievement versus these criteria which shall determine the number of Shares
granted, issued, retainable and/or vested, (c) the period as to which
performance shall be measured for determining achievement of performance (a
"Performance Period"), (d) forfeiture provisions, and (e) such further terms
and conditions, in each case not inconsistent with the Plan as may be
determined from time to time by the Committee.
8.2 Performance Criteria. The grant, issuance, retention and/or vesting of
each Performance Share shall be subject to such performance criteria and level
of achievement versus these criteria as the Committee shall determine, which
criteria may be based on financial performance and/or personal performance
evaluations. Notwithstanding anything to the contrary herein, the performance
criteria for any Performance Stock that is intended by the Committee to
satisfy the requirements for "performance-based compensation" under Code
Section 162(m) shall be a measure based on one or more Qualifying Performance
Criteria selected by the Committee and specified at the time the Performance
Stock Award is granted.
8.3 Termination of Employment. Subject to Section 12, upon a termination of
employment by an Employee prior to the end of a Performance Period, the
following procedures shall apply as to any Performance Stock Awards granted to
such Employee, unless determined otherwise by the Committee in its sole
discretion:
(a) Death, Disability or Retirement. Following the death or retirement of
the Employee or a determination of the Employee's disability, the
Participant shall be entitled to a pro-rata portion of any Performance
Stock Award. Such pro-rata portion shall be determined by multiplying (i)
the number of Shares as to which the Committee determines, either upon
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completion of the Performance Period or based upon an evaluation during the
Performance Period, the performance criteria applicable to such Award has
been or would have been satisfied, times (ii) a ratio equal to the number
of full months of the Employee's employment with the Company divided by the
number of months in the performance period for such Award.
(b) Other Forms of Termination. Subject to Section 12, unless the
Committee provides otherwise, upon a termination of an Employee's
employment with the Company for any reason other than death, disability, or
retirement prior to the end of a Performance Period, the right to any
Performance Stock as to which the performance criteria and any other
condition has not then been satisfied shall be forfeited.
8.4 Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under a Performance Stock Award on account of either financial
performance or personal performance evaluations may be reduced by the
Committee on the basis of such further considerations as the Committee in its
sole discretion shall determine.
SECTION 9. RESTRICTED STOCK
Restricted Stock consists of Shares which are registered or are issuable by
the Company in the name of an Employee in exchange for such cash or other
consideration as determined by the Committee. Restricted Stock may, but need
not, be subject during specified periods of time to such conditions to
vesting, to restrictions on their sale or other transfer by the Participant
and/or to repurchase rights as may be determined by the Committee. The
transfer and sale of Shares pursuant to Restricted Stock Awards shall be
subject to the following terms and conditions:
9.1. Numbers of Shares. The number of Shares to be transferred or sold by
the Company to an Employee pursuant to a Restricted Stock award shall be
determined by the Committee.
9.2. Sale Price. Subject to the requirements of applicable law, the
Committee shall determine the price, if any, at which Shares of Restricted
Stock shall be sold or awarded to an Employee, which may vary from time to
time and among Employees and which may be below the fair market value of such
Shares at the date of grant or issuance.
9.3. Conditions. All Shares transferred or sold as Restricted Stock
hereunder shall be subject to such restrictions or conditions as the Committee
may determine, including, without limitation any or all of the following:
(a) a prohibition against the sale, transfer, pledge or other encumbrance
of the Shares, such prohibition to lapse at such time or times as the
Committee shall determine (whether in annual
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or more frequent installments, at the time of the death, disability or
retirement of the holder of such Shares, or otherwise);
(b) a requirement that the holder of Shares forfeit or resell back to the
Company at a price specified by the Committee (which price may be more than
the price, if any, paid by the Employee for such Shares) all or part of
such Shares in the event of termination of employment during any period in
which such Shares are subject to conditions; and
(c) such other conditions or restrictions as the Committee may deem
advisable.
9.4. Escrow. In order to enforce the restrictions imposed by the Committee
pursuant to Section 9.3 with respect to any Shares of Restricted Stock
registered in the name of the Participant, such Shares may be held in escrow
by the Company or its agent or subject to stop transfer or other restrictions
or legends as the Committee shall determine. Unless provided otherwise by the
Committee, a Participant shall be entitled to vote and to receive dividends on
any shares of Restricted Stock as to which the restrictions have not lapsed.
9.5. End of Conditions. Subject to Section 12, as soon as administratively
practicable after any Shares of Restricted Stock cease to be subject to
forfeiture, resale, nontransferability or other conditions or restrictions,
such Shares will be registered in the name of the Participant free of all
restrictions and conditions, subject to reasonable delays and to delays beyond
the reasonable control of the Company.
