E.W. Scripps Company DEF 14A
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY
STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES
EXCHANGE ACT OF 1934
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Check the appropriate box:
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o Preliminary
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for Use of the Commission Only (as permitted by
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to Section 240.14a-11c or Section 240.14a-12
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The E.W. Scripps Company
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(Name of Person(s) Filing Proxy Statement)
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TABLE OF CONTENTS
THE E. W. SCRIPPS COMPANY
Scripps Center
312 Walnut Street
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 14, 2005
TO THE SHAREHOLDERS OF THE E. W. SCRIPPS COMPANY
The Annual Meeting of the Shareholders of The E. W. Scripps
Company (the Company) will be held at the Queen City
Club, Cincinnati, Ohio, on Thursday, April 14, 2005 at
2:00 p.m., local time, for the following purposes:
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1. |
to fix the number of directors and to elect persons as directors
of the Company; |
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2. |
to approve and amend the Companys Long-Term Incentive Plan
to reserve 6,000,000 additional Class A Common shares for
issuance under the Plan and to add certain provisions relating
to performance measures; |
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3. |
to approve and amend the Companys Executive Bonus Plan; |
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4. |
to approve a technical amendment to the Companys Code of
Regulations; and |
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5. |
to transact such other business as may properly come before the
meeting. |
The board of directors has fixed the close of business on
February 18, 2005 as the record date for the determination
of shareholders who are entitled to notice of and to vote at the
meeting and any adjournment thereof.
We encourage you to attend the meeting and vote your shares in
person. If you plan to attend the meeting and need special
assistance because of a disability, please contact the corporate
secretarys office.
We have enclosed the 2004 Annual Report, including financial
statements, and the Proxy Statement with this Notice of Annual
Meeting.
It is important that your shares be represented at the meeting,
whether or not you are personally able to attend. Registered
shareholders can vote their shares by using a toll-free
telephone number or the Internet. Instructions for using these
convenient services are set forth on the enclosed proxy card. Of
course, you may still vote your shares by marking your vote on
the enclosed proxy card, signing, dating it and mailing it in
the envelope provided. Returning your executed proxy card, or
voting your shares using the toll-free number or the Internet,
will not affect your right to attend the meeting and vote your
shares in person.
Your proxy is being solicited by the board of directors.
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M. Denise
Kuprionis, Esq.
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Vice President |
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Corporate Secretary/Director of Legal Affairs |
March 23, 2005
The E. W. Scripps Company
312 Walnut Street
Cincinnati, Ohio 45202
PROXY STATEMENT
2005 ANNUAL MEETING
April 14, 2005
This proxy statement, together with the accompanying notice of
meeting, proxy card and annual report, is being mailed to
shareholders on or about March 23, 2005. It is
furnished in connection with the solicitation of proxies for use
at the Annual Meeting of Shareholders of The E. W. Scripps
Company, an Ohio corporation (the Company), which
will be held on Thursday, April 14, 2005.
The close of business on February 18, 2005 has been fixed
as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
On February 18, 2005 the Company had outstanding
126,590,398 Class A Common Shares, $.01 par value per
share (Class A Common Shares), and 36,668,226
Common Voting Shares, $.01 par value per share
(Common Voting Shares). Holders of Class A
Common Shares are entitled to elect the greater of three or
one-third of the directors of the Company but are not entitled
to vote on any other matters except as required by Ohio law.
Holders of Common Voting Shares are entitled to elect all
remaining directors and to vote on all other matters requiring a
vote of shareholders. Each Class A Common Share and Common
Voting Share is entitled to one vote upon matters on which such
class of shares is entitled to vote.
PROPOSAL 1
Election of Directors
A board of twelve directors is to be elected, four by the
holders of Class A Common Shares voting separately as a
class and eight by the holders of Common Voting Shares voting
separately as a class. In the election, the nominees receiving
the greatest number of votes will be elected. All directors will
hold office until the next Annual Meeting of Shareholders.
Each proxy for Class A Common Shares executed and returned
by a holder of such shares will be voted for the election of the
four directors hereinafter shown as nominees for such class of
shares, unless otherwise indicated on such proxy. Each proxy for
Common Voting Shares executed and returned by a holder of such
shares will be voted for the election of the eight directors
hereinafter shown as nominees for such class of shares, unless
otherwise indicated on such proxy. Although the board of
directors does not contemplate that any of the nominees
hereinafter named will be unavailable for election, in the event
that any such nominee is unable to serve, the proxies will be
voted for the remaining nominees and for such other person(s),
if any, as the board may propose.
1
REPORT ON THE NOMINEES FOR ELECTION TO THE BOARD OF
DIRECTORS
The following table sets forth certain information as to each of
the nominees for election to the board of directors.
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Director |
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Principal Occupation or Occupation/Business |
Name |
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Age |
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Since |
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Experience for Past Five Years |
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Nominees for Election by Holders of Class A Common
Shares |
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David A. Galloway (1)
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61 |
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2002 |
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President and Chief Executive Officer of Torstar Corporation
from 1988 until his retirement in May 2002 (a media company
listed on the Toronto Stock Exchange). |
Nicholas B. Paumgarten (2)
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59 |
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1988 |
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Managing Director of J.P. Morgan Chase and Chairman of
J.P. Morgan Corsair II Capital Partners L.P. since
February 1992 (an investment banking firm and an investment
fund). |
Ronald W. Tysoe (3)
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51 |
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1996 |
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Vice Chairman since December 1997 and Vice Chairman and Chief
Financial Officer from April 1990 to December 1997 of Federated
Department Stores, Inc. |
Julie A. Wrigley
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56 |
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1997 |
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President and CEO of Wrigley Investments, LLC since March 1999,
Chairman and CEO of Wrigley Management Inc. from 1995 through
1998, Assistant to the President/CEO of Wm. Wrigley Jr. Company
from 1994 through 1998, Investment Advisor & Manager of
Wrigley Family Trusts and Estates from 1977 through 1998. |
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Nominees for Election by Holders of Common Voting Shares |
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William R. Burleigh (4)
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69 |
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1990 |
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Chairman of the Company since May 1999. Chief Executive Officer
from May 1996 to September 2000, President from August 1994 to
January 2000, Chief Operating Officer from May 1994 to May 1996,
Executive Vice President from March 1990 through May 1994 and
Senior Vice President/Newspapers and Publishing from September
1986 to March 1990. |
John H. Burlingame (5)
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71 |
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1988 |
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Retired Partner since January 2003, Active Retired Partner from
January 2000 to December 2002, Senior Partner from January 1998
to December 1999, Partner from June 1997 through December 1997
and Executive Partner from 1982 through 1997 of Baker &
Hostetler LLP (law firm). |
Kenneth W. Lowe (6)
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54 |
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2000 |
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President and Chief Executive Officer of the Company since
October 2000, and President and Chief Operating Officer from
January 2000 to September 2000. Chairman and CEO of Scripps
Networks, a subsidiary of the Company, from 1994 to January 2000. |
Jarl Mohn (7)
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53 |
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2002 |
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President and Chief Executive Officer of Liberty Digital, Inc.
from January 1999 to March 2002. President and CEO of E!
Entertainment Television from January 1990 to December 1998. |
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Director |
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Principal Occupation or Occupation/Business |
Name |
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Age |
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Since |
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Experience for Past Five Years |
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Jeffrey Sagansky (8)
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53 |
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2003 |
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Vice Chairman of Paxson Communications from December 2002 to
August 2003. President and CEO of Paxson from 1998 to December
2002. Co-President, Sony Pictures Entertainment, from 1996 to
1998. President of CBS Entertainment 1990 to 1994. |
Nackey E. Scagliotti (5)(9)
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59 |
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1999 |
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Chairman of the Board of Directors since May 1999 and Assistant
Publisher from 1996 to May 1999 of The Union Leader Corporation
(New Hampshire publisher of daily, Sunday and weekly
newspapers). Former President (1999 through 2003) and Publisher
(1999 and 2000) of Neighborhood Publications, Inc. (New
Hampshire publisher of weekly newspapers). |
Edward W. Scripps (5)(9)
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46 |
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1998 |
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Lifetime Emeritus Trustee of the Scripps Howard Foundation.
Trustee of the Scripps Howard Foundation from August 2001 to
July 2004 and from 1994 through 1998. Vice President of Scripps
Howard Foundation from 1995 through 1998. News Director at
KJRH-TV, a division of a subsidiary of the Company from February
1983 through September 1993. |
Paul K. Scripps (10)(9)
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59 |
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1986 |
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Vice President/Newspapers of the Company from November 1997 to
December 2001 and Chairman from December 1989 to June 1997 of a
subsidiary of the Company. |
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(1) |
Mr. Galloway is chairman of the board of directors of the
Bank of Montreal, and a director of Toromont Industries (a
Caterpillar machinery dealer and gas compression company),
Harris Bankmont (a midwest bank), and Hudson Bay Company (a
retail merchandise company). |
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(2) |
Mr. Paumgarten is a director of Compucredit (a credit card
company), Catlin Group Ltd. (a property and casualty reinsurance
company) and Post Properties, Inc. (a real estate investment
trust). |
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(3) |
Mr. Tysoe is a director of Federated Department Stores,
Inc. and Canadian Imperial Bank of Commerce. |
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(4) |
Mr. Burleigh is a director of Ohio National Financial
Services Company (a mutual insurance and financial services
company). |
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(5) |
Mr. Burlingame, Mrs. Scagliotti and Mr. Edward W.
Scripps are trustees of The Edward W. Scripps Trust. |
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(6) |
Mr. Lowe is a director of Fifth Third Bancorp (a midwest
bank). |
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(7) |
Mr. Mohn is a director of LodgeNet (an in-hotel-room movie
provider), CNET (a web-based computer consumer electronics
information service) and XM Satellite Radio Holdings, Inc. (a
satellite radio service provider). |
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(8) |
Mr. Sagansky is a director of Lions Gate
Entertainment (an independent film production and distribution
company). |
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(9) |
Mrs. Scagliotti and Mr. Edward W. Scripps are first
cousins and are income beneficiaries of The Edward W. Scripps
Trust. Mr. Paul K. Scripps is a second cousin to
Mrs. Scagliotti and Mr. Edward W. Scripps. |
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(10) |
Mr. Paul K. Scripps serves as a director of the Company
pursuant to an agreement between The Edward W. Scripps Trust and
John P. Scripps. See Certain Transactions John
P. Scripps Newspapers. |
3
REPORT ON THE BOARD OF DIRECTORS AND ITS COMMITTEES
2004 Board and Committee Meetings
The board held four regularly scheduled meetings and one special
meeting. The following committees of the board held the number
of meetings indicated: Executive, 1; Audit, 6; Compensation and
Incentive Plan, 4; and Nominating & Governance, 4. Each
director attended each of the meetings of the board and the
committees on which he or she served, except one director who
missed one board meeting and one committee meeting.
Committees
Executive Committee. William R. Burleigh (chairman), John
H. Burlingame and Kenneth W. Lowe are the members of the
executive committee which, if necessary, exercises all of the
powers of the board in the management of the business and
affairs of the Company between board meetings except the power
to fill vacancies on the board or its committees.
Audit Committee. Ronald W. Tysoe (chairman), Jeffrey
Sagansky and Julie A. Wrigley are the members of the audit
committee. Mrs. Scagliotti was a member of the audit
committee, but resigned effective October 27, 2004 and took
a position on the nominating & governance committee.
Among other things, the audit committee appoints the independent
auditors each year, reviews the audit plans of both the internal
and independent auditors, evaluates the adequacy of and monitors
compliance with corporate accounting policies, and reviews the
Companys annual and quarterly financial statements. The
internal and independent auditors have unrestricted access to
the audit committee. The committee meets privately with each of
the independent auditors, the internal auditors and management.
The committees charter is available for review on the
Companys Web site, www.scripps.com.
Compensation Committee. David A. Galloway (chairman),
John H. Burlingame, Jarl Mohn, Edward W. Scripps and
Ronald W. Tysoe are the members of the compensation
committee, which oversees all compensation matters relating to
the Companys senior executives. The committees
charter is available for review on the Companys Web site.
Incentive Plan Committee. David A. Galloway (chairman),
Jarl Mohn and Ronald W. Tysoe, three of the Companys
independent directors, are the members of the incentive plan
committee, which approves all awards under the Companys
Long-Term Incentive Plan and approves all performance-based
bonus awards for the Companys senior executives. The
incentive plan committee is a subcommittee of the compensation
committee and meets at the same time as the compensation
committee.
Nominating & Governance Committee. John H.
Burlingame (chairman), William R. Burleigh, Nicholas B.
Paumgarten, Nackey E. Scagliotti and Julie A. Wrigley are the
members of the nominating & governance committee. The
purpose of the committee is to review the size and composition
of the board, to recommend nominees to the board of directors,
to formulate policies of board conduct and to insure that the
board adopts appropriate corporate governance standards. The
committees charter is available for review on the
Companys Web site. The Edward W. Scripps Trust holds a
majority of the Companys Common Voting Shares, which
qualifies the company as a controlled company as
defined by Section 303A of the listing standards of the New
York Stock Exchange. As such, the Company could avail itself of
an exemption such status affords it from compliance with the
Exchanges requirements to have a majority of independent
directors and an independent nominating and corporate governance
committee and an independent compensation committee. The board
of directors has determined that a majority of its board of
directors is independent. When selecting new director nominees,
the committee considers any requirements of applicable law or
listing standards, as well as a candidates strength of
character, judgment, business experience, specific areas of
expertise, factors relating to the composition of the board
(including its size and structure) and principles of diversity.
The committee will review any candidate recommended by the
shareholders of the Company in light of the committees
criteria for selection of new directors. If a shareholder wishes
to recommend a candidate, he or she should send his or her
recommendation, with a description of the candidates
qualifications, to: Chairman, Nominating &
4
Governance Committee, c/o Mrs. M. Denise Kuprionis,
The E. W. Scripps Company, 312 Walnut Street, Suite 2800,
Cincinnati, Ohio 45202. In the past, the committee has hired an
independent consultant to assist with the identification and
evaluation of director nominees and may do so in the future.
REPORT ON THE COMPENSATION OF DIRECTORS
Since 2001, directors who are not employees of the Company have
received an annual fee of $35,000 and an additional $2,000 for
each board of directors meeting they attended. Effective
January 1, 2005, this annual fee was increased to $40,000
and the per meeting fee was increased to $2,500. The only other
increase in board fees in 2005 was an increase in the per
meeting fee paid to members of the audit committee. That fee
increased from $2,000 to $2,500 per meeting. A summary of
all fees paid to non-employee directors follows. Directors who
are employees of the Company do not receive any compensation for
services as directors or committee members.
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At January 1, 2004 |
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At January 1, 2005 |
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Annual retainer for the chairman of the board
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$ |
100,000 |
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$ |
100,000 |
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Annual retainer
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35,000 |
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40,000 |
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Board per meeting fee
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2,000 |
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2,500 |
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Executive Committee per meeting fee
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2,000 |
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2,000 |
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Audit Committee per meeting fee
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2,000 |
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2,500 |
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Compensation Committee per meeting fee
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2,000 |
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2,000 |
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Nominating and Governance Committee per meeting fee
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2,000 |
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2,000 |
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Executive Committee annual chair fee
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3,000 |
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3,000 |
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Audit Committee annual chair fee
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9,000 |
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9,000 |
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Compensation Committee annual chair fee
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6,000 |
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6,000 |
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Nominating & Governance Committee annual chair fee
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3,000 |
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3,000 |
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Consistent with past practice, in April 2005 the non-employee
directors each will receive a nonqualified stock option to
purchase 10,000 of the Companys Class A Common
Shares. The option will be exercisable beginning on the first
anniversary of the grant date and will remain exercisable until
2015. The exercise price will be the Fair Market Value of a
Class A Common Share, as defined in the Plan, on
April 14, 2005, the effective date of the award.
5
REPORT ON THE SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
The following table sets forth certain information with respect
to persons known to management to be the beneficial owners, as
of January 31, 2005, of more than five percent of the
Companys outstanding Class A Common Shares or Common
Voting Shares. Unless otherwise indicated, the persons named in
the table have sole voting and investment power with respect to
all shares shown therein as being beneficially owned by them.
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Common |
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Class A |
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Voting |
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Name and Address Of Beneficial Owner |
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Common Shares |
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Percent |
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Shares |
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Percent |
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The Edward W. Scripps Trust (1)
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39,192,222 |
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30.96 |
% |
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32,080,000 |
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87.49 |
% |
13350 Metro Parkway, Suite 301
Fort Myers, Florida 33912 |
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Paul K. Scripps and
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1,230 |
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% |
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3,232,226 |
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8.81 |
% |
John P. Scripps Trust (2)
P. O. Box 1211
Jamul, California 91935 |
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AXA Financial, Inc. (3)
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16,106,905 |
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12.72 |
% |
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1290 Avenue of the Americas
New York NY 10104 |
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JPMorgan Chase & Co. (4)
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10,509,119 |
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8.30 |
% |
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270 Park Avenue
New York, NY 10017 |
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FMR Corp. (5)
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6,649,030 |
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5.25 |
% |
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82 Devonshire Street
Boston, Massachusetts 02109 |
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(1) |
Under the Trust Agreement establishing The Edward W.
Scripps Trust (the Trust), the Trust must retain
voting shares sufficient to ensure control of the Company until
the final distribution of the Trust estate unless earlier stock
dispositions are necessary for the purpose of preventing loss or
damage to such estate. The trustees of the Trust are John H.
Burlingame, Edward W. Scripps and Nackey Scagliotti. The Trust
will terminate upon the death of the last to survive of two
persons specified in the Trust, the younger of whom is
85 years of age. Upon the termination of the Trust,
substantially all of its assets (including all shares of capital
stock of the Company held by the Trust) will be distributed to
the grandchildren of Robert Paine Scripps (a son of Edward W.
