LEE ENTERPRISES, INCORPORATED
400 Putnam Building
215 N. Main Street
Davenport, IA 52801-1924
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 29, 1997
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Lee Enterprises, Incorporated, a
Delaware corporation (the "Company"), will be held in the second floor
conference room of the offices of the Company, 215 N. Main Street, Davenport,
Iowa, on January 29, 1997, at 9:00 A.M., for the following purposes:
(1) To elect three directors for terms of three years, and one
director for a term of one year; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed December 2, 1996 as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting.
You are invited to attend this meeting; however, if you do not expect
to attend in person you are urged to execute and return immediately the enclosed
proxy, which is solicited by management. You may revoke your proxy and vote in
person should you attend the meeting.
/s/ C. D. Waterman III
-------------------------------
C. D. Waterman III, Secretary
Davenport, Iowa
December 27, 1996
LEE ENTERPRISES, INCORPORATED
1997 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Lee Enterprises, Incorporated (the
"Company"), to be voted at the annual meeting of the stockholders of the Company
to be held on Wednesday, January 29, 1997, or at any adjournment thereof, for
the purposes set forth in the foregoing Notice of Annual Meeting.
The principal executive offices of the Company are located at 400
Putnam Building, 215 N. Main Street, Davenport, Iowa 52801. This Proxy Statement
and the enclosed form of proxy are being mailed to stockholders on or about
December 27, 1996, together with a copy of the Company's Annual Report for the
fiscal year ended September 30, 1996.
VOTING PROCEDURES
Stockholders of record at the close of business on December 2, 1996
will be entitled to vote at the meeting or any adjournment thereof. As of
December 2, 1996, there were 34,555,576 shares of Common Stock and 12,455,186
shares of Class B Common Stock outstanding. Each share of Common Stock is
entitled to one vote at the meeting; each share of Class B Common Stock is
entitled to ten votes at the meeting.
The presence, in person or by proxy, of a majority of the voting power
of Common Stock and Class B Common Stock of the Company issued and outstanding
and entitled to vote is necessary to constitute a quorum at the annual meeting.
The affirmative vote of the holders of a plurality of the voting power of Common
Stock and Class B Common Stock represented in person or by proxy at the annual
meeting is required to elect directors, and the affirmative vote of the holders
of a majority of the voting power of Common Stock and Class B Common Stock is
required to act on any other matter properly brought before the meeting.
Abstentions from voting will be included for purposes of determining
whether the requisite number of affirmative votes are received on any matters
submitted to the stockholders for vote and, accordingly, will have the same
effect as a vote against such matters. If a broker indicates on the proxy that
it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote, and will have no effect on the vote, in respect to that matter.
In voting by proxy with regard to the election of directors,
stockholders may vote in favor of all nominees, withhold their votes as to all
nominees, or withhold their votes as to specific nominees. Stockholders should
specify their choices on the accompanying proxy card. All properly executed
proxy cards delivered by stockholders to the Company and not revoked will be
voted at the annual meeting in accordance with the directions given. If no
specific instructions are given with regard to the matters to be voted upon, the
shares represented by a signed proxy card will be voted "FOR" the election of
all directors as more fully set forth in this Proxy Statement. If any other
matters properly come before the annual meeting, the persons named as proxies
will vote upon such matters according to their judgment.
Any stockholder delivering a proxy has the power to revoke it at any
time before it is voted by giving written notice to the Secretary of the
Company, by executing and delivering to the Secretary a proxy card bearing a
later date or by voting in person at the annual meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Three directors are to be elected at the annual meeting to hold office
for three year terms expiring at the annual meeting of stockholders in 2000, and
one director is to be elected for a one year term expiring at the annual meeting
of stockholders in 1998. Each of the individuals named below is a nominee of the
Nominating Committee of the Board of Directors; each is presently a director
whose current term expires January 29, 1997.