9.6 Termination of Employment. Subject to Section 12, upon a termination of
employment by an Employee prior to the vesting of or the lapsing of
restrictions on Restricted Stock, the following procedures shall apply as to
any Restricted Stock Awards granted to such Employee, unless determined
otherwise by the Committee in its sole discretion:
(a) Death, Disability or Retirement. Upon the death or retirement of the
Employee or a determination of the Employee's disability prior to the
vesting or lapsing of restrictions on Restricted Stock, or upon any other
termination of an Employee's employment with the Company for which the
Committee so provides, any remaining unvested or restricted portion of the
Restricted Stock Award shall become vested and/or unrestricted on the same
terms and at the same time as if the Employee's employment with the Company
had continued.
(b) Other Forms of Termination. Upon a termination of an Employee's
employment for any reason other than death, disability or retirement or in
other circumstances specified by the Committee, and prior to the vesting or
lapsing of restrictions on Restricted Stock, the right to any portion of
the Restricted Stock Award that has not vested or that remains subject to
restrictions on the date of such termination of employment shall be
forfeited.
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SECTION 10. OTHER PROVISIONS APPLICABLE TO AWARDS
10.1 Transferability. Unless the agreement evidencing an Award (or an
amendment thereto authorized by the Committee) expressly states that the Award
is transferable as provided hereunder, no Award granted under the Plan, nor
any interest in such Award, may be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner prior to the vesting or
lapse of any and all restrictions applicable thereto, other than by will or
the laws of descent and distribution. The Committee may in its sole discretion
grant an Award or amend an outstanding Award to provide that the Award is
transferable or assignable to a member or members of the Employee's "family,"
as such term is defined under Code Section 267(c)(4), or to a trust for the
benefit of a member or members of the Employee's family, or to a partnership
whose only partners are members of the Employee's family, or to a charitable
institution, provided that (i) no consideration is given in connection with
the transfer of such Award, and (ii) following any such transfer or assignment
the Award will remain subject to substantially the same terms applicable to
the Award while held by the Employee, as modified as the Committee in its sole
discretion shall determine appropriate, and the Participant shall execute an
agreement agreeing to be bound by such terms.
10.2 Qualifying Performance Criteria. For purposes of this Plan, the term
"Qualifying Performance Criteria" shall mean any one or more of the following
performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or
subsidiary, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target,
to previous years' results or to a designated comparison group, in each case
as specified by the Committee in the Award: (a) cash flow, (b) earnings per
share (including earnings before interest, taxes and amortization), (c) return
on equity, (d) total stockholder return, (e) return on capital, (f) return on
assets or net assets, (g) revenue, (h) income or net income, (i) operating
income or net operating income, (j) operating profit or net operating profit,
(k) operating margin, (l) return on operating revenue, and (m) market share or
circulation.
10.3 Dividends. Unless otherwise provided by the Committee, no adjustment
shall be made in Shares issuable under Awards on account of cash dividends
which may be paid or other rights which may be issued to the holders of Shares
prior to their issuance under any Award. The Committee shall specify whether
dividends or dividend equivalent amounts shall be paid to any Participant with
respect to the Shares subject to any Award that have not vested or been issued
or that are subject to any restrictions or conditions on the record date for
dividends.
10.4 Consideration for Issuance of Shares. Any issuance of Shares may be
conditioned upon payment of an amount equal to the minimum amount, if any,
required by applicable law for the issuance of such Shares. The absence of any
such condition shall be deemed to reflect a determination
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by the Committee that non-cash consideration in an amount at least equal to
the minimum amount, if any, required by law has been or will be received prior
to the issuance of such Shares.
10.5 Conditions for Issuance of Awards. The Committee may, in its sole
discretion and on such terms as it may specify, require as a condition to the
grant of any Award that the Employee surrender for cancellation some or all of
any previously granted employee benefit arrangement (including other Awards),
or any rights under any such employee benefit arrangement. Any such Award
which is conditioned upon the surrender and cancellation of another employee
benefit arrangement or of rights thereunder may contain such other terms as
the Committee deems appropriate and shall be subject to such terms without
regard to number of Shares (if any), exercise or purchase price, term or other
conditions of the surrendered arrangement or rights.