Scripps), of whom there are 28. Certain of these grandchildren
have entered into an agreement among themselves, other cousins
and the Company which will restrict transfer and govern voting
of Common Voting Shares to be held by them upon termination of
the Trust and distribution of the Trust estate. See
Certain Transactions Scripps Family
Agreement. |
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(2) |
See footnote 5 to the table under Security Ownership
of Management. |
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(3) |
Alliance Capital Management L.P. and Advest, Inc. are wholly
owned subsidiaries of AXA Financial, Inc. (AXF). AXF
is a wholly owned subsidiary of AXA which is controlled by the
Mutuelles AXA, as a group. For purposes of Section 13
(d) of the Securities Exchange Act of 1934, as amended, AXA
Financial and the Mutuelles AXA each may be deemed beneficial
owners of 16,106,905 of The E.W. Scripps Company common stock
acquired by Alliance and Advest solely for investment purposes
on behalf of client discretionary investment accounts. AXF filed
a Schedule 13G with the Securities and Exchange Commission
with respect to the Companys Class A Common Shares on
February 14, 2005. The information in the table is based on
the information contained in such filing for the year ended 2004. |
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(4) |
JPMorgan Chase & Co. filed a Schedule 13G with the
Securities and Exchange Commission with respect to the
Companys Class A Common Shares on February 11,
2005. The information in the table is based on the information
contained in such filing for the year ended 2004. |
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(5) |
FMR Corp. filed a Schedule 13G with the Securities and
Exchange Commission with respect to the Companys
Class A Common Shares on February 14, 2005. The
information in the table is based on the information contained
in such filing for the year ended 2004. |
6
REPORT ON THE SECURITY OWNERSHIP OF MANAGEMENT
The following information is set forth with respect to the
Companys Class A Common Shares and Common Voting
Shares beneficially owned as of January 31, 2005 by each
director and each nominee for election as a director of the
Company, by each named executive, and by all directors and
executive officers of the Company as a group. Unless otherwise
indicated, the persons named in the table have sole voting and
investment power with respect to all shares shown therein as
being beneficially owned by them. Also included in the table are
shares owned by The Edward W. Scripps Trust, the trustees of
which are directors of the Company.
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Common |
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Name of Individual or |
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Class A |
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Voting |
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Number of Persons in Group |
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Common Shares(1) |
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Percent |
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Shares |
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Percent |
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William R. Burleigh
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484,830 |
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|
* |
|
|
|
|
|
|
|
|
|
John H. Burlingame (2)
|
|
|
45,428 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
David A. Galloway
|
|
|
17,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Kenneth W. Lowe
|
|
|
1,499,183 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Jarl Mohn (3)
|
|
|
20,600 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Nicholas B. Paumgarten (4)
|
|
|
50,300 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Jeffrey Sagansky
|
|
|
5,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Nackey E. Scagliotti (2)
|
|
|
44,400 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Edward W. Scripps (2)
|
|
|
46,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Paul K. Scripps (5)
|
|
|
21,230 |
|
|
|
* |
|
|
|
3,232,226 |
|
|
|
8.81 |
% |
Ronald W. Tysoe
|
|
|
60,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Julie A. Wrigley
|
|
|
84,144 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Richard A. Boehne
|
|
|
548,172 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Frank Gardner
|
|
|
470,166 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Alan M. Horton
|
|
|
589,777 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
Joseph G. NeCastro
|
|
|
73,487 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
William B. Peterson
|
|
|
29,028 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
The Edward W. Scripps Trust (6)
|
|
|
39,192,222 |
|
|
|
30.96 |
% |
|
|
32,080,000 |
|
|
|
87.49 |
% |
All directors and executive officers as a group (26 persons) (6)
|
|
|
43,825,673 |
|
|
|
34.62 |
% |
|
|
35,312,226 |
|
|
|
96.30 |
% |
|
|
|
|
* |
Shares owned represent less than one percent of the outstanding
shares of such class of stock. |
|
|
(1) |
The shares listed for each of the officers and directors include
Class A Common Shares underlying exercisable options and
options that are exercisable within 60 days of
January 31, 2005, held by him or her. The shares listed do
not include the balances held in any of the directors
phantom share accounts that are the result of an election to
defer compensation under the 1997 Deferred Compensation and
Stock Plan for Directors. |
|
(2) |
These persons are trustees of the Trust and have the power to
vote and dispose of the 39,192,222 Class A Common Shares
and the 32,080,000 Common Voting Shares of the Company held by
the Trust. Mr. Burlingame disclaims any beneficial interest
in the shares held by the Trust. |
|
(3) |
The shares for Mr. Mohn include shares held jointly with
other family members and shares owned as a trustee of a family
trust. |
|
(4) |
The shares listed for Mr. Paumgarten include
1,700 shares owned by his wife. Mr. Paumgarten
disclaims beneficial ownership of such shares. |
|
(5) |
The shares listed for Mr. Paul K. Scripps include 239,040
Common Voting Shares and 816 Class A Common Shares held in
various trusts for the benefit of certain of his relatives and
208 Class A Common Shares owned by his wife.
Mr. Scripps is a trustee of the aforesaid trusts.
Mr. Scripps disclaims beneficial ownership of the shares
held in such trusts and the shares owned by his wife. |
7
|
|
|
The shares listed also include 2,890,906 Common Voting Shares
held by five trusts of which Mr. Scripps is a trustee.
Mr. Scripps is the sole beneficiary of one of these trusts,
holding 698,036 Common Voting Shares. He disclaims beneficial
ownership of the shares held in the other four trusts. |
|
(6) |
Please see footnote 1 under Report on the Security
Ownership of Certain Beneficial Owners. |
GOVERNANCE
The board of directors is committed to good corporate
governance, good business practice and transparency in financial
reporting. The nominating & governance committee
annually reviews the Companys corporate governance
principles and the charters of the audit, compensation and
nominating & governance committees. The committee
charters comply with the governance provisions of the
Sarbanes-Oxley Act of 2002 and the listing requirements of the
New York Stock Exchange. The governance principles and committee
charters are available for review at www.scripps.com and are
available in print to any shareholder who requests a copy.
The Company has in place a Code of Business Conduct and Ethics
for Financial Executives, which is available for review on the
Companys Web site. It is the responsibility of the audit
committee and the chief financial officer to make sure that this
policy is operative and has effective reporting and enforcement
mechanisms.
The Companys Statement of Policy on Ethics and
Professional Conduct was established in 1996 and was updated,
renamed the Code of Ethics and approved by the board of
directors in February 2005. It is applicable to all employees.
The Companys Statement of Policy on Ethics and
Professional Conduct is available for review on the
Companys Web site and is available in print to any
shareholder who requests a copy. By the spring of 2005, the
Company plans to have its updated Code of Ethics replace the
ethics policy that is currently on its Web site. The updated
Code will also be available to any shareholder who requests a
printed copy.
The Company has not made any charitable contributions, where the
amount has exceeded $1 million or 2% of such charitys
consolidated gross revenues, to any charitable organization for
which a director serves as an executive officer.
In accordance with the Companys corporate governance
principles, the non-management directors met in executive
session at least four times in 2004. The director who presides
at these meetings is selected by the board of directors.
When first elected to the board of directors, new members attend
a training session that introduces them to the Companys
operations and to the members of management. Thereafter,
directors are informed on a regular basis of various director
educational programs offered by governance and director
organizations. The Company pays for the continuing education of
its directors.
Section 303A of the listing standards of the New York Stock
Exchange defines a controlled company as A listed company
of which more than 50% of the voting power is held by an
individual, a group or another company. The Edward W.
Scripps Trust holds a majority of the Companys outstanding
Common Voting Shares, which qualifies the Company as a
controlled company. As such, the Company could avail
itself of an exemption such status affords it from compliance
with the Exchanges requirements to have a majority of
independent directors and an independent nominating and
corporate governance committee and an independent compensation
committee. However, the board of directors has determined that a
majority of its board of directors is independent. On
May 7, 2004 the Company filed with the New York Stock
Exchange its executed Annual Written Affirmation. An exhibit to
the Annual Written Affirmation was the Companys annual
Section 303A.12(a) CEO Certification.
The Company does not have a policy with regard to attendance by
board members at the annual meeting of shareholders.
Mr. Lowe was the only director who attended the
Companys 2004 annual meeting of shareholders.
8
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Committee
The members are Mr. Ronald W. Tysoe (chairman),
Mr. Jeffrey Sagansky and Ms. Julie A. Wrigley.
Mrs. Nackey E. Scagliotti was a member of the committee
until she resigned on October 27, 2004. The board of
directors of the Company has determined that none of the current
members of the committee has any relationship with the Company
that could interfere with his or her exercise of independence
from management and the Company. Each of the members satisfies
the definitions of independence set forth in the rules
promulgated under the Sarbanes-Oxley Act and the listing
standards of the New York Stock Exchange. The board determined
that each member of the committee is financially literate as
defined under the current NYSE rules and that Mr. Tysoe is
an audit committee financial expert as defined in the SEC rules
adopted under the Sarbanes-Oxley Act.
Charter
The committees charter is available for review on the
Companys Web site and is attached as an exhibit to this
proxy statement. The charter was amended on March 7, 2005
to reference section 404 of the Sarbanes-Oxley Act.
Purpose
The committee provides assistance to the board of directors in
fulfilling its responsibility to shareholders, potential
shareholders, and the investment community. The purpose of the
committee is to assist the board in fulfilling its oversight
responsibility relating to (i) the integrity of the
companys financial statements and financial reporting
process and the companys systems of internal accounting
and financial controls; (ii) the performance of the
internal audit services function; (iii) the annual
independent audit of the Companys financial statements,
the engagement of the independent auditors and the evaluation of
the independent auditors qualifications, independence,
performance and fees; (iv) the compliance by the company
with legal and regulatory requirements, including the
Companys disclosure controls and procedures; (v) the
evaluation of enterprise risk issues; and (vi) the
fulfillment of all other responsibilities as outlined in its
charter. Additionally, the audit committee members have reviewed
the Companys Code of Ethics and have established
guidelines for receiving reports on issues raised by employees
using the Companys HelpLine. The committee meets privately
with representatives of the Companys independent auditors,
with the Companys internal auditors and with management.
Responsibilities
The principal responsibilities of the committee include, but are
not limited to, the following:
|
|
|
|
|
the engagement of the independent auditors; |
|
|
|
the determination as to the independence and performance of the
independent auditors; |
|
|
|
the determination as to the performance of the internal auditors; |
|
|
|
preapproval of audit and non-audit services; |
|
|
|
review of disclosure controls and procedures; |
|
|
|
review of managements annual report on internal controls
over financial reporting; |
|
|
|
review of annual SEC filings; |
|
|
|
review of quarterly SEC filings and other communications; |
|
|
|
review of certain matters with internal independent auditors; |
|
|
|
consultation with independent auditors; |
|
|
|
preparation of its report for the proxy statement; |
|
|
|
committee performance evaluation; |
|
|
|
review of policies for employment of former independent auditors; |
|
|
|
establishment of whistleblowing procedures; |
|
|
|
review of legal and regulatory compliance; |
|
|
|
review of certain transactions with directors and related
parties. |
9
Meetings
The committee held six meetings during 2004 and, as of
March 23, 2005, has had one meeting in 2005. During such
meetings, the committee spent a significant amount of time
reviewing the progress of managements first annual report
on internal controls over financial reporting as required by
section 404 of the Sarbanes-Oxley Act. Management reported
to the committee that there were no material weaknesses in the
Companys system of internal controls over financial
reporting. Additionally, management represented to the committee
that the Companys quarterly financial statements and
consolidated financial statements as of and for the year ended
December 31, 2004 were prepared in accordance with
generally accepted accounting principles. The committee reviewed
and discussed such financial statements with management and the
Companys independent auditors, Deloitte & Touche,
LLP, the member firms of Deloitte Touche Tohmatsu, and their
respective affiliates (collectively the Deloitte
Entities), and discussed such other matters deemed
relevant and appropriate by the committee. The committee
discussed with Deloitte Entities the matters required to be
discussed by Statement on Auditing Standards No. 61, as
amended, (Communications with Audit Committees). Deloitte
Entities also provided to the committee the written disclosures
and letter, required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees). The
committee and Deloitte Entities discussed independence and
whether the auditors provision of non-audit services is
compatible with maintaining such independence. It is the policy
of the committee that the Company notify the audit committee and
obtain its approval prior to engaging the Deloitte Entities for
any non-audit work.
In reliance on the reviews and discussions referred to above,
the committee recommended to the board of directors that the
audited financial statements be included in the companys
annual report on Form 10-K for the year ended
December 31, 2004 be filed with the Securities and Exchange
Commission.
Audit Fees
The following table sets forth fees for all professional
services rendered by Deloitte Entities to the Company for the
years ended December 31, 2004 and 2003.
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
|
|
|
Audit fees (1)
|
|
$ |
1,552,500 |
|
|
$ |
950,500 |
|
Audit related fees (2)
|
|
|
88,765 |
|
|
|
71,238 |
|
|
|
|
|
|
|
|
|
|
|
Total audit and audit related
|
|
|
1,641,265 |
|
|
|
1,021,738 |
|
|
|
|
|
|
|
|
|
|
Tax compliance and preparation:
|
|
|
|
|
|
|
|
|
|
Amended returns, claims for refunds and tax payment-planning
|
|
|
1,104,100 |
|
|
|
1,398,209 |
|
|
Employee benefit plans
|
|
|
1,700 |
|
|
|
1,600 |
|
Other tax-related fees
|
|
|
|
|
|
|
|
|
|
Tax consultation and planning
|
|
|
20,700 |
|
|
|
87,900 |
|
|
Other
|
|
|
145,800 |
|
|
|
15,800 |
|
|
|
|
|
|
|
|
|
|
|
Total tax fees (3)
|
|
|
1,272,300 |
|
|
|
1,503,509 |
|
All other fees
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
Total fees (4)
|
|
$ |
2,913,565 |
|
|
$ |
2,525,247 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes fees for quarterly reviews, accounting consultations,
work related to section 404 of the Sarbanes-Oxley Act,
comfort letters, consents and audits of subsidiary companies. |
|
(2) |
Includes fees for assurance and related services including due
diligence assistance and employee benefit plan audits. |
|
(3) |
Includes fees primarily for tax compliance services and for
various federal and state tax planning services related to tax
credits and incentives. |
|
(4) |
Includes fees for 2004 services expected to be billed in 2005. |
|
|
|
The Audit Committee |
|
|
Ronald W. Tysoe, Chairman |
|
Jeffrey Sagansky |
|
Julie A. Wrigley |
10
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Committee
The compensation committee of the board of directors, which
consists entirely of non-employee directors of the company, is
responsible for reviewing and approving the Companys
executive compensation program. The members are
Messrs. David A. Galloway (chairman), John H. Burlingame,
Ronald W. Tysoe, Jarl Mohn and Edward W. Scripps.
The incentive plan committee, a subcommittee of the compensation
committee, approves awards under the Companys Long-Term
Incentive Plan and the Executive Bonus Plan. Messrs. Tysoe,
Galloway and Mohn are members of the incentive plan committee.
Overview of the Companys Compensation Philosophy
The Companys executive compensation program is based on a
combination of a pay-for-performance philosophy and
market-aligned target compensation levels. The objective of the
program is to provide a comprehensive compensation package that
will enhance Company performance, maximize shareholder value,
and allow the company to attract, retain and motivate a
highly-qualified management team.
The company relies on a variety of published compensation
surveys such as the Towers Perrin Media Industry Survey and the
Cable and Television Human Resources Association Survey to
provide competitive compensation information that is used to
establish appropriate compensation levels.
Components of the Compensation Program
All elements of the executive compensation program are reviewed
annually by the compensation committee to ensure alignment with
Company objectives and consistency with competitive practices.
The program consists of base salary, annual bonus and long-term
incentives that include grants of nonqualified stock options and
restricted stock under the Companys 1997 Long-Term
Incentive Plan (hereinafter referred to as total direct
compensation). Performance-based compensation should be
commensurate with the level of performance achieved, appropriate
to the position held by the executive. Total direct compensation
is targeted to be between the market median and the 75th
percentile when taking performance into consideration. The
committee has determined that total direct compensation for the
named executive officers is reasonable and appropriate when
taking into consideration comparable positions in the market and
Company performance.
Salary levels for executive officers of the Company are targeted
to be at the median of the market in comparison to their
respective industry and professional peers. Salary adjustments
are a function of multiple factors including: competitive market
levels for comparable positions; an executives position
responsibilities; an executives job performance and
contributions; and the Companys performance. The
performance factors are not assigned specific weights. Rather,
the Committee applies its own judgment in evaluating the
aggregate impact of these factors and in making base salary
determinations.
The Committee takes into consideration the recommendation of the
chief executive officer when determining base salary increases
for the other named executive officers. The 2004 base salary
levels for named executive officers were generally close to the
median of the market data described above using regression
analysis to take into account the Companys revenue size.
Short-term incentives for 2004 were provided to the named
executive officers through the Executive Bonus Plan. The
Committee established objectives for two key financial measures,
operating cash flow and earnings per share. These measures
represented 60% and 40%, respectively, of each named
11
executive officers bonus opportunity. The operating cash
flow targets for Messrs. Horton, Gardner, and Peterson were
based on the performance of their respective divisions. The
operating cash flow target for Messrs. Lowe, Boehne, and
NeCastro was based on the Companys consolidated
performance.
The target bonus opportunity for Mr. Boehne was set at 60%
of base salary. The target bonus opportunity for
Messrs. Horton, Gardner, and NeCastro was set at 50% of
base salary, and at 40% of base salary for Mr. Peterson.
Performance levels less than the established threshold result in
no bonus being paid. Performance levels that meet the targeted
level are paid out at 100%. In no case would the actual bonus
exceed 150% of the targeted bonus opportunity.
The bonus award is typically paid during the first quarter of
the calendar year following the actual plan year, although
executives may elect to defer payment of the bonus until
retirement or another predetermined date.