Proxies will be voted for the election of these nominees unless the
stockholder giving the proxy withholds such authority. If as a result of
circumstances not now known any of such nominees shall be unable to serve as a
director, proxies will be voted for the election of such other person as
management may select. Information about the nominees and directors continuing
in office is set forth below:
NOMINEES FOR ELECTION AS DIRECTORS
Principal Proposed Director
Nominee Occupation Age Term Since
- ------------------ ----------------------- --- --------- --------
J. P. Guerin Investor (1)(3) 67 3 years 1985
(2000)
Charles E. Chairman of the Board, 68 3 years 1990
Rickershauser, Jr. PS Group Holdings, Inc. (3)(4) (2000)
Mark Vittert Investor (2)(4) 48 3 years 1986
(2000)
Richard W. Consultant and Retired 73 1 year 1982
Sonnenfeldt Chief Executive Officer (1998)
of NAPP Systems Inc. (3)
DIRECTORS CONTINUING IN OFFICE
Principal Remaining Director
Director Occupation Age Term Since
- -------- ------------------ --- --------- --------
Rance E. President, Crain 58 2 years 1990
Crain Communications (2) (1999)
Richard D. President and Chief 54 2 years 1986
Gottlieb Executive Officer (1) (1999)
Phyllis Retired (2)(4) 66 2 years 1977
Sewell (1999)
Andrew E. Newman Chairman and CEO, 52 1 year 1991
Race Rock Interna- (1998)
tional (2)
Ronald L. Vice President- 58 1 year 1986
Rickman Newspapers (1998)
Lloyd G. Chairman of the 70 1 year 1959
Schermer Board (1) (1998)
(1) Member of Executive Committee
(2) Member of Executive Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
Mr. Guerin is Vice-Chairman of Daily Journal Company, Los Angeles, CA
and Vice-Chairman of PS Group Holdings, Inc., San Diego, CA and Chairman of
Tapestry Films and Mitchum Securities Corp., Los Angeles, CA.
Mr. Rickershauser is Chairman of the Board of PS Group Holdings, Inc.,
San Diego, CA. He is also a director of City National Corporation and of The
Vons Companies, Inc., Los Angeles, CA.
Mr. Vittert is a private investor and a director of PremiumWear,
Minneapolis, MN and Dave & Buster's Inc., Dallas, TX.
From September 1, 1987 to September 28, 1990, Mr. Sonnenfeldt held the
position of Chairman of the Board and Chief Executive Officer of NAPP Systems
Inc., a subsidiary of the Company. He is a management consultant and a director
of Solar Outdoor Lighting Co., Stuart, FL.
Mr. Crain is the President and Editorial Director of Crain
Communications, a diversified publishing company with its principal offices in
Chicago, IL.
For more than the past 5 years, Mr. Gottlieb has been President and
Chief Executive Officer of the Company.
Until July, 1988, Mrs. Sewell was a Senior Vice President of Federated
Department Stores. Mrs. Sewell is also a director of Pitney Bowes Inc.,
Stamford, CT and SYSCO Corporation, Houston, TX.
Mr. Newman is Chairman and CEO of Race Rock International, St. Louis,
MO. He was Chairman of Edison Brothers Stores, Inc., until April, 1995. He is a
director of Dave & Buster's Inc., Dallas, TX; and Sigma-Aldrich Corporation, St.
Louis, MO. On November 3, 1995, Edison Brothers Stores, Inc. filed a petition
for reorganization under Chapter XI of the United States Bankruptcy Code in
Wilmington, Delaware. Further proceedings are still pending.
For more than the past 5 years, Mr. Rickman has been Vice
President-Newspapers of the Company.
For more than the past 5 years, Mr. Schermer has been Chairman of the
Board of the Company.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors met 4 times in fiscal 1996.
The Company's Audit Committee met 3 times in fiscal 1996; its
functions are to review the scope, timing and other considerations relative to
the independent auditors' annual examination of financial statements, and the
adequacy of internal control and the internal audit functions; and to evaluate
the performance of external and internal auditors and the Company's accounting
and financial departments. In addition, the Committee reviews professional
services provided by the Company's independent auditors, in general, prior to
rendering of such services, and the possible effect of any nonaudit-related
services upon the independence of the Company's independent auditors.
The Company's Nominating Committee met one time in fiscal year 1996;
its functions are to consider and recommend to the Board all nominees for
possible election and re-election to the Board, and to consider all matters
relating to the size, composition and governance of the Board and the general
subject matter, size and composition of Board committees. The Nominating
Committee will consider nominees recommended by the stockholders.
Recommendations should be sent to Charles E. Rickershauser, Jr., Chairman,
Nominating Committee, c/o the Company, at the address shown on the cover of this
Proxy Statement.