10.6 Agreements Evidencing Awards. The Committee shall, subject to
applicable law, determine the date an Award is deemed to be granted, which for
purposes of this Plan shall not be affected by the fact that an Award is
contingent on subsequent stockholder approval of the Plan. The Committee or,
except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements evidencing Awards under this Plan and may,
but need not, require as a condition to any such agreement's effectiveness
that such agreement be executed by the Participant and that such Participant
agree to such further terms and conditions as specified in such agreement,
including without limitation a requirement that the Participant agree to
submit any dispute with the Company related to the Participant's employment to
binding arbitration, a requirement that the Participant not compete with the
Company and/or a requirement that the Participant not participate in any
Change of Control Transaction. The grant of an Award under this Plan shall not
confer any rights upon the Participant holding such Award other than such
terms, and subject to such conditions, as are specified in this Plan as being
applicable to such type of Award (or to all Awards) or as are expressly set
forth in the Agreement evidencing such Award.
10.7 Tandem Stock or Cash Rights. Either at the time an Award is granted or
by subsequent action, the Committee may, but need not, provide that an Award
shall contain as a term thereof, a right, either in tandem with the other
rights under the Award or as an alternative thereto, of the Participant to
receive, without payment to the Company, a number of Shares, cash or a
combination thereof, the amount of which is determined by reference to the
value of the Award.
SECTION 11. CHANGES IN CAPITAL STRUCTURE
11.1 No Preferential Rights. The existence of outstanding Awards shall not
affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations,
exchanges, or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
any Shares or other
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securities or subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Shares or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
11.2 Adjustment in Shares. If the outstanding securities of the class then
subject to this Plan are increased, decreased or exchanged for or converted
into cash, property or a different number or kind of shares or securities, or
if cash, property or shares or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification,
dividend (other than a regular, quarterly cash dividend) or other
distribution, stock split, reverse stock split, spin-off or the like, or if
substantially all of the property and assets of the Company are sold, then,
unless the terms of such transaction shall provide otherwise, the Committee
shall make appropriate and proportionate adjustments in (i) the number and
type of shares or other securities or cash or other property that may be
acquired pursuant to Awards theretofore granted under this Plan and the
exercise or settlement price of such Awards, provided, however, that such
adjustment shall be made in such a manner that will not affect
the status of any Award intended to qualify as an ISO under Code Section 422
or as "performance based compensation" under Code Section 162(m), and (ii) the
maximum number and type of shares or other securities that may be issued
pursuant to such Awards thereafter granted under this Plan.
SECTION 12. CHANGE OF CONTROL
12.1 Effect of Change of Control. The Committee may through the terms of the
Award or otherwise provide that any or all of the following shall occur,
either immediately upon the Change of Control or a Change of Control
Transaction, or upon termination of the Employee's employment following a
Change of Control or a Change of Control Transaction: (a) in the case of an
Option, the Participant's ability to exercise any portion of the Option not
previously exercisable, (b) in the case of an Annual Incentive Bonus, the
right to receive a payment equal to the target amount payable or, if greater,
a payment based on performance through a date determined by the Committee
prior to the Change of Control, and (c) in the case of Shares issued in
payment of any Annual Incentive Bonus, and/or in the case of Performance Stock
or Restricted Stock, the lapse and expiration on any conditions to the grant,
issuance, retention, vesting or transferability of, or any other restrictions
applicable to, such Award. The Committee also may, through the terms of the
Award or otherwise, provide for an absolute or conditional exercise, payment
or lapse of conditions or restrictions on an Award which shall only be
effective if, upon the announcement of a Change of Control Transaction, no
provision is made in such Change of Control Transaction for the exercise,
payment or lapse of conditions or restrictions on the Award, or other
procedure whereby the Participant may realize the full benefit of the Award.
A-17
<PAGE>
12.2 Definitions. Unless the Committee or the Board shall provide otherwise,
"Change of Control" shall mean an occurrence of any of the following events:
(a) an acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "person or group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 under the Exchange Act) of more than fifty percent (50%)
of the combined voting power of the Company's then outstanding Voting
Securities; (b) the Board ceases for any reason to have at least a majority of
"unaffiliated directors" (defined as all members of the Board except those who
are or were proposed for nomination as a member of the Board by, or are
otherwise "affiliated" or "associated" (as those terms are used for purposes
of Rule 12b-2 under the Exchange Act) with a Person who has Beneficial
Ownership of ten percent (10%) or more of the combined voting power of the
Company (except to the extent such Person had such Beneficial Ownership prior
to the effective date of the Plan)); (c) approval by the stockholders of (i) a
merger, consolidation or reorganization involving the Company, unless either
(A) the stockholders of the Company immediately before such merger,
consolidation or reorganization own, directly or indirectly immediately
following such merger, consolidation or reorganization, at least seventy-five
percent (75%) of the combined voting power of any company resulting from such
merger, consolidation or reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership immediately before such
merger, consolidation or reorganization, or (B) at least a majority of the
members of the Board of Directors of the Surviving Corporation are
Unaffiliated Directors who were directors of the Company immediately prior to
the execution of the agreement providing for such merger, consolidation or
reorganization, and (C) the Surviving Corporation shall adopt or assume this
Plan and a Participant's Awards under the Plan, or (ii) a complete liquidation
or dissolution of the Company; or (d) such other events as the Committee or
the Board from time to time may specify. "Change of Control Transaction" shall
mean any tender offer, offer, exchange offer, solicitation, merger,
consolidation, reorganization or other transaction which is intended to or
reasonably expected to result in a change of control.