For 2004, the Company did not meet its earnings per share target
or the consolidated and divisional operating cash flows except
for Scripps Networks division operating cash flow.
Therefore, the actual bonus awards for Messrs. Lowe,
Boehne, Horton, Peterson, and NeCastro were less than the
targeted award.
The purpose of the 1997 Long-Term Incentive Plan is to encourage
stock ownership by management and better align the collective
interests of shareholders and management. The Plan allows for
several different types of stock-based awards, including stock
options, stock appreciation rights, restricted stock, and
restricted share unit grants.
Named executive officers typically receive an annual grant of
stock options. The 2004 award was a combination of stock options
and restricted stock. This is part of an ongoing effort to
provide stronger ties to performance and the interests of
shareholders.
Compensation of the Chief Executive Officer
The chief executive officers 2004 compensation package
consisted of a base salary of $975,000 and a target annual bonus
opportunity of 80% of such salary ($780,000).
Mr. Lowes bonus plan for 2004 was based on the
criteria outlined above under Annual Bonus.
Mr. Lowes bonus for 2004 was less than the targeted
amount based on company performance.
Mr. Lowe continues to be covered under an employment
contract that was effective June 16, 2003 and expires
December 31, 2006. The details of Mr. Lowes
contract can be found under Other Transactions.
Mr. Lowe was awarded an option on March 23, 2004 to
purchase 187,500 of the Companys Class A Common
shares under the Long-Term Incentive Program in recognition of
his performance in the previous year. The options will be
exercisable in three equal installments beginning on
March 23, 2005. In addition, Mr. Lowe was awarded
21,290 shares of restricted stock that vest in three equal
installments beginning on March 23, 2005.
At the request of the Company, on September 30, 2004,
Mr. Lowe converted 40,000 of his restricted shares to
restricted share units as provided by the Long-Term Incentive
Plan. These units will vest on January 2, 2007.
Response to Omnibus Budget Reconciliation Act of 1993
Section 162(m) of the Internal Revenue Code, enacted in
1993, generally disallows a tax deduction to public companies
for compensation of more than $1 million paid in any one
year to a companys chief executive officer and each of its
four other most highly compensated executives. Performance-based
compensation, if approved by shareholders, is exempt from
Section 162(m). The Companys Executive Bonus Plan and
its Long-Term Incentive Plan have been approved by shareholders
and, accordingly, performance-based compensation awarded under
such plans is exempt from Section 162(m).
12
The compensation tables that follow are intended to better
enable our shareholders to understand the compensation practices
of the Company. Shareholders comments may be sent to the
attention of the Companys secretary.
|
|
|
The Compensation Committee |
|
|
David A. Galloway, Chairman |
|
John H. Burlingame |
|
Jarl Mohn |
|
Edward W. Scripps |
|
Ronald W. Tysoe |
13
Summary Compensation Table
The following table sets forth information regarding the
compensation earned by, paid to or awarded to the Companys
chief executive officer, and each of the Companys five
other most highly compensated executive officers, during each of
the Companys last three fiscal years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation |
|
|
|
|
|
|
|
|
Awards |
|
|
|
|
|
|
Annual |
|
|
|
|
|
|
|
|
Compensation |
|
Restricted |
|
Securities |
|
All Other |
|
|
|
|
|
|
Stock |
|
Underlying |
|
Compen- |
Name and |
|
|
|
Salary |
|
Bonus |
|
Award(s) |
|
Options/ |
|
sation |
Principal Position |
|
Year |
|
$ |
|
$ |
|
(1)($) |
|
SARs(#) |
|
(2)($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth W. Lowe
|
|
|
2004 |
|
|
|
975,000 |
|
|
|
733,980 |
|
|
|
1,037,036 |
|
|
|
187,500 |
|
|
|
31,775 |
|
President and
|
|
|
2003 |
|
|
|
925,000 |
|
|
|
804,232 |
|
|
|
12,402,222 |
|
|
|
250,000 |
|
|
|
30,145 |
|
|
Chief Executive Officer (3)(4)(5) |
|
|
2002 |
|
|
|
875,000 |
|
|
|
951,020 |
|
|
|
0 |
|
|
|
250,000 |
|
|
|
30,418 |
|
Richard A. Boehne
|
|
|
2004 |
|
|
|
565,000 |
|
|
|
318,999 |
|
|
|
497,816 |
|
|
|
90,000 |
|
|
|
17,873 |
|
Executive Vice President (5)
|
|
|
2003 |
|
|
|
550,000 |
|
|
|
358,644 |
|
|
|
0 |
|
|
|
110,000 |
|
|
|
17,397 |
|
|
|
|
|
2002 |
|
|
|
535,000 |
|
|
|
436,111 |
|
|
|
0 |
|
|
|
120,000 |
|
|
|
16,925 |
|
Frank Gardner
|
|
|
2004 |
|
|
|
540,000 |
|
|
|
284,688 |
|
|
|
332,202 |
|
|
|
60,000 |
|
|
|
20,056 |
|
Senior Vice President and
|
|
|
2003 |
|
|
|
525,000 |
|
|
|
351,120 |
|
|
|
0 |
|
|
|
50,000 |
|
|
|
3,762 |
|
|
Chairman, Scripps Networks, Inc. (5) |
|
|
2002 |
|
|
|
525,000 |
|
|
|
383,565 |
|
|
|
0 |
|
|
|
70,000 |
|
|
|
9,262 |
|
Alan M. Horton
|
|
|
2004 |
|
|
|
550,000 |
|
|
|
192,500 |
|
|
|
332,202 |
|
|
|
60,000 |
|
|
|
20,443 |
|
Senior Vice President/
|
|
|
2003 |
|
|
|
535,000 |
|
|
|
243,051 |
|
|
|
0 |
|
|
|
80,000 |
|
|
|
24,565 |
|
|
Newspapers (5)(6) |
|
|
2002 |
|
|
|
525,000 |
|
|
|
318,045 |
|
|
|
0 |
|
|
|
100,000 |
|
|
|
20,910 |
|
Joseph G. NeCastro
|
|
|
2004 |
|
|
|
450,000 |
|
|
|
211,725 |
|
|
|
332,202 |
|
|
|
60,000 |
|
|
|
16,344 |
|
Senior Vice President and
|
|
|
2003 |
|
|
|
425,000 |
|
|
|
230,945 |
|
|
|
0 |
|
|
|
60,000 |
|
|
|
9,602 |
|
|
Chief Financial Officer (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William P. Peterson
|
|
|
2004 |
|
|
|
339,583 |
|
|
|
126,700 |
|
|
|
124,698 |
|
|
|
22,500 |
|
|
|
9,365 |
|
Senior Vice President/ Television (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The dollar amounts listed in this table reflect the value of the
restricted shares on the date of the award. The aggregate number
and value of restricted share holdings for each named executive
officer as of the end of 2004 were as follows: Mr. Lowe
held 302,588 shares, with a value of $14,654,337;
Mr. Boehne held 10,220 shares, with a value of
$494,955; Mr. Gardner held 14,608 shares, with a value
of $707,465; Mr. NeCastro held 6,820 shares, with a
value of $330,293, and Mr. Peterson held 2,760 shares,
with a value of $133,667. Dividends were paid during 2004 on
shares of restricted stock held by each named executive officer
at a rate of $.0875 per share for the first quarter, and $.10
per share for the second, third and fourth quarters. The value
of the restricted shares is based on the average of the high and
low closing sale prices of the Companys shares on
December 31, 2004, which was $48.43. Additionally,
Mr. Lowe has 40,000 restricted share units with a value of
$1,937,200. |
|
(2) |
Represents compensation contributed pursuant to the Scripps
Retirement and Investment Plan and the Scripps Executive
Deferred Compensation and Savings Restoration Plan, and imputed
income as a result of life insurance coverage exceeding $50,000
annually. |
|
(3) |
Mr. Lowe entered into an employment agreement with the
Company as of June 16, 2003. The terms of this agreement
are disclosed under Other Transactions. |
|
(4) |
Mr. Lowe entered into a restricted share award agreement
with the Company on January 2, 2003. Such agreement awarded
him 310,638 shares vesting in equal installments on the
anniversary date of the award in 2004, 2005, 2006 and 2007. |
|
(5) |
The 2004 restricted stock awards were granted on March 23,
and vest equally on the anniversary date of the award in 2005,
2006 and 2007. |
|
(6) |
Mr. Horton retired on December 16, 2004. |
14
Option/SAR Grants in 2004
The following table sets forth certain information regarding
options for Class A Common Shares granted in 2004 under the
Companys Long-Term Incentive Plan to named executives who
participate therein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
|
|
|
Potential Realizable |
|
|
|
|
|
|
|
|
Value at Assumed Annual |
|
|
Number of |
|
% of Total |
|
|
|
|
|
Rates of Share Price |
|
|
Securities |
|
Options/SARs |
|
Exercise |
|
|
|
Appreciation for Option |
|
|
Underlying |
|
Granted to |
|
Or Base |
|
|
|
Term |
|
|
Options/SARs |
|
Employees in |
|
Price |
|
Expiration |
|
|
Name |
|
Granted(#) |
|
2004 |
|
($/Sh) |
|
Date |
|
5%($) |
|
10%($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth W. Lowe
|
|
|
187,500 |
|
|
|
8.6 |
% |
|
|
48.71 |
|
|
|
2014 |
|
|
|
5,743,773 |
|
|
|
14,555,849 |
|
Richard A. Boehne
|
|
|
90,000 |
|
|
|
4.1 |
% |
|
|
48.71 |
|
|
|
2014 |
|
|
|
2,757,011 |
|
|
|
6,986,808 |
|
Frank Gardner
|
|
|
60,000 |
|
|
|
2.8 |
% |
|
|
48.71 |
|
|
|
2014 |
|
|
|
1,838,007 |
|
|
|
4,657,872 |
|
Alan M. Horton
|
|
|
60,000 |
|
|
|
2.8 |
% |
|
|
48.71 |
|
|
|
2014 |
|
|
|
1,838,007 |
|
|
|
4,657,872 |
|
Joseph G. NeCastro
|
|
|
60,000 |
|
|
|
2.8 |
% |
|
|
48.71 |
|
|
|
2014 |
|
|
|
1,838,007 |
|
|
|
4,657,872 |
|
William B. Peterson
|
|
|
22,500 |
|
|
|
1.0 |
% |
|
|
48.71 |
|
|
|
2014 |
|
|
|
689,253 |
|
|
|
1,746,702 |
|
Total awards to all employees
|
|
|
2,175,050 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth certain information regarding the
number and value of options for Class A Common Shares held
by the named executives at December 31, 2004. Two
executives exercised options during 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
Underlying |
|
Value of Unexercised |
|
|
|
|
|
|
Unexercised |
|
In-the-Money |
|
|
|
|
|
|
Options/SARs at |
|
Options/SARs at |
|
|
|
|
|
|
12/31/04(#) |
|
12/31/04($) |
|
|
Shares Acquired |
|
Value |
|
Exercisable/ |
|
Exercisable/ |
Name |
|
on Exercise(#) |
|
Realized($) |
|
Unexercisable |
|
Unexercisable |
|
|
|
|
|
|
|
|
|
Kenneth W. Lowe
|
|
|
81,000 |
|
|
|
3,458,789 |
|
|
|
797,001/437,499 |
|
|
|
14,244,869/2,312,491 |
|
Richard A. Boehne
|
|
|
9,800 |
|
|
|
430,409 |
|
|
|
416,667/203,333 |
|
|
|
7,912,269/1,053,731 |
|
Frank Gardner
|
|
|
|
|
|
|
|
|
|
|
383,334/116,666 |
|
|
|
8,246,140/534,960 |
|
Alan M. Horton
|
|
|
|
|
|
|
|
|
|
|
580,000/0 |
|
|
|
9,686,400/0 |
|
Joseph G. NeCastro
|
|
|
|
|
|
|
|
|
|
|
26,667/103,333 |
|
|
|
237,537/371,963 |
|
William B. Peterson
|
|
|
|
|
|
|
|
|
|
|
10,001/32,499 |
|
|
|
100,609/92,491 |
|
Equity Compensation Plan Information for 2004
The following table sets forth certain information as of
December 31, 2004 for each category of equity compensation
plan under which equity securities are authorized for issuance
to employees and directors in exchange for consideration in the
form of services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
Number of securities |
|
|
|
|
average exercise |
|
remaining available for |
|
|
|
|
price of |
|
future issuance under |
|
|
Number of securities to |
|
outstanding |
|
equity compensation |
|
|
be issued upon exercise |
|
options, |
|
plans (excluding |
|
|
of outstanding options, |
|
warrants and |
|
securities reflected in |
Plan Category |
|
warrants and rights(#) |
|
rights($) |
|
column (a))(#) |
|
|
|
|
|
|
|
|
|
(a) |
|
(b) |
|
(c) |
Equity compensation plans approved by security holders
|
|
|
18,317,400 |
|
|
|
35.29 |
|
|
|
2,814,152 |
|
Equity compensation plans not approved by security holders
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
18,317,400 |
|
|
|
35.29 |
|
|
|
2,814,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
REPORT ON STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
return on the Companys Class A Common Shares,
assuming an initial investment of $100 as of December 31,
1999, and based on the market prices at the end of each year and
assuming reinvestment of dividends, with the cumulative total
return of the Standard & Poors Composite-500
Stock Index and an index based on a peer group of media
companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1999 |
|
2000 |
|
2001 |
|
2002 |
|
2003 |
|
2004 |
|
S&P 500
|
|
$ |
100 |
|
|
$ |
91 |
|
|
$ |
80 |
|
|
$ |
62 |
|
|
$ |
80 |
|
|
$ |
89 |
|
|
Scripps
|
|
$ |
100 |
|
|
$ |
145 |
|
|
$ |
157 |
|
|
$ |
187 |
|
|
$ |
234 |
|
|
$ |
245 |
|
|
Media Index
|
|
$ |
100 |
|
|
$ |
84 |
|
|
$ |
87 |
|
|
$ |
98 |
|
|
$ |
117 |
|
|
$ |
109 |
|
|
The companies in the peer group index are Belo Corporation,
Gannett Co. Inc., Knight Ridder, Inc., Lee Enterprises, Inc.,
The New York Times Company, Tribune Company, and the Washington
Post Company. The index is weighted based on market
capitalization. The companies included in the peer group were
approved by the compensation committee.
REPORT ON COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Messrs. John H. Burlingame, David A. Galloway, Jarl Mohn,
Edward W. Scripps and Ronald W. Tysoe are the members of the
Companys compensation committee.
Mr. John H. Burlingame is a member of the executive
committee of the Companys board of directors. He is also a
retired partner of Baker & Hostetler LLP.
Baker & Hostetler was a provider of legal services to
the Company and to The Edward W. Scripps Trust in 2004 and is
expected to provide legal services to the Company and to the
Trust in 2005.
Mr. Edward W. Scripps is a lifetime Emeritus Trustee of the
Scripps Howard Foundation.
Mr. Burlingame and Mr. Scripps are two of the three
trustees of The Edward W. Scripps Trust and for 2005 are
expected to continue to serve as trustees. The trustees have the
power to vote and dispose of the 39,192,222 Class A Common
Shares and 32,080,000 Common Voting Shares of the Company held
by the Trust. Mr. Burlingame disclaims any beneficial
interest in the shares held by the Trust. Mr. Scripps is an
income beneficiary of the Trust. See Security Ownership of
Certain Beneficial Owners.
16
REPORT ON THE COMPANYS PENSION PLAN
The Companys executive officers and substantially all
other non-union employees of the Company are participants in a
non-contributory defined benefit pension plan maintained by the
Company (the Pension Plan). Contributions to the
Pension Plan are based on separate actuarial computations for
each business unit and are made by the business unit
compensating the particular individual.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Services |
|
|
|
Remuneration |
|
15 Years |
|
20 Years |
|
25 Years |
|
30 Years |
|
35 Years |
|
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
$ |
55,000 |
|
|
$ |
73,000 |
|
|
$ |
91,000 |
|
|
$ |
109,000 |
|
|
$ |
128,000 |
|
|
400,000 |
|
|
|
73,000 |
|
|
|
98,000 |
|
|
|
122,000 |
|
|
|
147,000 |
|
|
|
171,000 |
|
|
500,000 |
|
|
|
92,000 |
|
|
|
123,000 |
|
|
|
154,000 |
|
|
|
184,000 |
|
|
|
215,000 |
|
|
600,000 |
|
|
|
111,000 |
|
|
|
148,000 |
|
|
|
185,000 |
|
|
|
222,000 |
|
|
|
259,000 |
|
|
700,000 |
|
|
|
130,000 |
|
|
|
173,000 |
|
|
|
216,000 |
|
|
|
259,000 |
|
|
|
303,000 |
|
|
800,000 |
|
|
|
148,000 |
|
|
|
198,000 |
|
|
|
247,000 |
|
|
|
297,000 |
|
|
|
346,000 |
|
|
900,000 |
|
|
|
167,000 |
|
|
|
223,000 |
|
|
|
279,000 |
|
|
|
334,000 |
|
|
|
390,000 |
|
|
1,000,000 |
|
|
|
186,000 |
|
|
|
248,000 |
|
|
|
310,000 |
|
|
|
372,000 |
|
|
|
434,000 |
|
|
1,500,000 |
|
|
|
280,000 |
|
|
|
373,000 |
|
|
|
466,000 |
|
|
|
559,000 |
|
|
|
653,000 |
|
|
1,750,000 |
|
|
|
327,000 |
|
|
|
435,000 |
|
|
|
544,000 |
|
|
|
653,000 |
|
|
|
762,000 |
|
|
2,500,000 |
|
|
|
467,000 |
|
|
|
623,000 |
|
|
|
779,000 |
|
|
|
934,000 |
|
|
|
1,090,000 |
|
The above table shows the annual normal retirement benefits
which, absent the maximum benefit limitations (the Benefit
Limitations) imposed by Section 415(b) of the
Internal Revenue Code of 1986, as amended (the
Code), would be payable pursuant to the Pension Plan
upon retirement at age 65 (based upon the 2004 social
security integration level under the Pension Plan), pursuant to
a straight life annuity option, for employees in the
compensation ranges specified and under various assumptions with
respect to average final annual compensation and years of
credited services.