The Company's Executive Compensation Committee met 1 time in fiscal
1996; its functions are to administer the Company's Retirement Account and
Supplementary Benefit Plans, and the 1990 Long Term Incentive Plan; to establish
salary ranges and salaries, bonus formulae and bonuses, and participation in
other benefit plans or programs, for elected officers; to review employment
terminations involving payment to any individual in excess of $150,000, and to
approve employment contracts for executives extending beyond one year; and to
approve the position description, performance standards and Key Result Areas for
Bonus Criteria for the Chief Executive Officer of the Company and to measure his
performance thereunder. In addition, the Committee recommends to the Board of
Directors significant employee benefit programs and bonus or other benefit plans
affecting individuals on the executive payroll other than elected officers.
No incumbent director attended fewer than 75% of the aggregate of (1)
the total number of meetings of the Board of Directors and (2) the total number
of meetings held by all committees of the Board on which he or she served during
1996.
COMPENSATION OF DIRECTORS
No Company employee receives any remuneration for acting as a
director. In fiscal 1996 Messrs. Newman, Vittert, Crain, Rickershauser, Guerin,
Schermer and Sonnenfeldt and Mrs. Sewell were paid a $24,400 annual retainer,
$1,000 for each Board meeting attended and $700 for each Committee meeting
attended. Committee chairmen were also paid $3,000 extra as an annual retainer
for acting as such. Mr. Schermer received an additional stipend of $50,000 for
his services as Chairman of the Board. Directors engaged to provide consultative
services are compensated at the rate of $1,500 per diem. The Company in fiscal
1996 also paid to Mr. Sonnenfeldt $60,000 for consultative services rendered to
the Company and its subsidiary, NAPP Systems Inc. No other non-employee director
was paid additional compensation for consultative services in fiscal 1996.
The Board of Directors has authorized non-employee directors, prior to
the beginning of any Company fiscal year, to elect to defer receipt of all or
any part of compensation a director might earn during such year. Amounts so
deferred will be paid to the director upon his or her ceasing to be a director
or upon attaining any specified age between 60 and 70, together with interest
thereon at the average rate of interest earned by the Company on its invested
funds during each year. Alternatively, directors may elect to have deferred
compensation credited to a "rabbi trust" established by the Company with an
independent trustee, which administers the investment of amounts so credited for
the benefit and at the direction of the trust beneficiaries until their accounts
are distributed under the deferred compensation plan.
In February, 1996 the stockholders of the Company adopted the Stock
Plan for Non-Employee Directors. Under the plan, non-employee directors receive
an annual grant of 500 shares of Common Stock, and may elect to receive all or
50% of the cash retainer and meeting fees described above in Common Stock of the
Company.
The Company also matches, on a dollar-for-dollar basis up to $5,000
annually, charitable contributions made by directors.
EQUITY SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of December 2, 1996 as
to each person known by the Company to own beneficially more than five (5%)
percent of the Common Stock or Class B Common Stock of the Company.
Percent Class B Percent
Beneficial Owner Common Stock of Class Common Stock of Class
- --------------------------------------------------------------------------------
Journal Limited 3,048,760 8.82% - - - -
Partnership
4230 So. 33rd Street
Lincoln, NE 68506
Harris Associates, Inc. 2,626,870 7.60% - - - -
Two North LaSalle St
Suite 500
Chicago, IL 60602
Reich & Tang 1,794,200 5.19% - - - -
Asset Management, L.P.
600 Fifth Avenue
8th Floor
New York, NY 10020
Lloyd G. Schermer (1) 634,528 1.84% 1,182,586 9.49%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
Betty A. Schermer (2) 462,872 1.34% 1,079,354 8.67%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
(1) Includes (i) 82,422 Common and 455,028 Class B Common shares owned by a
trust as to which Lloyd G. Schermer retains sole voting and investment
powers; (ii) 275,654 Common shares subject to acquisition within 60 days by
the exercise of outstanding stock options; (iii) 9,924 Common and 30,210
Class B Common shares held by a charitable foundation as to which Lloyd G.