SECTION 13. TAXES
13.1 Withholding Requirements. The Committee may make such provisions or
impose such conditions as it may deem appropriate for the withholding or
payment by the Employee or Participant, as appropriate, of any taxes which it
determines are required in connection with any Awards granted under this Plan,
and a Participant's rights in any Award are subject to satisfaction of such
conditions.
13.2 Payment of Withholding Taxes. Notwithstanding the terms of Section 13.1
hereof, the Committee may provide in the agreement evidencing an Award or
otherwise that all or any portion
A-18
<PAGE>
of the taxes required to be withheld by the Company or, if permitted by the
Committee, desired to be paid by the Participant, in connection with the
exercise of a Nonqualified Option or the exercise, vesting, settlement or
transfer of any other Award shall be paid or, at the election of the
Participant, may be paid by the Company withholding shares of the Company's
capital stock otherwise issuable or subject to such Award, or by the
Participant delivering previously owned shares of the Company's capital stock,
in each case having a fair market value equal to the amount required or
elected to be withheld or paid. Any such elections are subject to such
conditions or procedures as may be established by the Committee and may be
subject to disapproval by the Committee.
SECTION 14. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan or any agreement
evidencing an Award made under the Plan, but no amendment or alteration shall
be made which would impair the rights of any Award holder, without such
holder's consent, under any Award theretofore granted, provided that no such
consent shall be required if the Committee determines in its sole discretion
and prior to the date of any Change of Control that such amendment or
alteration is not reasonably likely to significantly diminish the benefits
provided under such Award, or that any such diminishment has been adequately
compensated. The Committee may determine whether or not any amendment to a
previously granted Award is, for purposes of the Plan, deemed to be a
cancellation and new grant of the Award. Notwithstanding the foregoing, if an
amendment to the Plan would affect the ability of Awards granted under the
Plan to comply with Rule 16b-3 under the Exchange Act or Section 162(m) or 422
or other applicable provisions of the Code, and if the Committee determines
that it is necessary or desirable for any Awards theretofore or thereafter
granted that are intended to comply with any such provision to so comply, or
otherwise is required under any applicable law, rule or regulation, the
amendment shall be approved by the Company's stockholders to the extent
required for such Awards to continue to comply with Rule 16b-3 under the
Exchange Act, Section 162(m) or Section 422 of the Code, or other applicable
provisions of or rules under the Code.
SECTION 15. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
The Plan, the grant and exercise of Awards thereunder, and the obligation of
the Company to sell, issue or deliver Shares under such Awards, shall be
subject to all applicable federal, state and foreign laws, rules and
regulations and to such approvals by any governmental or regulatory agency as
may be required. The Company shall not be required to register in a
Participant's name or deliver any Shares prior to the completion of any
registration or qualification of such Shares under any federal, state or
foreign law or any ruling or regulation of any government body which the
Committee shall, in its sole discretion, determine to be necessary or
advisable. This Plan is intended to constitute an unfunded arrangement for a
select group of management or other key employees.
A-19
<PAGE>
Without amending the Plan, the Committee may grant Awards to Employees who
are foreign nationals or are employed in foreign countries on such terms and
conditions different from those specified in the Plan as may in the judgment
of the Committee be necessary or desirable to foster and promote achievement
of the purposes of the Plan, and, in furtherance of such purposes, the
Committee may make such modifications, amendments, procedures, and the like,
and may waive such requirements, conditions or terms, as may be necessary or
advisable to comply with provisions of laws or practices of other countries in
which the Company operates or has employees.