In general, the Benefit Limitations limit the annual retirement
benefits that may be paid pursuant to the Pension Plan to
$165,000 (subject to further cost-of-living increases
promulgated by the United States Secretary of the Treasury). The
Company supplements payments under the Pension Plan with direct
pension payments equal to the amount, if any, by which the
benefits that otherwise would be payable under the Pension Plan
exceed the benefits that are permitted to be paid under the
Benefit Limitations. Annual normal retirement benefits are
computed at the rate of 1% of average final annual compensation
up to the applicable social security integration level plus
1.25% of average final annual compensation in excess of the
social security integration level, multiplied by the
employees years of credited service. An employees
benefits are actuarially adjusted if paid in a form other than a
life annuity.
An employees remuneration is defined as the average annual
amount of his pensionable compensation (generally salary and
bonus, excluding the Scripps Retirement & Investment
Plan match and any other annual or long-term compensation
reflected in the Summary Compensation Table) for service during
the five consecutive years within the last ten years of his
employment for which his total compensation was greatest. The
employees years of credited service equal the number of
years of his employment with the Company (subject to certain
limitations). As of December 31, 2004, the years of
credited service of the individuals named in the cash
compensation table were as follows: Mr. Lowe
25; Mr. Gardner 20; Mr. Horton
34; Mr. Boehne 19;
Mr. NeCastro 3; Mr. Peterson 3.
In May 1996, the board of directors of the Company adopted a
Selected Officer Retirement Program, the purpose of which is to
provide supplemental retirement benefits to certain key
employees of the Company who meet the eligibility requirements.
Participants in the program must be specifically designated as
participants by the compensation committee. As of
December 31, 2004, the Program has three retired employee
participants. No active employee has been designated for
participation in such plan. A participant begins to receive
benefits under the plan upon retirement. The amount of the
benefit is a percentage of the participants highest
three-year average earnings subject to certain offsets and
maximums.
17
REPORT ON THE COMPANYS CHANGE IN CONTROL PLAN
On April 28, 2004, the directors of the Company approved
the Senior Executive Change in Control Plan (the Change in
Control Plan) for the named executive officers and certain
other executive officers of the Company. Under this Plan, if
there is a Change in Control (as defined in the Plan) of the
Company, the participating executives will be entitled to
termination payments if their employment with the Company is
terminated without Cause (as defined in the Plan) or if they
terminate such employment for Good Reason (as defined in the
Plan), in either case within two (2) years of the Change in
Control. The amount of the termination payment payable to each
executive under the Plan equals a specific multiple (termination
pay multiple) of such executives Base Salary and Bonus (as
such terms are defined in the Plan). Base Salary equals the
executives highest annualized rate of Base Salary in
effect at any time during the year of termination and the three
full prior calendar years preceding termination. Bonus means the
higher of (i) an executives target bonus in the year
of termination or (ii) the executives highest actual
annual Bonus in the three full calendar years prior to
termination of employment. Executives who participate in the
Plan have termination pay multiples ranging from 1.5 to 2.5. Of
the named executives of the Company, the termination pay
multiple for Mr. Boehne is 2.5, and for the remaining named
executives (other than Mr. Lowe) the multiple is 2.
Mr. Lowe is not covered under this Plan since his
employment agreement provides for payments in the event of a
change in control. See Other Transactions. In
addition to termination payments, the Plan provides for
(i) continued benefits coverage for the number of months
following termination of employment equal to 12 times an
executives termination pay multiple and (ii) a cash
sum equal to the actuarially determined value of a pension
enhancement equal to the difference in the present value of
(x) the actual pension the executive is entitled to receive
under the Companys Pension Plan and Supplemental Executive
Retirement Plan and (y) the assumed pension such executive
would be entitled to receive under such plans if age and years
of credited service at the time of termination were increased by
a number equal to his termination pay multiple. The Plan also
provides that upon termination as described above all
outstanding equity awards held by an executive, including stock
options and restricted stock, will immediately vest and not be
subject to forfeiture, with all options remaining exercisable
for the remainder of their terms. Executives who receive
termination payments under the Plan are also entitled to
gross-up payments intended to cover any excise taxes (and
interest or penalties imposed with respect to such taxes) under
Section 4999 of the Internal Revenue Code.
REPORT ON THE COMPANYS DEFERRED COMPENSATION PLAN
During 2004, the Company replaced the 1997 Deferred Compensation
and Phantom Stock Plan for Senior Officers and Selected
Employees, effective May 22, 1997, and the Scripps
Executive Savings and Restoration Plan, effective
May 1, 1999, with the Scripps Executive Deferred
Compensation and Savings Restoration Plan. To be eligible to
participate in the Plan, an employee must be eligible to
participate in both the Companys Long-Term Incentive Plan
and the Scripps Retirement and Investment Plan (401(k) Plan) and
must earn compensation in excess of the Internal Revenue Code
Section 401(a)(17) limit in any one year. The Plan is a
non-qualified plan and participants may defer to the Plan,
before taxes are deducted, up to 50% of base pay and up to 100%
of an annual bonus. After a participant completes one year of
service with the Company, the Company adds a 50% match to base
pay deferrals, up to 6% of base pay. The Plan is intended to
help restore amounts that a participant cannot contribute to the
Companys 401(k) plan, due to federal contribution limits.
REPORT ON CERTAIN TRANSACTIONS
Scripps Family Agreement
General. The Company and certain persons and trusts are
parties to an agreement (the Scripps Family
Agreement) restricting the transfer and governing the
voting of Common Voting Shares that such persons and trusts may
acquire or own at or after the termination of the Trust. Such
persons and trusts (the Signatories) consist of
certain grandchildren of Robert Paine Scripps who are
beneficiaries of the Trust, descendants of John P. Scripps, and
certain trusts of which descendants of John P. Scripps
18
are trustees and beneficiaries. Robert Paine Scripps was a son
of the founder of the Company. John P. Scripps was a grandson of
the founder and a nephew of Robert Paine Scripps.
If the Trust were to have terminated as of January 31,
2005, the Signatories would have held in the aggregate
approximately 93.55% of the outstanding Common Voting Shares as
of such date.
Once effective, the provisions restricting transfer of Common
Voting Shares under the Scripps Family Agreement will continue
until twenty-one years after the death of the last survivor of
the descendants of Robert Paine Scripps and John P. Scripps
alive when the Trust terminates. The provisions of the Scripps
Family Agreement governing the voting of Common Voting Shares
will be effective for a ten-year period after termination of the
Trust and may be renewed for additional ten-year periods.
Transfer Restrictions. No Signatory will be able to
dispose of any Common Voting Shares (except as otherwise
summarized below) without first giving other Signatories and the
Company the opportunity to purchase such shares. Signatories
will not be able to convert Common Voting Shares into
Class A Common Shares except for a limited period of time
after giving other Signatories and the Company the aforesaid
opportunity to purchase and except in certain other limited
circumstances.
Signatories will be permitted to transfer Common Voting Shares
to their lineal descendants or trusts for the benefit of such
descendants, or to any trust for the benefit of such a
descendant, or to any trust for the benefit of the spouse of
such descendant or any other person or entity. Descendants to
whom such shares are sold or transferred outright, and trustees
of trusts into which such shares are transferred, must become
parties to the Scripps Family Agreement or such shares shall be
deemed to be offered for sale pursuant to the Scripps Family
Agreement. Signatories will also be permitted to transfer Common
Voting Shares by testamentary transfer to their spouses provided
such shares are converted to Class A Common Shares and to
pledge such shares as collateral security provided that the
pledgee agrees to be bound by the terms of the Scripps Family
Agreement. If title to any such shares subject to any trust is
transferred to anyone other than a descendant of Robert Paine
Scripps or John P. Scripps, or if a person who is a descendant
of Robert Paine Scripps or John P. Scripps acquires outright any
such shares held in trust but is not or does not become a party
to the Scripps Family Agreement, such shares shall be deemed to
be offered for sale pursuant to the Scripps Family Agreement.
Any valid transfer of Common Voting Shares made by Signatories
without compliance with the Scripps Family Agreement will result
in automatic conversion of such shares to Class A Common
Shares.
Voting Provisions. The Scripps Family Agreement provides
that the Company will call a meeting of the Signatories prior to
each annual or special meeting of the shareholders of the
Company held after termination of the Trust (each such meeting
hereinafter referred to as a Required Meeting). At
each Required Meeting, the Company will submit for decision by
the Signatories, each matter, including election of directors,
that the Company will submit to its shareholders at the annual
meeting or special meeting with respect to which the Required
Meeting has been called. Each Signatory will be entitled, either
in person or by proxy, to cast one vote for each Common Voting
Share owned of record or beneficially by him on each matter
brought before the meeting. Each Signatory will be bound by the
decision reached with respect to each matter brought before such
meeting, and, at the related meeting of the shareholders of the
Company, will vote his Common Voting Shares in accordance with
decisions reached at the meeting of the Signatories.
John P. Scripps Newspapers
In connection with the merger in 1986 of the John P. Scripps
Newspaper Group (JPSN) into a wholly owned
subsidiary of the Company (the JPSN Merger), the
Company and The Edward W. Scripps Trust entered into certain
agreements discussed below.
JPSN Board Representation Agreement. The Edward W.
Scripps Trust and John P. Scripps entered into a Board
Representation Agreement dated March 14, 1986 in connection
with the JPSN Merger. Under this agreement, the surviving adult
children of Mr. John P. Scripps who are shareholders of the
Company have the right to designate one person to serve on the
Companys board of directors so long as they continue to
own in the aggregate 25% of the sum of (i) the shares
issued to them in the
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JPSN Merger and (ii) the shares received by them from John
P. Scripps estate. In this regard, The Edward W. Scripps
Trust has agreed to vote its Common Voting Shares in favor of
the person designated by John P. Scripps children.
Pursuant to this agreement, Paul K. Scripps currently serves on
the Companys board of directors and is a nominee for
election at the annual meeting. The Board Representation
Agreement terminates upon the earlier of the termination of The
Edward W. Scripps Trust or the completion of a public offering
by the Company of Common Voting Shares.
Stockholder Agreement. The former shareholders of the
John P. Scripps Newspaper Group, including John P. Scripps and
Paul K. Scripps, entered into a Stockholder Agreement with the
Company in connection with the JPSN Merger. This agreement
restricts to certain transferees the transfer of Common Voting
Shares received by such shareholders pursuant to the JPSN
Merger. These restrictions on transfer will terminate on the
earlier of the termination of The Edward W. Scripps Trust or
completion of a public offering of Common Voting Shares. Under
the agreement, if a shareholder has received a written offer to
purchase 25% or more of his Common Voting Shares, the
Company has a right of first refusal to purchase
such shares on the same terms as the offer. On the death of any
of these shareholders, the Company is obligated to purchase from
the shareholders estate a sufficient number of the Common
Voting Shares of the Company to pay federal and state estate
taxes attributable to all shares included in such estate; this
obligation expires in 2006. Under certain other circumstances,
such as bankruptcy or insolvency of a shareholder, the Company
has an option to buy all Common Voting Shares of the Company
owned by such shareholder. Under the agreement, stockholders
owning 25% or more of the outstanding Common Voting Shares
issued pursuant to the JPSN Merger may require the Company to
register Common Voting Shares (subject to the right of first
refusal mentioned above) under the Securities Act of 1933 for
sale at the shareholders expense in a public offering. In
addition, the former shareholders of the John P. Scripps
Newspaper Group will be entitled, subject to certain conditions,
to include Common Voting Shares (subject to the right of first
refusal) that they own in any registered public offering of
shares of the same class by the Company. The registration rights
expire three years from the date of a registered public offering
of Common Voting Shares.
Other Transactions
Mr. John H. Burlingame is a retired partner of
Baker & Hostetler LLP, which provided legal services to
the Company and to The Edward W. Scripps Trust (the
Trust) in 2004 and is expected to perform such
services in 2005.
Mr. Nicholas B. Paumgarten is a managing director of
J.P. Morgan Chase (J.P. Morgan).
J.P. Morgan Chase Bank (an affiliate of J.P. Morgan)
is a lender to the Company under its Competitive Advance/
Revolving Credit Agreement. J.P. Morgan has performed
investment banking services for the Company in the past and may
again perform investment banking services for the Company.
Mr. Kenneth W. Lowe entered into an employment agreement
with the Company on June 16, 2003, pursuant to which he
serves as President and Chief Executive Officer and as a member
of the board of directors. The agreement continues through
December 31, 2006, and thereafter renews for successive
one-year terms unless terminated. During the term, Mr. Lowe
is entitled to an annual salary, to be set by the Compensation
Committee of the Company, that is not less than that paid to him
for the immediately preceding year. Under the agreement,
Mr. Lowe participates in the Companys annual bonus
plan for senior executives with an annual target bonus
opportunity equal to no less than 80% of his salary. A
description of Mr. Lowes compensation for 2004,
including awards granted pursuant to his employment agreement,
is included in the Compensation Committees report under
Compensation of the Chief Executive Officer.
Mr. Lowes agreement was amended on September 30,
2004. Such amendment converted 40,000 restricted shares to
40,000 restricted share units under the terms of the
Companys Long-Term Incentive Plan. Effective
January 1, 2005, Mr. Lowes annual base salary
was increased to $1,050,000 and his target bonus opportunity was
increased to 100% of his annual base salary.
Deferred Stock Units. In recognition of the value
Mr. Lowe created in the Companys national television
networks and to provide him with an incentive to enhance the
profitability of the Company in the future, Mr. Lowe
received a grant of 192,076 deferred stock units in 1999 under
his previous
20
employment agreement. As of the date of the employment
agreement, 80% of these deferred stock units had matured and
153,662 Class A Common Shares of the Company had been
issued in exchange for such units. On January 15, 2004,
under his employment agreement, the remaining deferred stock
units matured and were exchanged for 38,414 Class A Common
Shares, and Mr. Lowe received $50,706, which equals the
amount of the cash dividends that would have been paid on such
shares had they been outstanding between July 20, 1999 and
January 15, 2004.
Restricted Stock. In connection with his employment
agreement, the Company granted Mr. Lowe 310,638 restricted
Class A Common Shares under the Companys Incentive
Plan, vesting in equal annual installments from 2004 through
2007. As of the date of this proxy statement, 155,320 of such
shares vested. On September 30, 2004, 40,000 of these
shares were converted to restricted share units. Furthermore,
201,746 restricted Class A Common Shares granted in
connection with the previous employment agreement will continue
to vest in accordance with their original vesting schedules. As
of the date of this proxy statement, 113,426 of such shares have
vested. All restricted shares that have not vested shall be
forfeited if Mr. Lowe elects Early Retirement (as defined
in the Agreement) before January 1, 2007, or if the Company
terminates his employment as a result of criminal conviction. If
Mr. Lowes employment is terminated for any other
reason (including a Change in Control), all restricted shares
shall vest immediately.
Termination. If the Company terminates the employment
agreement for Cause (as defined in the agreement) or if
Mr. Lowe terminates the agreement for any reason other than
Good Reason (as defined in the agreement), Mr. Lowe will
not be entitled to any further compensation or other benefits
and, except in certain circumstances, will forfeit all
outstanding equity awards.
If Mr. Lowe dies or suffers Permanent Disability, the
Company must continue to pay Mr. Lowe (or his estate) his
salary and provide him (and his family) with medical benefits
for two years. Also, all outstanding equity awards will vest
with the options remaining exercisable for the remainder of the
original term.
If the Company terminates the agreement without Cause or
Mr. Lowe terminates it for Good Reason (other than within
two years following a Change in Control), the Company must
continue to pay Mr. Lowe his salary for the greater of
three years or the balance of the term remaining at the time of
such termination. Mr. Lowe will also be entitled to receive
an amount equal to the target bonus then in effect times the
greater of two or the number of years remaining under the term
of the agreement, and he will be entitled to all benefits for
the greater of two years or the balance of the term of the
agreement, subject to certain offsets. Also, outstanding equity
awards will vest with the options remaining exercisable for the
remainder of the original term.
Change in Control. If the Company terminates the
employment agreement without Cause within two years after a
Change in Control or Mr. Lowe terminates it for Good Reason
within such two-year period, the Company must pay him an amount
equal to three times the greater of his then current salary or
his salary at the highest annualized rate paid in the three
calendar years prior to the date of termination and in addition
an amount equal to three times the greater of 100% of his target
bonus for the year of such termination or the highest annual
bonus he received for the three calendar years prior to
termination. Until the earliest of the third anniversary of the
Change in Control termination or Mr. Lowes death or
his securing of full-time employment which provides
substantially equivalent benefits, the Company will provide
Mr. Lowe and his eligible dependents with benefits
substantially equivalent to those which were received
immediately prior to the date of termination or a Change in
Control. The Company shall also provide Mr. Lowe with
reasonable outplacement services for a period of eighteen months
and will reimburse him for his reasonable legal expenses in an
amount not to exceed $75,000 should he have to institute legal
proceedings to enforce the Change in Control provisions of the
agreement. All outstanding equity awards will vest upon a Change
in Control with the options remaining exercisable for the
remainder of the original term.
Indemnification. Under the agreement, the Company is
required to indemnify Mr. Lowe to the full extent permitted
under Ohio law and must maintain directors and officers
liability insurance covering
21
him at a level and on terms and conditions no less favorable
than the coverage the Company currently provides its directors
and senior level officers.
Legal Fees. In 2003, the Company reimbursed Mr. Lowe
$100,000 of the legal fees he incurred in the negotiation of the
employment agreement.
The Company employed Mr. B. Jeff Craig as its vice
president and chief technology officer effective
February 19, 2001. Under the terms of his employment
agreement, which expired in 2003, the Company loaned
Mr. Craig $300,000, to be repaid, with interest at
6% per year, by January 2004. The final installment of that
loan obligation, $134,905, was paid in January 2004.