SECTION 16. PURCHASE FOR INVESTMENT
No Option shall be exercisable unless a registration statement with respect
to the Option is effective or the Company has determined that such
registration is unnecessary. Unless the Awards and Shares covered by this Plan
have been registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary, each person
receiving an Award and/or Shares pursuant to any Award may be required by the
Company to give a representation in writing that such person is acquiring such
Shares for his or her own account for investment and not with a view to, or
for sale in connection with, the distribution of any part thereof.
SECTION 17. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted pursuant to this
Plan shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual's employment at any time. The Award agreements may contain such
provisions as the Committee may approve with reference to the effect of
approved leaves of absence.
SECTION 18. LIABILITY OF COMPANY
The Company which is in existence or hereafter comes into existence shall
not be liable to a Participant, an Employee or other persons as to:
18.1 The Non-Issuance of Shares. The non-issuance or sale of Shares as to
which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder; and
18.2 Tax Consequences. Any tax consequence expected, but not realized, by
any Employee, Participant or other person due to the receipt, exercise or
settlement of any Award granted hereunder.
A-20
<PAGE>
SECTION 19. EFFECTIVENESS AND EXPIRATION OF PLAN
The Plan shall be effective on the date the Board adopts the Plan. All
Awards granted under this Plan are subject to, and may not be exercised
before, the approval of this Plan by the stockholders prior to the first
anniversary date of the effective date of the Plan, by the affirmative vote of
the holders of a majority of the outstanding shares of the Company present, or
represented by proxy, and entitled to vote, at a meeting of the Company's
stockholders or by written consent in accordance with the laws of the State of
Delaware; provided that if such approval by the stockholders of the Company is
not forthcoming, all Awards previously granted under this Plan shall be void.
If the stockholders of the Company fail to approve the Plan within twelve
months of the date the Board approved the Plan, the Plan shall terminate and
all Awards previously granted under the Plan shall become void and of no
effect. No Award granted under this Plan shall have a term of more than ten
years from the date it is granted. No Awards shall be granted pursuant to the
Plan more than ten (10) years after the effective date of the Plan.
SECTION 20. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as it or they may deem desirable, including without
limitation, the granting of restricted stock or stock options otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
SECTION 21. GOVERNING LAW
This Plan and any agreements hereunder shall be interpreted and construed in
accordance with the laws of the State of Delaware and applicable federal law.
The Committee may provide that any dispute as to any Award shall be presented
and determined in such forum as the Committee may specify, including through
binding arbitration. Any reference in this Plan or in the agreement evidencing
any Award to a provision of law or to a rule or regulation shall be deemed to
include any successor law, rule or regulation of similar effect or
applicability.
A-21
<PAGE>
EXHIBIT B
THE TIMES MIRROR COMPANY
NON-EMPLOYEE DIRECTORS STOCK PLAN
1. Purpose of the Plan. Under this Non-Employee Directors Stock Plan (the
"Directors Plan") of The Times Mirror Company, a Delaware corporation (the
"Company"), shares of the Company's Series A Common Stock, $1.00 par value
("Common Stock"), shall be issued to participants in partial compensation for
their service as directors of the Company. This Directors Plan is designed to
promote the long-term growth and financial success of the Company by enabling
the Company to attract, retain and motivate such persons by providing for or
increasing their proprietary interest in the Company.
2. Definitions. For purposes of this Directors Plan:
(a) The term "Announcement Date Market Price" shall mean, with respect to
any Payment Date, the Fair Market Value of the Common Stock of the Company
over the five business days preceding the Payment Date.
(b) The term "Board" shall mean the Company's Board of Directors.
(c) The term "Fair Market Value" shall mean, as of any date, and unless
the Committee shall specify otherwise, the mean between the high and the
low market prices for the Common Stock reported for that date on the
composite tape for securities listed on the New York Stock Exchange or, if
the Common Stock did not trade on the New York Stock Exchange on the date
in question, then for the next preceding date for which the Common Stock
traded on the New York Stock Exchange.
(d) The term "Participant" shall mean any person who on a Payment Date is
a Director on the Board and is not an employee of the Company or a
subsidiary of the Company. For purposes of this Section 2(d), unless the
Board provides otherwise, a person shall not be considered an employee
solely by reason of serving as Chairman of the Board.
(e) The term "Payment Date" shall mean the date on which directors'
retainer fees are paid by the Company.
(f) The term "Retainer Amount" shall mean one-half of the aggregate
dollar amount declared by the Board to be payable as a quarterly directors'
retainer, including any retainer for chairing the Board or a Committee of
the Board, to each non-employee director of the Company, as determined from
time to time by the Board.
(g) The term "Shares" shall mean shares of Common Stock granted under
this Plan.
B-1
<PAGE>
3. Effective Date. This Directors Plan shall be effective for the first
Payment Date occurring after approval of this Directors Plan by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company present, or represented by proxy, and entitled to vote at a meeting of
the Company's stockholders or by written consent in accordance with the laws
of the State of Delaware; provided, that if such approval by the stockholders
of the Company is not forthcoming, this Directors Plan shall be of no effect.
Common Stock may not be issued under this Directors Plan after termination of
this Directors Plan by the Board, after issuance of all of the Shares
authorized for issuance under this Directors Plan or more than ten years after
the date of stockholder approval of this Directors Plan, whichever is earlier.
4. Plan Operation. This Directors Plan is intended to operate in a manner
that meets the requirements of a formula plan under Rule 16b-3 (or its
successor) adopted under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in a manner that does not affect the status of
Participants as "disinterested administrators" under such Rule 16b-3.
Accordingly this Directors Plan is intended to be self-governing and requires
no discretionary action by any administrative body with regard to any
transaction under this Directors Plan. Subject to the foregoing, this Plan
shall be administered by the Executive Personnel and Compensation Committee of
the Board (or any successor committee designated by the Board), and all
decisions, determinations and interpretations by the Committee regarding the
Plan shall be final and binding on all current, future and former
Participants. Such Committee may delegate to one or more of its members or to
any person or persons such ministerial duties as it may deem advisable. To the
extent any provision of this Directors Plan or action taken hereunder fails to
so operate under Rule 16b-3, such provision or action shall be deemed null and
void and shall be conformed so as to so operate, to the extent permitted by
law and deemed advisable by the Board.
5. Stock Subject to Directors Plan. The maximum number of Shares that may be
issued hereunder shall be 500,000, subject to adjustments under Section 6.
6. Adjustments. If the outstanding securities of the class then subject to
this Plan are increased, decreased or exchanged for or converted into cash,
property or a different number or kind of shares or securities, or if cash,
property or shares or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification,
dividend (other than a regular, quarterly cash dividend) or other
distribution, stock split, reverse stock split, spin-off or the like, or if
substantially all of the property and assets of the Company are sold, then,
unless the terms of such transaction shall provide otherwise, the Board shall
make an appropriate adjustment in the number and/or type of shares or
securities which may thereafter be issued under this Directors Plan.
B-2
<PAGE>
7. Stock Grants. Commencing on the first Payment Date for which this
Directors Plan is effective, and on each Payment Date thereafter during the
term of this Directors Plan, each Participant shall be granted a number of
Shares equal to the Retainer Amount divided by the Announcement Date Market
Price, rounded up to the nearest whole number of Shares. If on any date upon
which Shares are to be granted under this Directors Plan the number of Shares
remaining available under the Directors Plan is less than the number of Shares
required for all grants to be made on such date, then a proportionate amount
of such available number of Shares shall be granted to each Participant, and
in lieu of the Shares that otherwise would be issuable, the Participants shall
be paid an amount in cash equal to the Retainer Amount minus the aggregate
Announcement Date Market Price of the Shares then issued to each Participant.
8. Restrictions on Shares. If and to the extent that such is necessary in
order for the grant of Shares under this Directors Plan to be exempt from
Section 16(b) of the Exchange Act, Shares granted to a Participant under this
Plan shall not be transferable until six months after the date of grant.
9. Amendment and Termination. The Board may alter, amend, suspend, or
terminate this Directors Plan, provided that no such action shall deprive any
Participant, without his or her consent, of any Shares theretofore issued
under this Directors Plan, and provided further that the provisions of this
Directors Plan designating persons eligible to participate in the Directors
Plan and specifying the Retainer Amount and the amount and timing of grants
under this Directors Plan shall not be amended more than once every six months
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder, unless such
restriction on amendments to this Directors Plan is not necessary in order for
the Participants to remain "disinterested administrators" under Exchange Act
Rule 16b-3.
10. Taxes. The Board may make such provisions or impose such conditions as
it may deem appropriate for the withholding or payment by a Participant of any
taxes which it determines are necessary or appropriate in connection with any
issuance of Shares under this Plan, and a Participant's rights in any Shares
are subject to satisfaction of such conditions. The Company and any affiliate
of the Company shall not be liable to a Participant or any other persons as to
any tax consequence expected, but not realized, by any Participant or other
person due to the receipt of any Shares granted hereunder.