The Company employed Mr. Joseph G. NeCastro as its senior
vice president and chief financial officer effective May 3,
2002. To assist Mr. NeCastro in satisfying an obligation
with his previous employer, the Company paid him a $661,626
signing bonus (including the gross-up for withholding taxes) and
loaned him $356,905. If Mr. NeCastro voluntarily resigns
within three years of his date of hire, he will be required to
pay the Company $350,000 of the signing bonus. If he voluntarily
resigns between three and five years of his date of hire, he
will be required to pay the Company $175,000 of the signing
bonus. Mr. NeCastro must repay the loan, with interest at
4.75% per year, by July 26, 2007. A portion of
Mr. NeCastros annual performance bonus, if any, will
be used to repay interest and principal on the loan.
Simultaneously with such payment, the Company has agreed to pay
Mr. NeCastro an additional bonus, the net amount of which
will equal withholding taxes applicable to the portion of the
bonus used for the loan payment. In February 2004,
Mr. NeCastro repaid $80,000 of his loan balance. If his
employment with the Company is terminated for any reason, all
outstanding principal and accrued interest must be paid within
thirty (30) days of the date of such termination.
Mr. Alan M. Horton retired from his role as senior vice
president/newspapers on December 16, 2004. Upon his
retirement, the Company entered into a Consulting Agreement and
a Special Retirement Supplement Agreement with Mr. Horton.
Mr. Horton will serve as an independent consultant for the
Company for a three-year term that began on January 1,
2005. Mr. Horton will provide the Company and its
subsidiaries and affiliates and the Scripps Howard Foundation
with business advice and other consulting services, as may be
requested from time to time by the Company. In consideration for
all services performed by Mr. Horton, he will be paid a
monthly fee of $12,500 during the term of the consulting
agreement. In addition, should Mr. Horton satisfy his
obligations and the agreement expires in the normal course, the
Company will pay Mr. Horton a one-time fee of $50,000
within thirty days following the expiration of the consulting
term. The Special Retirement Supplement agreement provides
Mr. Horton with three equal payments of $166,667 on
January 15, 2005, January 15, 2006 and
January 15, 2007.
The Company employed Mr. Mark G. Contreras as its vice
president of newspaper operations effective January 4,
2005. Under the terms of the compensation arrangements
Mr. Contreras received a signing bonus of $150,000. Half of
such bonus was paid in January 2005 and the remainder is payable
on July 5, 2005, conditioned upon his continuing employment
through that date. Mr. Contreras also received a grant of
4,000 performance-based restricted shares pursuant to the
Companys 1997 Long-Term Incentive Plan. Mr. Contreras
will also receive the following: (i) an annualized base
salary of $450,000; (ii) an annual bonus target amount
equal to 45% of his annual base salary (while the bonus he
receives will depend upon the Companys achievement of
earnings per share and operating cash flow targets for the
newspaper operating segment, the Company has guaranteed that
Mr. Contreras will receive at least $151,875, no later than
March 2006.); (iii) a one-time bonus of $50,000 if certain
2005 targets related to on-line revenue and advertising
benchmarks for the newspaper operating segment are met;
(iv) a severance payment equal to one and one-half times
his base salary and annual bonus if he is terminated without
cause or if he leaves the Company for good reason prior to
December 31, 2006, other than within 18 months
following a change in control. Cause is defined in the
Companys Senior Executive Change in Control Plan. Good
reason is defined as (a) a material reduction in his
starting pay or target bonus, (b) an assignment of duties
that is materially inconsistent with, or materially less than
his duties as vice president of newspaper operations or
(c) an assignment or relocation without his consent. In no
event would he receive a severance payment and a payment under
the Change in Control
22
Plan. Effective February 10, 2005, pursuant to the terms of
the Companys 1997 Long-Term Incentive Plan,
Mr. Contreras received a grant of 4,426 performance-based
restricted shares and a nonqualified stock option agreement to
purchase 15,000 of the Companys Class A Common
shares.
PROPOSAL 2
To amend the Companys 1997 Long-Term Incentive Plan to
reserve 6,000,000 additional Class A Common Shares for
issuance under the Plan and to add certain provisions relating
to grants of performance based restricted shares.
General
There will be submitted at the annual meeting for action by the
holders of Common Voting Shares a proposal to amend The E. W.
Scripps Companys 1997 Long-Term Incentive Plan (the
Plan). The Plan amendment would increase the number
of shares authorized for issuance under the Plan from 18,317,400
to 24,317,400. The Board of directors approved the proposed
amendments on February 10, 2005.
Reservation of Additional Shares. The Plan presently
provides for the issuance of 18,317,400 Class A Common
Shares. Through January 31, 2005, awards for 1,563,448
restricted shares and options for 13,939,800 shares had
been granted under the Plan to directors, executive officers and
key employees of the Company. On that date, 2,814,152
Class A Common Shares were available for issuance in the
future under the Plan. If proposal 2 is approved by the
holders of the Common Voting Shares, on April 14, 2005,
8,814,152 shares will be available for issuance under the
Plan. This 8,814,152, along with the 15,503,248 shares
already granted under the Plan, would represent an amount equal
to approximately 19.2% of the Class A Common Shares
outstanding and approximately 14.9% of the aggregate of the
Class A Common Shares and Common Voting Shares outstanding.
The closing sale price of the Class A Common Shares on the
New York Stock Exchange on February 18, 2005 was $46.69. At
that date, the aggregate value of the additional
6,000,000 shares proposed to be reserved for purposes of
the Plan was $280,140,000.
Performance Measures. The Plan presently allows for
grants of restricted shares. Under the terms of the amended
plan, the Incentive Plan Committee (the Committee)
will be able to grant shares, the vesting of which shall be
based on the attainment of written performance goals approved by
the Committee for a performance period established by the
Committee (i) while the outcome for such performance period
is substantially uncertain and (ii) no more than
90 days after the commencement of such performance period
to which the performance goal relates. The performance goals,
which must be objective, shall be based solely upon one or more
of the following criteria:
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1. |
Earnings per share; |
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2. |
Operating cash flow; |
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3. |
Gross margin; |
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4. |
Operating or other expenses; |
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5. |
Earnings before interest and taxes (EBIT); |
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6. |
Earnings before interest, taxes, depreciation and amortization; |
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7. |
Net income; |
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8. |
Return on investment (determined with reference to one or more
categories of income or cash flow and one or more categories of
assets, capital or equity); and |
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9. |
Stock price appreciation. |
The foregoing criteria may relate to the Company, one or more of
its subsidiaries or one or more of its divisions, units,
partnerships, joint ventures or minority investments, product
lines or products or
23
any combination of the foregoing, and may be applied on an
absolute basis or be relative to the Companys annual
budget, one or more peer group companies or indices, or any
combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of
the Code, the performance goals may be calculated without regard
to extraordinary items or may be adjusted for unusual or
unplanned items.
Certain Technical Amendments. To comply with recent
legislation relating to non-qualified deferred compensation and
with certain changes in tax regulations, the Company is
proposing certain technical amendments to the Plan.
Section 5 of the Plan will be amended to indicate that the
maximum number of shares for which incentive stock options may
be granted under the Plan shall not exceed 5,000,000 for the
duration of the Plan. Additionally, Section 21 will be
added to the Plan to provide that if any payment to be made
under the Plan is considered non-qualified deferred
compensation subject to Section 409(A) of the Code,
payment thereof will be delayed for six (6) months
following separation from service of the Plan participant.
If the proposed amendment is approved by the holders of Common
Voting Shares, the Companys compensation committee and/or
incentive plan committee will from time to time consider awards
for key employees and directors of the Company under the Plan.
Such decisions regarding awards are in the Committees sole
discretion. A copy of the Plan is attached as an exhibit to this
proxy statement.
Tax Consequences
The following is a summary of the federal income tax
consequences related to awards granted under the Plan.
Nonqualified Stock Options. With respect to nonqualified
stock options generally, (a) no income is realized by the
optionee at the time the option is granted, (b) upon
exercise of the option, the optionee realizes ordinary income in
an amount equal to the excess, if any, of the fair market value
of the shares on the date of exercise over the exercise price
paid for the shares, and the Company is entitled to a tax
deduction in the amount of ordinary income realized (provided
that applicable withholding or reporting requirements are
satisfied), and (c) upon disposition of the shares received
upon the exercise of the option, the optionee recognizes, as
either short-term or long-term capital gain (or loss), depending
upon the length of time that the optionee has held the shares,
income (or loss) equal to the difference between the amount
realized and the fair market value of the shares on the date of
exercise of the option.
With respect to the exercise of a nonqualified stock option and
the payment of the option price by the delivery of Class A
Common Shares, to the extent that the number of shares received
does not exceed the number of shares surrendered, no taxable
income will be realized by the optionee at that time, the tax
basis of the shares received will be the same as the tax basis
of the shares surrendered, and the holding period of the
optionee in the shares received will include his holding period
in the shares surrendered. To the extent that the number of
shares received exceeds the number of shares surrendered,
ordinary income will be realized by the optionee at that time in
the amount of the fair market value of such excess shares, the
tax basis of such excess shares will be such fair market value,
and the holding period of the optionee in such shares will begin
on the date such shares are transferred to the optionee.
Capital Gains. Under current law, capital gains are
subject to the same tax rates that apply to ordinary income,
except the rate on long-term capital gains may not exceed 15%.
Capital losses may be utilized to offset capital gains to the
extent of capital gains, and $3,000 of capital losses in excess
of capital gains ($1,500 in the case of a married individual
filing a separate return) is deductible against other income. To
receive long-term capital gain (loss) treatment with respect to
any appreciation (depreciation) in the value of the shares
acquired pursuant to the Plan, the participant must hold such
shares for more than one year. Shares held for one year or less
will receive short-term capital gain or loss treatment.
24
Vote Necessary for Approval
Under the listing standards of the New York Stock Exchange, the
Company is required to obtain shareholder approval for material
revisions to the terms of compensation plans that (like the
Long-Term Incentive Plan) provide equity-based awards to
employees or directors.
The affirmative vote of the holders of a majority of the Common
Voting Shares present or represented at the annual meeting
(including abstentions) is required to approve the amended and
restated Plan. Broker nonvotes are not counted as voting. The
board of directors recommends that holders of such shares
vote FOR proposed amendments to the Plan. It is expected
that the Common Voting Shares owned by The Edward W. Scripps
Trust will be voted in favor of this proposal, thus assuring its
approval. Proxies for Common Voting Shares solicited by the
board will be voted FOR the proposal unless shareholders specify
a contrary choice in their proxies.
PROPOSAL 3
To approve and amend the Companys Executive Bonus Plan.
General
There will be submitted at the annual meeting for action by the
holders of Common Voting Shares a proposal to approve The E. W.
Scripps Companys Executive Bonus Plan (the Bonus
Plan) and to amend it to conform to changes in the
Internal Revenue Code (the Code) with respect to
nonqualified deferred compensation, to modify the definition of
Change in Control under the Bonus Plan and to make certain
technical and administrative amendments to the Bonus Plan. The
board of directors approved the proposed amendments on
February 10, 2005.
The purpose of the plan is to promote the interests of The E. W.
Scripps Company and its shareholders by providing incentive
compensation for certain designated key executives and employees
of the Company and its subsidiaries. The Plan was first approved
by the shareholders on May 18, 2000.
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public companies for compensation
over $1.0 million paid to the chief executive officer and
the four other most highly compensated executive officers
employed by the Company at the end of the applicable year.
Performance-based compensation will not be subject to the
deduction limit if certain requirements are met. In the case of
the Bonus Plan, one such requirement is that it be approved by
the Companys shareholders every five years. A copy of the
Plan is attached as an exhibit to this proxy statement.
Proposed amendments to the Bonus Plan are summarized below.
To conform to changes in the Internal Revenue Code. An
amendment has been made to the plan to provide that if, any
payment to be made under the Plan is nonqualified deferred
compensation subject to Section 409A of the Code,
such payment will be delayed for six (6) months following
the individual participants separation from service.
To modify the definition of Change in Control. The
proposed amendment will conform the Plans Change in
Control definition to correspond with such definition in
the Companys 1997 Long-Term Incentive Plan. Under the
proposed definition, a Change in Control shall occur
with respect to all participants in the Plan when:
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(i) any Person becomes a Beneficial Owner of a
majority of the outstanding Common Voting Shares, $.01 par
value, of the Company (or shares of capital stock of the Company
with comparable or unlimited voting rights), excluding, however,
The Edward W. Scripps Trust (the Trust) and the
trustees thereof, and any person that is or becomes a party to
the Scripps Family Agreement, dated October 15, 1992, as
amended currently and as it may be amended from time to time in
the future (the Family Agreement); |
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(ii) the majority of the board of directors of the Company
consists of individuals other than incumbent directors as
defined in the Plan; or |
25
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(iii) assets of the Company accounting for 90% or more of
the Companys revenues (hereinafter referred to as
substantially all of the Companys assets) are
disposed of pursuant to a merger, consolidation, sale, or plan
of liquidation and dissolution (unless the Trust or the parties
to the Family Agreement have Beneficial Ownership of, directly
or indirectly, a controlling interest (defined as owning a
majority of the voting power) in the entity surviving such
merger or consolidation or acquiring such assets upon such sale
or in connection with such plan of liquidation and dissolution); |
To make certain technical and administrative amendments.
The proposed technical and administrative amendments to the Plan
are immaterial in nature.
Vote Necessary for Approval
The affirmative vote of the holders of a majority of the Common
Voting Shares present or represented at the annual meeting
(including abstentions) is required to approve the amended and
restated Plan. Broker nonvotes are not counted as voting. The
board of directors recommends that holders of such shares
vote FOR the Bonus Plan. It is expected that the Common
Voting Shares owned by The Edward W. Scripps Trust will be voted
in favor of this proposal, thus assuring its approval. Proxies
for Common Voting Shares solicited by the board will be voted
FOR the proposal unless shareholders specify a contrary choice
in their proxies.
PROPOSAL 4
To approve an amendment to the Companys Code of Regulation.
General
There will be submitted at the annual meeting for action by the
holders of Common Voting Shares a proposal to amend
Article 1, Section 6 of The E. W. Scripps
Companys Code of Regulations. Such amendment will allow
telephonic and Internet voting. The board of directors approved
the proposed amendment on February 10, 2005.
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Section 6. Proxies. A person who is entitled
to attend a shareholders meeting, to vote thereat, or to execute
consents, waivers or releases, may be represented at such
meeting or vote thereat, and execute consents, waivers and
releases, and exercise any of his other rights, by proxy or
proxies appointed by a writing signed by such person or
appointed by a verifiable communication authorized by such
person. |
Vote Necessary for Approval
The affirmative vote of the holders of a majority of the Common
Voting Shares outstanding as of the record date for the annual
meeting is required to approve the amendment to the Code of
Regulations. Broker nonvotes have the effect of a vote against
the proposal. The board of directors recommends that holders of
such shares vote FOR the amended Code. It is expected that
the Common Voting Shares owned by The Edward W. Scripps Trust
will be voted in favor of the amendment to the Companys
Code of Regulations, thus assuring its approval. Proxies for
Common Voting Shares solicited by the board will be voted FOR
the proposal unless shareholders specify a contrary choice in
their proxies.
REPORT ON SECTION 16(a) BENEFICIAL OWNERSHIP
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors and executive officers,
and owners of more than ten percent of the Companys
Class A Common Shares (10% shareholders), to
file with the Securities and Exchange Commission (the
SEC) and the New York Stock Exchange initial reports
of ownership and reports of changes in ownership of Class A
Common Shares and other equity securities of the Company.
Executive officers, directors and 10% shareholders are required
by SEC regulations to furnish the Company with copies of all
forms they file pursuant to Section 16(a).
26
To the Companys knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
year ended December 31, 2004, all Section 16(a) filing
requirements applicable to its executive officers, directors and
10% shareholders were complied with, except that one Form 4
for one officer was filed two days late.
REPORT ON INDEPENDENT PUBLIC ACCOUNTANTS
At its March 7, 2005 meeting, the audit committee of the
board of directors approved the appointment of
Deloitte & Touche LLP as independent public accountants
for the Company for the fiscal year ending December 31,
2005. A representative of Deloitte & Touche LLP is
expected to be present at the annual meeting and will be
available to answer questions.
REPORT ON SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Any shareholder proposals intended to be presented at the
Companys 2006 Annual Meeting of Shareholders must be
received by the Company at 312 Walnut Street, Suite 2800,
Cincinnati, Ohio, 45202, on or before November 11, 2005,
for inclusion in the Companys proxy statement and form of
proxy relating to the 2006 Annual Meeting of Shareholders.
If a shareholder intends to raise a proposal at the
Companys 2006 annual meeting that he or she does not seek
to have included in the Companys proxy statement, the
shareholder must notify the Company of the proposal on or before
January 6, 2006. If the shareholder fails to notify the
Company, the Companys proxies will be permitted to use
their discretionary voting authority with respect to such
proposal when and if it is raised at such annual meeting,
whether or not there is any discussion of such proposal in the
2006 proxy statement.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
Any shareholder wishing to communicate with the board may do so
by addressing letters to the Corporate Secretary at 312 Walnut
Street, Suite 2800, Cincinnati, Ohio, 45202. All
communications referring to material matters will be relayed to
the directors at their next board meeting.
OTHER MATTERS
The solicitation of proxies is made by and on behalf of the
board of directors. The cost of the solicitation will be borne
by the Company. The Company may also reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Companys Class A
Common Shares.
The presence of any shareholder at the meeting will not operate
to revoke his proxy. A proxy may be revoked at any time, insofar
as it has not been exercised, by giving written notice to the
Company or in open meeting.
The persons named in the enclosed proxy, or their substitutes,
will vote the shares represented by such proxy at the meeting.
The forms of proxy for the two respective classes of stock
permit specification of a vote for persons nominated for
election as directors by each such class of stock, as set forth
under Election of Directors above, and the
withholding of authority to vote in the election of such
directors or the withholding of authority to vote for one or
more specified nominees. Where a choice has been specified in
the proxy, the shares represented thereby will be voted in
accordance with such specification. If no specification is made,
such shares will be voted to elect directors as set forth under
Election of Directors.
Under Ohio law and the Companys Articles of Incorporation,
broker non-votes for Class A Common Shares and abstaining
votes for both Class A Common Shares and Common Voting
Shares will not be counted in favor of, or against, election of
any nominee.
27
If any other matters shall properly come before the meeting, the
persons named in the proxy, or their substitutes, will vote
thereon in accordance with their judgment. The board does not
know of any other matters which will be presented for action at
the meeting.
A copy of the Companys Annual Report for the year ended
December 31, 2004 is enclosed.
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By order of the board of directors, |
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M. Denise
Kuprionis, Esq.
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Vice President |
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Corporate Secretary/Director of Legal Affairs |
March 23, 2005
28
THE E. W. SCRIPPS COMPANY
AUDIT COMMITTEE CHARTER
Approved by the committee on February 26, 2003 and
ratified by the board of directors on February 27,
2003.
The Audit Committee amended the Charter on March 7,
2005.
The Audit Committee shall provide assistance to the Board of
Directors in fulfilling its responsibility to shareholders,
potential shareholders, and the investment community. The
purpose of the committee is to assist the Board in fulfilling
its oversight responsibility relating to (i) the integrity
of the companys financial statements and financial
reporting process and the companys systems of internal
accounting and financial controls; (ii) the performance of
the internal audit services function; (iii) the annual
independent audit of the Companys financial statements,
the engagement of the independent auditors and the evaluation of
the independent auditors qualifications, independence,
performance and fees; (iv) the compliance by the company
with legal and regulatory requirements, including the
Companys disclosure controls and procedures; (v) the
evaluation of enterprise risk issues; and (vi) the
fulfillment of the other responsibilities set out herein. The
Committee shall also prepare the report of the committee
required to be included in the companys annual proxy
statement.
In discharging its responsibilities, the Committee is not itself
responsible for the planning or conduct of audits or for any
determination that the Companys financial statements are
complete and accurate or in accordance with generally accepted
accounting principles. This is the responsibility of management
and the independent auditors.
A. Charter. At least annually, this charter shall be
reviewed and reassessed by the Committee and any proposed
changes shall be submitted to the Board of Directors for
approval.
B. Members. The members of the Committee shall be
appointed and/or removed by the Board of Directors, upon the
recommendation of the Nominating & Governance
Committee, and shall number at least three, who meet the
independence, experience and expertise requirements of the New
York Stock Exchange and applicable law. The Board of Directors
shall also designate a Committee Chair. No member shall
simultaneously serve on the audit committee of more than two
other public companies. The Board of Directors shall also make a
determination on the independence of each Committee member and a
determination as to whether or not there is a financial expert,
as determined by the applicable rules, serving on the Committee.
C. Meetings. In order to discharge its
responsibilities, the Committee shall each year establish a
schedule of meetings; additional meetings may be scheduled as
required. In planning the annual schedule of meetings, the
Committee shall ensure that sufficient opportunities exist for
its members to meet separately with the independent auditors and
the head of internal audit, without management present; to meet
separately with management, without the independent auditors or
the head of internal audit present; and to meet in private with
only the Committee members present.
D. Quorum; Action by Committee. A quorum at any
Committee meeting shall be at least two members. All
determinations of the Committee shall be made by a majority of
its members present at a meeting duly called or held, except as
specifically provided herein (or where only two members are
present, by unanimous vote). Any decision or determination of
the Committee reduced to writing and signed by all of the
members of the Committee shall be fully as effective as if it
had been made at a meeting duly called and held.
E. Agenda, Minutes and Reports. An agenda, together
with materials relating to the subject matter of each meeting,
shall be sent to members of the Committee prior to each meeting.
Minutes for all meetings of the Committee shall be prepared to
document the Committees discharge of its responsibilities.
The minutes shall be circulated in draft form to all Committee
members to ensure an accurate
29
final record, shall be approved at a subsequent meeting of the
Committee and shall be made available to the full Board of
Directors. The Committee shall make regular reports to the Board
of Directors.
The following shall be the principal responsibilities of the
Audit Committee:
A. Engagement of Independent Auditors. The Committee
shall have sole authority to engage the independent auditors,
including in connection with any non-audit services, and
oversee, evaluate and, where appropriate, replace the
independent auditors. The Committee shall approve the fees paid
to the independent auditors, including in connection with any
non-audit services.
B. Determination as to Independence and Performance of
Independent Auditors. The Committee shall receive periodic
reports from the independent auditors as required by the
Independence Standards Board (or any successor body) regarding
the auditors independence, which shall include all
relationships between the independent auditor and the Company
and which shall be not less frequently than annually. The
Committee shall discuss such reports with the auditors, and if
so determined by the Committee, take appropriate action to
satisfy itself of the independence of the auditors. The
Committee shall review the performance of the Companys
independent auditors annually. In doing so, the Committee shall
consult with management and the head of internal audit and shall
obtain and review a report by the independent auditors
describing their internal control procedures, material issues
raised by their most recent internal quality control review, or
peer review (if applicable), or by any inquiry or investigation
by governmental or professional authorities for the preceding
five years and the response of the independent auditors. The
Committee shall consider whether it is appropriate to adopt a
policy of rotating independent auditors on a periodic basis.
C. Determination as to Performance of Internal
Auditors. The Committee shall annually review the experience
and qualifications of the senior members of the internal audit
department and the quality control procedures of the internal
auditors.
D. Audits by Internal and Independent Auditors. The
Committee shall discuss with the internal auditor and the
independent auditors the overall scope and plans for their
respective audits, including the adequacy of staffing and other
factors that may affect the effectiveness and timeliness of such
audits. In this connection, the Committee shall discuss with
management, the internal auditor and the independent auditors
the Companys major risk exposures (whether financial,
operating or otherwise), the adequacy and effectiveness of the
accounting and financial controls, and the steps management has
taken to monitor and control such exposures and manage legal
compliance programs, among other considerations that may be
relevant to their respective audits. The Committee shall review
with management and the independent auditors managements
annual internal control report, including any attestation of
same by the independent auditors. Management and the internal
auditor shall report periodically to the Committee regarding any
significant deficiencies in the design or operation of the
Companys internal controls, material weaknesses in
internal controls and any fraud (regardless of materiality)
involving persons having a significant role in the internal
controls, as well as any significant changes in internal
controls implemented by management during the most recent
reporting period of the Company.
The Committee shall discuss with management the companys
risk exposures and the steps management has taken to monitor and
control such exposures, including the companys risk
assessment and risk management procedures.
E. Pre-Approval of Audit and Non-Audit Services. The
Committee shall approve guidelines for the retention of the
independent auditors for any non-audit service and the fee for
such service and shall determine procedures for the approval of
audit and non-audit services in advance. Annually, the Committee
may approve in advance any audit or non-audit service provided
to the Company by the independent auditors, up to a pre-approved
amount and so long as such individual work assignments are
approved by the Chief Financial Officer. The Chief Financial
Officer shall annually report to the Committee the status all
such individual work assignments.
30
F. Review of Disclosure Controls and Procedures. The
Committee shall review with the Chief Executive Officer and the
Chief Financial Officer the Companys disclosure controls
and procedures and shall review periodically, but in no event
less frequently than quarterly, managements conclusions
about the efficacy of such disclosure controls and procedures,
including any significant deficiencies in, or material
non-compliance with, such controls and procedures.
G. Review of Managements Annual Report on Internal
Controls Over Financial Reporting. The Committee shall
review with the Chief Financial Officer and the Controller
managements annual report on internal controls over
financial reporting (the Internal Control Report) as
required by section 404 of the Sarbanes-Oxley Act. The
Committee shall ensure that management (a) establishes and
maintains an adequate system of internal controls over financial
reporting and (b) conducts an assessment of the
effectiveness of the Companys system of internal controls
over financial reporting. The Committee will also review the
attestation of the Companys independent auditors as to
managements Internal Control Report.
H. Review of Annual SEC Filings. The Committee shall
review with management and the independent auditors the
financial information to be included in the Companys
Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of the
Form 10-K), including the disclosures under
Managements Discussion and Analysis of Financial
Condition and Results of Operations, their judgment about
the quality, not just acceptability, of accounting principles,
the reasonableness of significant judgments, the clarity of the
disclosures in the financial statements and the adequacy of
internal controls. The Committee shall also discuss the results
of the annual audit and any other matters required to be
communicated to the Committee by the independent auditors under
generally accepted auditing standards, applicable law or listing
standards, including matters required to be discussed by
Statement on Auditing Standards No. 61, as amended by
Statement on Auditing Standards No. 90. Based on such
review and discussion, the Committee shall make a determination
whether to recommend to the Board of Directors that the audited
financial statements be included in the Companys
Form 10-K.
I. Review of Quarterly SEC Filings and Other
Communications. The Committee shall review and discuss with
management and the independent auditors the quarterly financial
information to be included in the Companys Quarterly
Reports on Form 10-Q, including the disclosures under
Managements Discussion and Analysis of Financial
Condition and Results of Operations, and shall discuss any
other matters required to be communicated to the Committee by
the independent auditors under generally accepted auditing
standards, applicable law or listing standards. The Committee
shall also review the Companys earnings press releases and
financial information and earnings guidance periodically
provided to analysts and rating agencies (which may consist of a
discussion of the types of information to be provided and types
of presentations to be made) to the extent required by
applicable law or listing standards, or as it deems necessary or
appropriate. The Committee shall also discuss the results of the
independent auditors review of the Companys
quarterly financial information conducted in accordance with
Statement on Auditing Standards No. 71.
J. Review of Certain Matters with Internal and
Independent Auditors. The Committee shall review
periodically with management, the internal auditor and
independent auditors the effect of new or proposed regulatory
and accounting initiatives on the Companys financial
statements and other public disclosures.
K. Consultation with Independent Auditors. The
Committee shall review with the independent auditors any
problems or difficulties the auditors may have encountered in
connection with the annual audit or otherwise and any management
letter provided by the auditors and the Companys response
to that letter. Such review shall address any difficulties
encountered in the course of the audit work, including any
restrictions on the scope of activities or access to required
information, any disagreements with management regarding
generally accepted accounting principles and other matters,
material adjustments to the financial statements recommended by
the independent auditors and adjustments that were proposed but
passed, regardless of materiality, critical
accounting policies and alternative
31
treatments of financial information under GAAP. The Committee
may also review the audit teams communications with its
national office.
L. Preparation of Report for Proxy Statement. The
Committee shall produce the report required to be included in
the Companys annual proxy statement, all in accordance
with applicable rules and regulations.
M. Committee Performance Evaluation. The Committee
shall evaluate its performance on an annual basis based on
criteria developed by the Nominating and Governance Committee.
N. Policies for Employment of Former Audit Staff.
The Committee shall approve guidelines for the Companys
hiring of employees or former employees of the independent
auditors, which shall meet the requirements of applicable law
and listing standards.
O. Establishment of Whistleblowing
Procedures. The Committee shall establish procedures for the
receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission by
employees of the Company of concerns regarding questionable
accounting or auditing matters.
P. Review of Legal and Regulatory Compliance. The
Committee shall periodically review with management, including
the General Counsel, and the independent auditors any
correspondence with, or other action by, regulators or
governmental agencies and any employee complaints or published
reports that raise concerns regarding the Companys
financial statements, accounting or auditing matters or
compliance with the Companys Code of Business Conduct and
Ethics. The Committee shall also meet periodically and
separately with the General Counsel and other appropriate legal
staff of the Company to review material legal affairs of the
Company and the Companys compliance with applicable law
and listing standards.
Q. Review of Certain Transactions with Directors and
Related Parties. The Committee shall review periodically,
but no less frequently than annually, a summary of the
Companys transactions with Directors and officers of the
Company and with firms that employ Directors, as well as any
other material related party transactions.
R. Access to Records, Consultants and Others. The
Committee shall have full authority (i) to investigate any
matter brought to its attention with full access to all books,
records, facilities and personnel of the Company; (ii) to
retain outside legal, accounting or other consultants to advise
the Committee; and (iii) to request any officer or employee
of the Company, the Companys outside counsel, internal
auditor, internal audit service providers or independent
auditors to attend a meeting of the Committee or to meet with
any members of, or consultants to, the Committee.
S. Delegation. The Committee may delegate any of its
responsibilities to a subcommittee comprised of one or more
members of the Committee.
T. Other Delegated Responsibilities. The Committee
shall also carry out such other duties that may be delegated to
it by the Board of Directors.
32
Approved by the board of directors 2/10/05
Subject to approval by the shareholders on 4/14/05
THE E. W. SCRIPPS COMPANY
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
April 14, 2005
The plan shall be known as The E. W. Scripps Company 1997
Long-Term Incentive Plan (the Plan). The purpose of
the Plan is to promote the long-term growth and profitability of
The E. W. Scripps Company (the Company) and its
subsidiaries by (i) providing directors of the Company and
officers and key employees of the Company and its subsidiaries
with incentives to improve stockholder values and contribute to
the success of the Company and (ii) enabling the Company to
attract, retain and reward the best available persons for
positions of substantial responsibility. Grants of incentive or
nonqualified stock options, stock appreciation rights in tandem
with or independent of options (SARs), restricted or
nonrestricted share awards, performance units, or any
combination of the foregoing may be made under the Plan.
(a) Affiliate means any Person
controlling or under common control with the Company or any
Person of which the Company directly or indirectly has
Beneficial Ownership of securities having a majority of the
voting power.
(b) Beneficial Ownership and
Beneficial Owner have the meanings provided in
Rule 13d-3 promulgated under the Securities Exchange Act of
1934 (the Exchange Act).
(c) Cause means:
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(i) commission of a felony or an act or series of acts that
results in material injury to the business or reputation of the
Company or any subsidiary; |
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(ii) willful failure to perform duties of employment, if
such failure has not been cured in all material respects within
twenty (20) days after the Company or any subsidiary, as
applicable, gives notice thereof; or |
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(iii) breach of any material term, provision or condition
of employment, which breach has not been cured in all material
respects within twenty (20) days after the Company or any
subsidiary, as applicable, gives notice thereof. |
(d) Change in Control shall occur with
respect to all participants in the Plan when:
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(i) any Person becomes a Beneficial Owner of a
majority of the outstanding Common Voting Shares, $.01 par
value, of the Company (or shares of capital stock of the Company
with comparable or unlimited voting rights), excluding, however,
The Edward W. Scripps Trust (the Trust) and the
trustees thereof, and any person that is or becomes a party to
the Scripps Family Agreement, dated October 15, 1992, as
amended currently and as it may be amended from time to time in
the future (the Family Agreement); |
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(ii) the majority of the Board of Directors of the Company
(the Board) consists of individuals other than
Incumbent Directors; or |
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(iii) assets of the Company accounting for 90% or more of
the Companys revenues (hereinafter referred to as
substantially all of the Companys assets) are
disposed of pursuant to a merger, consolidation, sale, or plan
of liquidation and dissolution (unless the Trust or the parties
to the Family Agreement have Beneficial Ownership of, directly
or indirectly, a controlling interest (defined as owning a
majority of the voting power) in the entity surviving such
merger or consolidation |
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or acquiring such assets upon such sale or in connection with
such plan of liquidation and dissolution); |
(e) Change in Control shall occur with
respect to a particular participant in the Plan employed by a
particular subsidiary or division of a subsidiary when:
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(i) any Person, other than the Company or an Affiliate,
acquires Beneficial Ownership of securities of the particular
subsidiary of the Company employing the participant having at
least fifty percent (50%) of the voting power of such
subsidiarys then outstanding securities; or |
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(ii) the particular subsidiary sells to any Person other
than the Company or an Affiliate all or substantially all of the
assets of the particular division thereof to which the
participant is assigned. |
(f) Disability means a permanent
disability deemed to have occurred under any Company-wide
employee long-term disability plan.
(g) Fair Market Value of Class A
Common Shares of the Company means, with respect to the date in
question, the average of the high and low sale prices of such
shares on the New York Stock Exchange, or if the Companys
Class A Common Shares are not traded on such exchange, or
otherwise traded publicly, the value determined, in good faith,
by the Committee.
(h) Incentive Stock Option means an
option conforming to the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the Code).
(i) Incumbent Director means a member of
the Board on April 15, 2004, provided that any person
becoming a director subsequent to April 15, 2004, whose
election or nomination for election was supported by a majority
of the directors who then comprised the Incumbent Directors
shall be considered to be an Incumbent Director.
(j) Nonqualified Stock Option means any
stock option other than an Incentive Stock Option.
(k) Person has the meaning provided in
Section 3(a)(9) of the Exchange Act, and as used in
Sections 13(d) and 14(d) thereof, including a
group (as defined in Section 13(d) of such Act).
(l) Retirement means retirement as
defined under the Scripps Pension Plan, or as otherwise
determined by the Board of Directors of the Company.
(m) SARs means stock appreciation rights.
(n) Scripps Pension Plan means the
Scripps Pension Plan as Amended and Restated effective
January 1, 1997.
(o) Subsidiary means a corporation or
other entity of which outstanding shares or interests
representing 50% or more of the combined voting power of such
corporation or entity are owned directly or indirectly by the
Company.
The Plan shall be administered by a committee consisting of at
least three directors of the Company (the
Committee). Subject to the provisions of the Plan,
the Committee shall be authorized to determine the form and
substance of grants made under the Plan to each participant;
establish the conditions and restrictions, if any, subject to
which such grants will be made or will vest; interpret the Plan;
and adopt, amend, or rescind such rules and regulations for
carrying out the Plan as it may deem appropriate. Decisions of
the Committee on all matters relating to the Plan shall be
conclusive and binding on all parties, including the Company,
its shareholders, and the participants in the Plan. The
Committee may appoint a subcommittee of its members as permitted
or appropriate under applicable laws and regulations. Such
subcommittee may exercise such powers of the Committee as the
Committee designates. All actions of the subcommittee shall be
reported to the Committee.