11. Compliance with Law. Shares shall not be issued under this Directors
Plan unless and until counsel for the Company shall be satisfied that any
conditions necessary for such issuance to comply with applicable federal,
state or local tax, securities or other laws or rules or applicable securities
exchange requirements have been fulfilled.
B-3
<PAGE>
12. Governing Law; Miscellaneous. This Directors Plan and any rights
hereunder shall be interpreted and construed in accordance with the laws of
the State of Delaware and applicable federal law. Neither this Directors Plan
nor any action taken pursuant thereto shall be construed as giving any
Participant any right to be retained in the service of the Company or
nominated for re-election to the Board.
13. Arbitration. Any claim, dispute or other matter in question of any kind
relating to this Plan shall be settled by arbitration in accordance with the
Rules of the American Arbitration Association, which proceedings shall be held
in the city in which the Company's executive offices are located. Notice of
demand for arbitration shall be made in writing to the opposing party and to
the American Arbitration Association within a reasonable time after the claim,
dispute or other matter in question has arisen. In no event shall a demand for
arbitration be made after the date when the applicable statute of limitations
would bar the institution of a legal or equitable proceeding based on such
claim, dispute or other matter in question. The decision of the arbitrators
shall be final and may be enforced in any court of competent jurisdiction.
B-4
<PAGE>
TIMES MIRROR SQUARE, LOS ANGELES, CALIFORNIA 90053
[LOGO OF TIMES MIRROR]
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TIME THURSDAY, MAY 9, 1996
AT 11:00 IN THE MORNING
PLACE HARRY CHANDLER AUDITORIUM
TIMES MIRROR SQUARE
FIRST AND SPRING STREETS
IN LOS ANGELES
<PAGE>
PROXY PROXY
TO: PARTICIPANTS IN THE TIMES MIRROR SAVINGS PLUS PLAN AND THE TIMES MIRROR
EMPLOYEE STOCK OWNERSHIP PLAN
THE TIMES MIRROR SAVINGS PLUS PLAN (THE "SPP") AND THE TIMES MIRROR EMPLOYEE
STOCK OWNERSHIP PLAN (THE "ESOP") PROVIDE THAT THE TRUSTEE SHALL VOTE ALL
SHARES OF TIMES MIRROR COMMON STOCK AND ALL SHARES OF CONVERSION PREFERRED
STOCK, SERIES B HELD IN THE SPP (INCLUDING PAYSOP) AND ALL SHARES ALLOCATED TO
PARTICIPANTS' ACCOUNTS UNDER THE ESOP AT ANY MEETING OF SHAREHOLDERS OF THE
COMPANY IN ACCORDANCE WITH WRITTEN INSTRUCTIONS FROM THE PARTICIPANTS. PLEASE
MARK YOUR VOTING INSTRUCTIONS FOR THE MAY 9, 1996 ANNUAL MEETING OF
SHAREHOLDERS OR ANY ADJOURNMENT THEREOF IN THE SPACES PROVIDED ON THE REVERSE
SIDE OF THIS CARD, SIGN AND DATE THE FORM AND RETURN IT TO THE COMPANY'S
TRANSFER AGENT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. PLEASE RETURN THIS
CARD PROMPTLY.
THE TRUSTEE
YOU MAY RECEIVE OTHER INSTRUCTION CARDS FOR SHARES REGISTERED IN A DIFFERENT
MANNER. IF SO, PLEASE SIGN AND RETURN ALL SUCH INSTRUCTION CARDS IN THE
ENCLOSED ENVELOPE.