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4. |
Shares Available for the Plan. |
Subject to adjustments as provided in Section 16, an
aggregate of 24,317,400 of Class A Common Shares of the
Company (hereinafter referred to from time to time as
shares) may be issued pursuant to the Plan.
(9,158,700 pre-split shares were available when the Plan was
last amended. Post split, the shares available were 18,317,400.
Adding the shares approved on 4/14/05, the shares available are
24,317,400.) Such shares may be unissued or treasury shares. If
any grant under the Plan expires or terminates unvested or
unexercised, becomes unexercisable or is forfeited as to any
shares, such unpurchased or forfeited shares shall thereafter be
available for further grants under the Plan unless, in the case
of options granted under the Plan, SARs in tandem therewith are
exercised.
Participation in the Plan shall be limited to directors of the
Company and officers and key employees of the Company and its
subsidiaries, all as approved by the Committee.
Nothing in the Plan or in any grant thereunder shall confer any
right on an employee to continue in the employ of the Company or
shall interfere in any way with the right of the Company to
terminate an employee at any time.
Incentive or nonqualified stock options, SARs, restricted or
nonrestricted stock awards, performance units, or any
combination thereof, may be granted for such number of shares as
the Committee shall determine (such individuals to whom grants
are made being herein referred to from time to time as
grantees). A grant of any type made hereunder in any
one year to an eligible participant shall neither guarantee nor
preclude a further grant of that or any other type to such
employee in that year or subsequent years.
The maximum number of shares with respect to which incentive or
nonqualified options, SARs, restricted or nonrestricted stock or
performance units, or any combination of the foregoing may be
granted to any single individual in any one calendar year shall
not exceed 1,000,000 shares. The maximum number of shares
for which incentive stock options may be granted under the Plan
shall not exceed 5,000,000.
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6. |
Incentive and Nonqualified Option Grants. |
The Committee may grant from time to time to eligible
participants Incentive Stock Options, Nonqualified Stock
Options, or any combination thereof. The options granted shall
take such form as the Committee shall determine, subject to the
following terms and conditions.
(a) Price. The price per share deliverable upon the
exercise of each option (exercise price) shall not
be less than 100% of the Fair Market Value of the shares on the
date the option is granted. In the case of the grant of any
Incentive Stock Option to a participant who, at the time of the
grant, owns more than 10% of the total combined voting power of
all classes of stock of the Company or any of its subsidiaries,
such price per share, if required by the Code at the time of
grant, shall not be less than 110% of the Fair Market Value of
the shares on the date the option is granted.
(b) Cash Exercise. Options may be exercised in whole
or in part upon payment of the exercise price of the shares to
be acquired. Payment shall be made in cash or, in the discretion
of the Committee, in shares previously acquired by the
participant or a combination of cash and shares. The Fair Market
Value of shares tendered on exercise of options shall be
determined on the date of exercise.
(c) Cashless Exercise. Options may be exercised in
whole or in part upon delivery of an irrevocable written notice
of exercise pursuant to any cashless exercise program that the
Company offers from time to time.
(d) Terms of Options. The term during which each
option may be exercised shall be determined by the Committee,
but in no event shall a Nonqualified Stock Option be exercisable
more than ten years and one day from the date it is granted or
an Incentive Stock Option, more than ten years from the date it
is granted; and, in the case of the grant of an Incentive Stock
Option to an employee who at the time
35
of the grant owns more than 10% of the total combined voting
power of all classes of stock of the Company or any of its
subsidiaries, in no event shall such option be exercisable, if
required by the Code at the time of grant, more than five years
from the date of the grant. All rights to purchase shares
pursuant to an option shall, unless sooner terminated, expire at
the date designated by the Committee. The Committee shall
determine the date on which each option shall become exercisable
and may provide that an option shall become exercisable in
installments. The shares constituting each installment may be
purchased in whole or in part at any time after such installment
becomes exercisable, subject to such minimum exercise
requirement as is designated by the Committee. The Committee may
accelerate the time at which any option may be exercised in
whole or in part. Unless otherwise provided herein, a grantee
who is an employee of the Company or a subsidiary may exercise
an option only if he or she is, and has continuously been since
the date the option was granted, an employee of the Company or a
subsidiary. Prior to the exercise of the option and delivery of
the stock represented thereby, the grantee shall have no rights
to any dividends or be entitled to any voting rights on any
stock represented by outstanding options.
(e) Limitations on Grants. If required by the Code
at the time of grant of an Incentive Stock Option, the aggregate
Fair Market Value (determined as of the grant date) of shares
for which such option is exercisable for the first time during
any calendar year may not exceed $100,000.
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7. |
Stock Appreciation Right Grants. |
(a) Tandem SARs. The Committee shall have the
authority to grant SARs in tandem with an option (tandem
SAR) under this Plan to any grantee, either at the time of
grant of an option or thereafter by amendment to an option. The
exercise of an option shall result in an immediate forfeiture of
its corresponding tandem SAR, and the exercise of a tandem SAR
shall cause an immediate forfeiture of its corresponding option.
Tandem SARs shall be subject to such other terms and conditions
as the Committee may specify. A tandem SAR shall expire at the
same time as the related option expires and shall be
transferable only when, and under the same conditions as, the
related option is transferable.
Tandem SARs shall be exercisable only when, to the extent and on
the conditions that the related option is exercisable. No tandem
SAR may be exercised unless the Fair Market Value of a share on
the date of exercise exceeds the exercise price of the option to
which the SAR corresponds.
Upon the exercise of a tandem SAR, the grantee shall be entitled
to a distribution in an amount equal to the difference between
the Fair Market Value of a share on the date of exercise and the
exercise price of the option to which the SAR corresponds. The
Committee shall decide whether such distribution shall be in
cash, in shares, or in a combination thereof.
All tandem SARs will be exercised automatically on the last day
prior to the expiration date of the related option, so long as
the Fair Market Value of a share on that date exceeds the
exercise price of the related option.
(b) Independent SARs. SARs may be granted by the
Committee independently of options (Independent
SARs). An Independent SAR will entitle a participant to
receive, with respect to each share as to which the SAR is
exercised, the excess of the Fair Market Value of a share on the
date of exercise over its Fair Market Value on the date the
Independent SAR was granted.
Any exercise of an Independent SAR must be in writing, signed by
the participant and delivered or mailed to the Company,
accompanied by any other documents required by the Committee.
Each Independent SAR will be exercised automatically on the last
day prior to the expiration date established by the Committee at
the time of the award of such SAR.
Payment of the amount to which a participant is entitled upon
the exercise of an Independent SAR shall be made in cash or
shares, or in a combination thereof, as the Committee shall
determine. To the extent that payment is made in shares, the
shares shall be valued at their Fair Market Value on the date of
exercise of such SAR.
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8. |
Performance Units for Employees. |
Performance units may be granted on a contingent basis to
participants at any time and from time to time as determined by
the Committee. The Committee shall have complete discretion in
determining the number of performance units so granted to a
participant and the appropriate period over which performance is
to be measured (performance cycle). Each performance
unit shall have a dollar value determined by the Committee at
the time of grant. The value of each unit may be fixed or it may
be permitted to fluctuate based on a performance factor (e.g.,
return on equity) selected by the Committee. The Committee shall
establish performance goals that, depending on the extent to
which they are met, will determine the ultimate value of the
performance unit or the number of performance units earned by
participants, or both.
The Committee shall establish performance goals and objectives
for each performance cycle on the basis of such criteria and
objectives as the Committee may select from time to time. During
any performance cycle, the Committee shall have the authority to
adjust the performance goals and objectives for such cycle for
such reasons as it deems equitable.
The Committee shall determine the number of performance units
that have been earned by a participant on the basis of the
Companys performance over the performance cycle in
relation to the performance goals for such cycle. Earned
performance units may be paid out in restricted or nonrestricted
shares, cash, or a combination of both, as the Committee shall
determine at the time of grant or payment.
A participant must be an employee of the Company at the end of
the performance cycle in order to be entitled to payment of a
performance unit granted in respect of such cycle; provided,
however, that, except as otherwise provided by the Committee, if
a participant ceases to be an employee of the Company upon the
occurrence of his or her death, Retirement, or Disability prior
to the end of the performance cycle, the participant shall earn
a proportionate number of performance units based upon the
elapsed portion of the performance cycle and the Companys
performance over that portion of such cycle in accordance with
terms and conditions established by the Committee upon grant of
a performance unit.
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9. |
Restricted and Nonrestricted Share Grants; Performance-Based
Grants; Restricted Share Unit Grants. |
The Committee may grant shares under the Plan to such
participants and in such amounts as it determines. Each grant
shall specify the applicable restrictions, if any, the duration
of such restrictions, the time or times at which such
restrictions shall lapse with respect to all or a specified
number of shares or units that are part of the grant, and the
terms and conditions under which a participant can earn a
proportionate number of restricted shares or units in the event
of his or her death, Retirement or Disability. The Committee may
grant shares the vesting of which is based on the attainment of
written performance goals approved by the Committee for a
performance period established by the Committee (i) while
the outcome for such performance period is substantially
uncertain and (ii) no more than 90 days after the
commencement of such performance period to which the performance
goal relates. The performance goals, which must be objective,
shall be based solely upon one or more of the following criteria:
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1. |
Earnings per share; |
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2. |
Operating cash flow; |
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3. |
Gross margin; |
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4. |
Operating or other expenses; |
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5. |
Earnings before interest and taxes (EBIT); |
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6. |
Earnings before interest, taxes, depreciation and amortization; |
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7. |
Net income; |
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8. |
Return on investment (determined with reference to one or more
categories of income or cash flow and one or more categories of
assets, capital or equity; and |
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9. |
Stock price appreciation. |
The foregoing criteria may relate to the Company, one or more of
its Subsidiaries or one or more of its divisions, units,
partnerships, joint ventures or minority investments, product
lines or products or any combination of the foregoing, and may
be applied on an absolute basis or be relative to the
Companys annual budget, one or more peer group companies
or indices, or any combination thereof, all as the Committee
shall determine. In addition, to the degree consistent with
Section 162(m) of the Code (or any successor section
thereto), the performance goals may be calculated without regard
to extraordinary items or adjusted for unusual or unplanned
items.
Notwithstanding the foregoing, the Committee may reduce or
shorten the duration of any restriction applicable to any
participant under the Plan. The participant will be required to
deposit shares with the Company during the period of any
restriction thereon and to execute a blank stock power therefor.
The Committee may grant restricted shares that are convertible
into restricted share units at the election of the participant
to defer receipt of such shares. The Committee may permit
participants holding restricted shares granted under the Plan
heretofore or hereafter to convert such shares into restricted
share units if the participant elects to defer receipt of such
shares. The terms and conditions of any such grant or conversion
shall be approved by the Committee. Each participant who so
receives restricted share units shall be eligible to receive, at
the expiration of the applicable deferral period, one share for
each restricted share unit, and the Company shall issue to and
register in the name of each such participant a certificate for
that number of shares. Participants who receive restricted share
units shall have no rights as shareholders with respect to such
restricted share units until such time as share certificates are
issued to the participants; provided, however, that quarterly
during the applicable restricted period for all restricted share
units so received, the Company shall pay to each such
participant an amount equal to the sum of all dividends and
other distributions paid by the Company during the prior quarter
on that equivalent number of shares.
(a) Change in Control of the Company. Upon a Change
in Control of the Company, all grants made under the Plan shall
become fully vested and, in the case of options, be exercisable
until their respective expiration dates.
(b) Change in Control of Subsidiary or Division
Employing a Participant. Upon a Change in Control of a
subsidiary or division by which a participant is employed, all
of such participants grants shall become fully vested and,
in the case of options, be exercisable until their respective
expiration dates.
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11. |
Termination of Employment. |
(a) Employees. If a participant ceases to be an
employee of the Company or any subsidiary due to death,
Disability or Retirement, each of the participants grants
shall become fully vested and, in the case of an option, be
exercisable until its expiration date. Notwithstanding the
foregoing, in the event of such death, Disability or Retirement,
any restricted share grant or restricted share unit grant
contingent on the achievement of performance measures shall vest
proportionately in accordance with the terms and conditions
established by the Committee upon grant of such share or unit.
If a participant ceases to be an employee of the Company or any
subsidiary due to Cause, all of his or her grants, whether or
not vested, shall be forfeited, other than restricted and
nonrestricted share grants that vested prior to such
participants ceasing to be such an employee due to Cause
and options or other grants that were exercised prior to such
cessation.
If a participant ceases to be an employee of the Company or any
subsidiary for any reason other than as set forth in the first
two paragraphs of this Section 11(a), each of his or her
grants that had
38
vested on or before the date of termination shall remain vested
and, in the case of an option, be exercisable for, and shall
otherwise terminate at the end of, a period of 90 days
after the date of termination of employment, but in no event
after its expiration date; and each of a participants
grants that had not vested on or before the date of such
termination shall be forfeited.
Notwithstanding anything to the contrary herein, if a
participant ceases to be an employee of the Company or any
subsidiary for any reason other than Cause, the Committee at its
sole discretion may accelerate the vesting of any grant, so that
it will become fully vested as of the date of such
participants termination of employment and in the case of
an option exercisable until its expiration date.
(b) Directors. If a participant is a director and
not an officer or employee of the Company or a subsidiary, each
of his or her grants shall be nonforfeitable and shall vest and,
if applicable, be exercisable until its expiration date,
regardless of whether or not such director continues to be a
director of the Company, unless such director has been removed
for cause as a director in accordance with applicable law (in
which event such director shall forfeit all outstanding grants,
whether vested or not, at the date of his or her removal, other
than restricted or nonrestricted share grants that vested prior
to such removal and options or other grants that were exercised
prior to such removal).
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12. |
Withholding of Taxes. |
The Company may require, as a condition to any grant under the
Plan or to the delivery of certificates for shares issued
hereunder, that the grantee pay to the Company, in cash, any
federal, state or local taxes of any kind required by law to be
withheld with respect to any grant or any delivery of shares.
The Committee may permit participants to pay such taxes through
the withholding of shares otherwise deliverable to such
participant in connection with such grant or the delivery to the
Company of shares otherwise acquired by the participant. The
Fair Market Value of shares withheld by the Company or tendered
to the Company for the satisfaction of tax withholding
obligations under this section shall be determined on the date
such shares are withheld or tendered. The Company, to the extent
permitted or required by law, shall have the right to deduct
from any payment of any kind (including salary or bonus)
otherwise due to a grantee any federal, state or local taxes of
any kind required by law to be withheld with respect to any
grant or to the delivery of shares under the Plan, or to retain
or sell without notice a sufficient number of the shares to be
issued to such grantee to cover any such taxes, provided that
the Company shall not sell any such shares if such sale would be
considered a sale by such grantee for purposes of
Section 16 of the Exchange Act.
Each participant to whom a grant is made under the Plan shall
enter into a written agreement with the Company that shall
contain such provisions, consistent with the provisions of the
Plan, as may be established by the Committee.
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14. |
Listing and Registration. |
If the Committee determines that the listing, registration, or
qualification upon any securities exchange or under any law of
shares subject to any option, SAR, performance unit, or share
award is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase
of shares thereunder, no such option or SAR may be exercised in
whole or in part, no such performance unit paid out, or no
shares issued unless such listing, registration or qualification
is effected free of any conditions not acceptable to the
Committee.
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15. |
Transfer of Employee. |
Transfer of an employee from the Company to a subsidiary, from a
subsidiary to the Company, and from one subsidiary to another
shall not be considered a termination of employment. Nor shall
it be considered a termination of employment if an employee is
placed on military or sick leave or such other leave of absence
which is considered as continuing intact the employment
relationship; in such a case,
39
the employment relationship shall be continued until the date
when an employees right to reemployment shall no longer be
guaranteed either by law or by contract.
In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other change in the corporate
structure or shares of the Company, the Committee shall make
such adjustments as it deems appropriate in the number and kind
of shares reserved for issuance under the Plan, in the number
and kind of shares covered by grants made under the Plan, and in
the exercise price of outstanding options. In the event of any
merger, consolidation or other reorganization in which the
Company is not the surviving or continuing corporation, all
grants outstanding on the date of such event shall be assumed by
the surviving or continuing corporation.
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17. |
Termination and Modification of the Plan. |
The Board of Directors, with such approval of the shareholders
as may be required, may modify or terminate the Plan and from
time to time may suspend, and if suspended, may reinstate any or
all of the provisions of the Plan, except that no modification,
suspension or termination of the Plan may, without the consent
of the grantee affected, alter or impair any grant previously
made under the Plan.
With the consent of the grantee affected thereby, and with such
approval of the shareholders as may be required, the Committee
may amend or modify a grant in any manner to the extent that the
Committee would have had the authority to make such grant as so
modified or amended, including without limitation to change the
date or dates as of which (i) an option becomes
exercisable, (ii) a performance unit is to be determined or
paid, or (iii) restrictions on shares are to be removed.
The Committee shall be authorized to make minor or
administrative modifications to the Plan as well as
modifications to the Plan that may be dictated by requirements
of federal or state laws applicable to the Company or that may
be authorized or made desirable by such laws.
The Plan shall terminate at the close of business on
June 1, 2014.
The Committee may authorize cash awards to any participant
receiving shares under the Plan in order to assist such
participant in meeting his or her tax obligations with respect
to such shares.