SERIES A AND SERIES C COMMON STOCK CONVERSION PREFERRED STOCK, SERIES B
TO: THE NORTHERN TRUST COMPANY TRUSTEE FOR THE TIMES MIRROR SAVINGS PLUS PLAN
AND THE TIMES MIRROR EMPLOYEE STOCK OWNERSHIP PLAN
PLEASE VOTE ALL SHARES OF TIMES MIRROR SERIES A AND SERIES C COMMON STOCK AND
ALL SHARES OF CONVERSION PREFERRED STOCK, SERIES B HELD IN MY ACCOUNT UNDER
THE TIMES MIRROR SAVINGS PLUS PLAN (INCLUDING PAYSOP) AND ALL SUCH SHARES
ALLOCATED TO MY ACCOUNT UNDER THE TIMES MIRROR EMPLOYEE STOCK OWNERSHIP PLAN
AS FOLLOWS:
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
TIMES MIRROR
IMPORTANT: PLEASE MARK BOXES TO GIVE VOTING INSTRUCTIONS (SEE NOTE BELOW). [_]
[ ]
1. ELECTION OF DIRECTORS--Nominees: CLASS I: C. Michael Armstrong, Gwendolyn
Garland Babcock, Donald R. Beall, Joan A. Payden, Richard T. Schlosberg
III, Warren B. Williamson
For All
For Withhold Except -------------------
[_] [_] [_] Nominee Exception
2. Approval of 1996 Management Incentive Plan
For Against Abstain
[_] [_] [_]
3. Approval of Non-Employee Directors Stock Plan
For Against Abstain
[_] [_] [_]
4. Ratifying the appointment of Ernst & Young LLP as Independent Auditors for
the Company and its subsidiaries
For Against Abstain
[_] [_] [_]
Dated: _________________________________________________________________ , 1996
- -------------------------------------------------------------------------------
Please sign exactly as imprinted at left
NOTE: Your voting instructions are solicited for shares in your Savings Plus
Plan account (including PAYSOP) and shares allocated to your account under the
ESOP. All such shares will be voted as you direct, but if you fail to return
your instructions your shares held in the ESOP and in the PAYSOP portion of
the Savings Plus Plan will be voted at the discretion of the Trustee. Your
shares in the Savings Plus Plan, exclusive of the PAYSOP account, will remain
unvoted and will be recorded as abstentions if you fail to return your
instructions.
<PAGE>
PROXY PROXY
[LOGO OF TIMES MIRROR]
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS -- MAY 9, 1996
THE UNDERSIGNED, REVOKING ALL PRIOR PROXIES, HEREBY APPOINTS MARK H. WILLES
AND RICHARD T. SCHLOSBERG III, OR EACH OR EITHER OF THEM, PROXIES FOR THE
UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE ALL SHARES OF SERIES A
COMMON STOCK, SERIES C COMMON STOCK AND CONVERSION PREFERRED STOCK, SERIES B
WHICH THE UNDERSIGNED IS ENTITLED TO VOTE AT THE ANNUAL MEETING OF
SHAREHOLDERS OF THE TIMES MIRROR COMPANY TO BE HELD IN LOS ANGELES, CALIFORNIA
ON MAY 9, 1996 AT 11:00 A.M., PACIFIC DAYLIGHT TIME, OR AT ANY ADJOURNMENT
THEREOF, UPON SUCH BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY
ADJOURNMENT THEREOF INCLUDING, WITHOUT LIMITING SUCH GENERAL AUTHORIZATION,
THE PROPOSALS DESCRIBED ON THE REVERSE SIDE OF THIS CARD AND IN THE
ACCOMPANYING PROXY STATEMENT.
UNLESS OTHERWISE SPECIFIED ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS, FOR APPROVAL OF THE 1996 MANAGEMENT INCENTIVE PLAN,
FOR APPROVAL OF THE NON-EMPLOYEE DIRECTORS STOCK PLAN AND FOR RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP.
SERIES A AND SERIES C COMMON STOCK CONVERSION PREFERRED STOCK, SERIES B
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
TIMES MIRROR
IMPORTANT: PLEASE MARK BOXES TO GIVE VOTING INSTRUCTIONS. [_]
[ ]
1. ELECTION OF DIRECTORS--Nominees: CLASS I: C. Michael Armstrong, Gwendolyn
Garland Babcock, Donald R. Beall, Joan A. Payden, Richard T. Schlosberg
III, Warren B. Williamson
For All
For Withhold Except ----------------------
[_] [_] [_] Nominee Exception
2. Approval of 1996 Management Incentive Plan
For Against Abstain
[_] [_] [_]
3. Approval of Non-Employee Directors Stock Plan
For Against Abstain
[_] [_] [_]
4. Ratifying the appointment of Ernst & Young LLP as Independent Auditors for
the Company and its subsidiaries
For Against Abstain
[_] [_] [_]
The undersigned agrees that said proxies may vote in accordance with their
discretion with respect to any other matters which may properly come before
the meeting. Should any nominee for director become unavailable, discretionary
authority is conferred to vote for a substitute. The undersigned instructs
such proxies to vote as directed on the reverse side.
This Proxy should be dated, signed by the shareholder exactly as printed at
the left and returned promptly in the enclosed envelope. Persons signing in a
fiduciary capacity should so indicate.
Dated: _________________________________________________________________ , 1996
- -------------------------------------------------------------------------------
(Signature)
- -------------------------------------------------------------------------------
(Signature if held jointly)
[_] I PLAN TO ATTEND THE MEETING. [_] PLEASE SEND PARKING CARD.