No option, SAR, or performance unit, or any right thereunder may
be transferred by a participant except by will or the laws of
descent and distribution, pursuant to a qualified domestic
relations order (as defined in the Code or the Employee
Retirement Income Security Act of 1974, as amended) or, during
his or her lifetime, to one or more members of his or her
family, to one or more trusts for the benefit of one or more
members of his or her family, or to a partnership or
partnerships of members of his or her family, provided that no
consideration is paid for the transfer and that such transfer
would not result in the loss of any exemption under
Rule 16b-3 with respect to any grant hereunder. A
transferee shall be subject to all restrictions, terms and
conditions applicable to the transferor-participant and shall
not be entitled to transfer the particular option, SAR,
performance unit or right during his or her life.
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21. |
Nonqualified Deferred Compensation. |
Notwithstanding anything to the contrary in the Plan, in the
event it is determined that any payment to be made under the
Plan is considered nonqualified deferred
compensation subject to Section 409A of the Code,
payment will be delayed for six (6) months following
separation from service.
40
Approved by the board of directors 2/10/05
Subject to approval by the shareholders on 4/14/05
THE E. W. SCRIPPS COMPANY
EXECUTIVE BONUS PLAN
The purpose of the Executive Bonus Plan (the Plan)
is to promote the interests of The E. W. Scripps Company (the
Company) and its shareholders by providing incentive
compensation for certain designated key executives and employees
of the Company and its subsidiaries.
As used in this Plan, the following capitalized terms have the
respective meanings set forth in this section:
(a) Act: The Securities Exchange Act of 1934, as
amended, or any successor thereto.
(b) Award: A periodic cash bonus award granted
pursuant to the Plan.
(c) Beneficial Owner: As such term is defined in
Rule 13d-3 under the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control shall occur with
respect to all participants in the Plan when:
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(i) any Person becomes a Beneficial Owner of a
majority of the outstanding Common Voting Shares, $.01 par
value, of the Company (or shares of capital stock of the Company
with comparable or unlimited voting rights), excluding, however,
The Edward W. Scripps Trust (the Trust) and the
trustees thereof, and any person that is or becomes a party to
the Scripps Family Agreement, dated October 15, 1992, as
amended currently and as it may be amended from time to time in
the future (the Family Agreement); |
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(ii) the majority of the Board of Directors of the Company
(the Board) consists of individuals other than
Incumbent Directors; or |
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(iii) assets of the Company accounting for 90% or more of
the Companys revenues (hereinafter referred to as
substantially all of the Companys assets) are
disposed of pursuant to a merger, consolidation, sale, or plan
of liquidation and dissolution (unless the Trust or the parties
to the Family Agreement have Beneficial Ownership of, directly
or indirectly, a controlling interest (defined as owning a
majority of the voting power) in the entity surviving such
merger or consolidation or acquiring such assets upon such sale
or in connection with such plan of liquidation and dissolution); |
(f) Change in Control shall occur with
respect to a particular participant in the Plan employed by a
particular subsidiary or division of a subsidiary when:
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(i) any Person, other than the Company or an Affiliate,
acquires Beneficial Ownership of securities of the particular
subsidiary of the Company employing the participant having at
least fifty percent (50%) of the voting power of such
subsidiarys then outstanding securities; or |
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(ii) the particular subsidiary sells to any Person other
than the Company or an Affiliate all or substantially all of the
assets of the particular division thereof to which the
participant is assigned. |
(g) Code: The internal Revenue Code of 1986, as
amended, or any successor thereto.
(h) Committee: The Incentive Plan Committee of the
Board, or any successor thereto, or any other committee
designated by the Board to assume the obligations of the
Committee hereunder.
(i) Company: The E. W. Scripps Company, an Ohio
corporation.
41
(j) Covered Employee: An employee who is, or who is
anticipated to become, a covered employee, as such term is
defined in Section 162(m) of the Code (or any successor
section thereto).
(k) Effective Date: The date on which the Plan took
effect, which was January 1, 2000.
(l) Participant: A Covered Employee of the Company
or any of its Subsidiaries who is selected by the Committee to
participate in the Plan pursuant to Section 4 of the Plan.
(m) Performance Period: The calendar year or any
other period that the Committee, in its sole discretion, may
determine.
(n) Person: As such term is used for purposes of
Section 13(d) or 14(d) of the Act or any successor sections
thereto.
(o) Plan: The E. W. Scripps Companys Executive
Bonus Plan.
(p) Shares: Class A common shares of the
Company.
The Plan shall be administered by the Committee or such other
persons designated by the Board. The Committee shall have the
authority to select the Covered Employees to be granted Awards
under the Plan, to determine the size and terms of an Award
(subject to the limitations imposed on Awards in Section 5
below), to modify the terms of any Award that has been granted
(except for any modification that would increase the amount of
the Award), to determine the time when Awards will be made and
the Performance Period to which they relate, to establish
performance objectives in respect of such Performance Periods
and to certify that such performance objectives were attained;
provided, however, that any such action shall be consistent with
the applicable provisions of Section 162(m) of the Code.
The Committee is authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the
Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Plan;
provided, however, that any action permitted to be taken by the
Committee may be taken by the Board, in its discretion. Any
decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned. Determinations
made by the Committee under the Plan need not be uniform and may
be made selectively among Participants, whether or not such
Participants are similarly situated. The Committee shall have
the right to deduct from any payment made under the Plan any
federal, state, local or foreign income or other taxes required
by law to be withheld with respect to such payment. To the
extent consistent with the applicable provisions of
Sections 162(m) of the Code, the Committee may delegate to
one or more employees of the Company or any of its Subsidiaries
the authority to take actions on its behalf pursuant to the Plan.
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4. |
Eligibility and Participation |
The Committee shall designate those persons who shall be
Participants for each Performance Period. Participants shall be
selected from among the Covered Employees of the Company and any
of its Subsidiaries who are in a position to have a material
impact on the results of the operations of the Company or of one
or more of its Subsidiaries.
(a) Performance Goals. A Participants Award
shall be determined based on the attainment of written
performance goals approved by the Committee for a Performance
Period established by the Committee (i) while the outcome
for the Performance Period is substantially uncertain and
(ii) no more than 90 days after the commencement of
the Performance Period to which the performance goal relates.
42
The performance goals, which must be objective, shall be based
solely upon one or more or the following criteria:
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1. |
Earnings per share; |
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2. |
Operating cash flow; |
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3. |
Gross margin; |
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4. |
Operating or other expenses; |
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5. |
Earnings before interest and taxes (EBIT); |
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6. |
Earnings before interest, taxes, depreciation and amortization; |
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7. |
Net income; |
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8. |
Return on investment (determined with reference to one or more
categories of income or cash flow and one or more categories of
assets, capital or equity); and |
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9. |
Stock price appreciation. |
The foregoing criteria may relate to the Company, one or more of
its Subsidiaries or one or more of its divisions, units,
partnerships, joint ventures or minority investments, product
lines or products or any combination of the foregoing, and may
be applied on an absolute basis or be relative to the
Companys annual budget, one or more peer group companies
or indices, or any combination thereof, all as the Committee
shall determine. In addition, to the degree consistent with
Section 162(m) of the Code (or any successor section
thereto), the performance goals may be calculated without regard
to extraordinary items or adjusted for unusual or unplanned
items. The maximum amount of an Award to any Participant with
respect to a fiscal year of the Company shall be $3,000,000.
(b) Payment. The Committee shall determine whether,
with respect to a Performance Period, the applicable performance
goals have been met with respect to a given Participant and, if
they have, to so certify, and ascertain the amount of the
applicable Award. No Awards will be paid for such Performance
Period until such certification is made by the Committee. The
amount of the Award actually paid to a given Participant may be
less than the amount determined by the applicable performance
goal formula (including zero), at the discretion of the
Committee. The amount of the Award determined by the Committee
for a Performance Period shall be paid to the Participant at
such time as determined by the Committee in its sole discretion
after the end of such Performance Period.
(c) Compliance with Section 162(m) of the Code.
The provisions of this Section 5 shall be administered and
interpreted in accordance with Section 162(m) of the Code
to ensure the deductibility by the Company or its Subsidiaries
of the payment of Awards; provided, however, that the
Committee may, in its sole discretion, administer the Plan in
violation of Section 162(m) of the Code.
(d) Termination of Employment. If a Participant
dies, retires, is assigned to a different position, is granted a
leave of absence, or if the Participants employment is
otherwise terminated (except with cause by the Company, as
determined by the Committee in its sole discretion) during a
Performance Period (other than a Performance Period in which a
Change in Control occurs), a pro rata share of the
Participants award based on the period of actual
participation shall be paid to the Participant after the end of
the Performance Period if it would have become earned and
payable had the Participants employment status not
changed; provided, however, that the amount of the Award
actually paid to a given Participant may be less than the amount
determined by the applicable performance goal formula (including
zero), at the discretion of the Committee.
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6. |
Amendments or Termination |
The Board or the Committee may amend, alter or discontinue the
Plan, but no amendment, alteration or discontinuation shall be
made which would impair any of the rights or obligations under
any Award theretofore granted to a Participant under the Plan
without such Participants consent; provided,
however, that the Board or the Committee may amend the Plan
in such manner as it deems necessary to
43
permit the granting of Awards meeting the requirements of the
Section 162(m) of the Code or other applicable laws.
Notwithstanding anything to the contrary herein, the Board may
not amend, alter or discontinue the provisions relating to
Section 10(b) of the Plan after the occurrence of a Change
in Control.
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7. |
No Right to Employment |
Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant or other person any right to
continue to be employed by or perform services for the Company
or any Subsidiary, and the right to terminate the employment of
or performance of services by any Participant at any time and
for any reason is specifically reserved to the Company and its
Subsidiaries.
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8. |
Nontransferability of Awards |
An award shall not be transferable or assignable by the
Participant otherwise than by will or by the laws of descent and
distribution.
Notwithstanding anything to the contrary herein, the Committee,
in its sole discretion (but subject to applicable law), may
reduce any amounts payable to any Participant hereunder in order
to satisfy any liabilities owed to the Company or any of its
Subsidiaries by the Participant.
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10. |
Adjustments Upon Certain Events |
(a) Generally. In the event of any change in the
outstanding Shares by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation,
spin-off, combination or exchange of Shares or other corporate
exchange, or any distribution to stockholders of Shares other
than regular cash dividends, the Committee in its sole
discretion and without liability to any person may make such
substitution or adjustment, if any, as it deems to be equitable,
as to any affected terms of outstanding Awards.
(b) Change in Control. In the event that (i) a
Participants employment is terminated during a given
Performance Period (the Affected Performance Period)
and (ii) a Change in Control shall have occurred within the
365 days immediately preceding the date of such
termination, then such Participant shall receive, promptly after
the date of such termination, an Award for the Affected
Performance Period as if the performance goals for such
Performance Period had been achieved at 100%.
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11. |
Nonqualified Deferred Compensation |
Notwithstanding anything to the contrary in Sections 5(d)
and 10(b), in the event that it is determined that any payment
to be made hereunder is considered nonqualified deferred
compensation subject to Section 409A of the Code,
payment will be delayed for six (6) months following
separation from service.
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12. |
Miscellaneous Provisions |
The Company is the sponsor and legal obligor under the Plan and
shall make all payments hereunder. The Company shall not be
required to establish any special or separate fund or to make
any other segregation of assets to ensure the payment of any
amounts under the Plan, and the Participants rights to the
payment hereunder shall be no greater than the rights of the
Companys (or Subsidiarys) unsecured creditors. All
expenses involved in administering the Plan shall be borne by
the Company.
The Plan shall be governed by and construed in accordance with
Ohio law.
44
Vote by Telephone
Have your proxy card available when you call the
toll-free number 1-866-756-9926 using a touch-tone
phone. You will be prompted to enter information found on the
reverse side and then you can follow the simple prompts that
will be presented to you to record your vote.
Vote by Internet
Have your proxy card available when you access the website
https://www.proxyvotenow.com/ssp. You will be prompted to
enter information found on the reverse side and then you can
follow the simple prompts that will be presented to you to
record your vote. Ohio law allows proxy voting by electronic
means.
Vote by Mail
Please mark, sign and date your proxy card and return it in the
postage-paid envelope provided or return it to: Wachovia
Bank, N.A. Attn: Proxy Tabulation NC 1153, P O Box
563994, Charlotte, North Carolina 28256-9912
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Vote by Telephone
Call Toll-Free using a
touch-tone phone
1-866-756-9926 |
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Vote by Internet
Access the Website and
cast your vote
https://www.proxyvotenow.com/ssp |
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Vote by Mail
Return your proxy
in the postage-paid
envelope provided |
Vote 24 hours a day, 7 days a week!
Your telephone or internet vote must be received by
5:00 P.M. Eastern Standard Time on April 13, 2005
to be counted in the final tabulation.
Your telephone or internet vote authorizes the named proxies to
vote your shares in the
same manner as if you had marked, signed, dated and returned
your proxy card.
. FOLD AND DETACH HERE .
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PROXY FOR CLASS A COMMON SHARES
THE E. W. SCRIPPS COMPANY
The undersigned hereby appoints KENNETH W. LOWE,
RICHARD A. BOEHNE and M. DENISE KUPRIONIS and each of
them, as the undersigneds proxies, with full power of
substitution, to attend the Annual Meeting of Shareholders of
The E. W. Scripps Company, to be held at The Queen City Club,
Cincinnati, Ohio, on Thursday, April 14, 2005 at
2:00 P.M., local time, and any adjournment or adjournments
thereof, and to vote thereat the number of shares which the
undersigned would be entitled to vote, with all the power the
undersigned would possess if present in person, as follows:
1. o FOR,
or o WITHHOLD
AUTHORITY to vote for the following nominees for election as
directors:
(01) David A. Galloway, (02) Nicholas B. Paumgarten, (03) Ronald
W. Tysoe and (04) Julie A. Wrigley.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominees name on the line
provided below.)
2. On such other business as may properly come before
the meeting.
The Proxies will vote as specified above, or if a choice is
not specified, they will vote FOR the nominees listed in
item 1.
(Continued, and to be signed, on the other side.)
. FOLD AND DETACH HERE .
........................................................................................................................................................................
Receipt of the Notice of Meeting of Shareholders and the
related Proxy Statement dated March 23, 2005 is hereby
acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY.
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(Please date your Proxy) |
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Signature of Shareholder |
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Please sign exactly as your name appears hereon, indicating,
where proper, official position or representative capacity. |
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When signing as Attorney, Executor, Administrator, Trustee,
etc., give full title as such.
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Vote by Telephone
Have your proxy card available when you call the
toll-free number 1-866-756-9926 using a touch-tone
phone. You will be prompted to enter information found on the
reverse side and then you can follow the simple prompts that
will be presented to you to record your vote.
Vote by Internet
Have your proxy card available when you access the website
https://www.proxyvotenow.com/ssp. You will be prompted to
enter information found on the reverse side and then you can
follow the simple prompts that will be presented to you to
record your vote. Ohio law allows proxy voting by electronic
means.
Vote by Mail
Please mark, sign and date your proxy card and return it in the
postage-paid envelope provided or return it to: Wachovia
Bank, N.A. Attn: Proxy Tabulation NC 1153, P O Box
563994, Charlotte, North Carolina 28256-9912
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Vote by Telephone
Call Toll-Free using a
touch-tone phone
1-866-756-9926 |
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Vote by Internet
Access the Website and
cast your vote
https://www.proxyvotenow.com/ssp |
|
Vote by Mail
Return your proxy
in the postage-paid
envelope provided |
Vote 24 hours a day, 7 days a week!
Your telephone or internet vote must be received by
5:00 P.M. Eastern Standard Time on April 13, 2005
to be counted in the final tabulation.
Your telephone or internet vote authorizes the named proxies to
vote your shares in the
same manner as if you had marked, signed, dated and returned
your proxy card.
. FOLD AND DETACH HERE .
........................................................
PROXY FOR COMMON VOTING SHARES
THE E. W. SCRIPPS COMPANY
The undersigned hereby appoints KENNETH W. LOWE,
RICHARD A. BOEHNE and M. DENISE KUPRIONIS and each of
them, as the undersigneds proxies, with full power of
substitution, to attend the Annual Meeting of Shareholders of
The E. W. Scripps Company, to be held at The Queen City Club,
Cincinnati, Ohio, on Thursday, April 14, 2005 at
2:00 P.M., local time, and any adjournment or adjournments
thereof, and to vote thereat the number of shares which the
undersigned would be entitled to vote, with all the power the
undersigned would possess if present in person, as follows:
1. o FOR,
or o WITHHOLD
AUTHORITY to vote for the following nominees for election as
directors:
(01) William R. Burleigh, (02) John H. Burlingame, (03) Kenneth
W. Lowe, (04) Jarl Mohn, (05) Jeffrey Sagansky,
(06) Nackey E. Scagliotti, (07) Edward W. Scripps and (08) Paul
K. Scripps.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominees name on the line
provided below.)
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2. o FOR, or
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o AGAINST, or |
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o ABSTAIN WITH
RESPECT TO,
amending the Companys 1997 Long-Term Incentive Plan as
proposed (to reserve 6,000,000 additional class A common
shares for issuance under the Plan and to add certain provisions
relating to performance measures). |
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3. o FOR, or
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o AGAINST, or |
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o ABSTAIN WITH
RESPECT TO,
approving and amending as proposed the Companys Executive
Bonus Plan. |
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4. o FOR, or
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o AGAINST, or |
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o ABSTAIN WITH
RESPECT TO,
amending as proposed the Companys Code of Regulations. |
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5. |
On such other business as may properly come before the meeting. |
The Proxies will vote as specified above, or if a choice is
not specified, they will vote FOR the nominees listed in
item 1 and FOR the proposals set forth in
items 2, 3 and 4 as set forth above.
(Continued, and to be signed, on the other side.)
. FOLD AND DETACH HERE .
........................................................................................................................................................................
Receipt of the Notice of Meeting of Shareholders and the
related Proxy Statement dated March 23, 2005 is hereby
acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY.
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(Please date your Proxy) |
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Signature of Shareholder |
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Please sign exactly as your name appears hereon, indicating,
where proper, official position or representative capacity. |
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When signing as Attorney, Executor, Administrator, Trustee,
etc., give full title as such. |