Schermer has shared voting and investment power; (iv) 348,838 Class B
Common shares held by a charitable trust as to which Lloyd G. Schermer has
sole voting and shared investment power; and (v) 110,020 Common and 110,020
Class B Common shares held by a trust and 156,908 Common and 238,490 Class
B Common shares held by a charitable trust as to which Lloyd G. Schermer
shares voting and investment powers. Lloyd G. Schermer disclaims beneficial
ownership of 276,452 Common and 727,558 Class B Common shares listed above,
and of the Common and Class B Common shares beneficially owned by Betty A.
Schermer listed above and described in footnote (2) below.
(2) Includes (i) 296,440 Common and 761,338 Class B Common shares owned by
trusts under which Betty A. Schermer has sole voting and investment powers;
(ii) 156,508 Common and 238,490 Class B Common shares owned by a charitable
trust as to which Betty A. Schermer shares voting and investment powers,
but disclaims all beneficial ownership; and (iii) 9,924 Common and 30,210
Class B Common shares held by a charitable foundation as to which Betty A.
Schermer has shared voting and investment power, but disclaims all
beneficial ownership. Betty A. Schermer also disclaims beneficial ownership
of all Common and Class B Common shares beneficially owned by Lloyd G.
Schermer listed and described in footnote (1) above.
The following table sets forth information as to the Common Stock and
Class B Common Stock of the Company beneficially owned as of December 2, 1996 by
each director, each of the named executive officers listed in the Summary
Compensation Table below, and by all directors and executive officers as a
group:
Name and
Address of Percent Class B Common Percent
Beneficial Owner Common Stock of class Stock of class
- -----------------------------------------------------------------------------------------------------------------
Larry L. Bloom (2) 26,600 * -- --
1021 Carriage Place Drive
Bettendorf, IA 52722
Rance E. Crain 4,226 * -- --
220 E. 42nd Street
Room 930
New York, NY 10017
Richard D. Gottlieb (1)(2) 532,514 1.54% 125,505 1.01%
11 Deer Hill Road
Pleasant Valley, IA 52767
J. P. Guerin (1) 500 * 106,814 *
355 S. Grand Ave.
34th Floor
Los Angeles, CA 90071-1560
Andrew E. Newman 2,500 * -- --
501 N. Broadway
St. Louis, MO 63102
Charles E. 2,500 * -- --
Rickershauser, Jr.
355 S. Grand Ave.
34th Floor
Los Angeles, CA 90071-1560
Ronald L. Rickman (2) 299,664 * 79,746 *
3265 Woodcrest Drive
Bettendorf, IA 52722
Lloyd G. Schermer (1)(2) 930,968 2.69% 1,993,240 16.00%
c/o Lee Enterprises,
Incorporated
400 Putnam Building
215 N. Main Street
Davenport, IA 52801
Gary N. Schmedding (1)(2) 195,540 * 9,064 *
5743 Lewis Court
Bettendorf, IA 52722
Phyllis Sewell 2,400 * 2,900 *
7716 Pinemeadow
Cincinnati, OH 45224
Richard W. Sonnenfeldt 2,300 * 200 *
4 Secor Drive
Port Washington, NY 11050
Greg Veon (1)(2) 59,719 * 5,804 *
3621 Cedarwood Court
Bettendorf, IA 52722
Mark Vittert 2,500 * -- --
750 S. Price Road
Ladue, MO 63124
All present executive
officers and directors
as a group (16). 2,129,269 6.07% 2,323,677 18.66%
* Less than one (1%) percent of the class.
(1) The following directors and officers disclaim beneficial ownership of the
following shares, included above, not owned personally by them or held for
their benefit: Schermer, 572,892 Common Stock, 1,538,212 Class B Common
Stock; Gottlieb, 28,072 Common Stock, 37,930 Class B Common Stock; Guerin,
2,850 Class B Common Stock; Schmedding, 540 Common Stock; and Veon, 400
Common Stock.
(2) This table includes the following shares of common stock subject to
acquisition within 60 days by the exercise of outstanding stock options:
Schermer, 275,654; Gottlieb, 444,506; Rickman, 240,376; Schmedding,
165,252; Bloom, 19,900 and Veon, 47,440 Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables and discussion summarize the compensation which
the Company paid for services rendered in all capacities for the fiscal year
ended September 30, 1996 to the chief executive officer of the Company and to
each of the four other most highly compensated executive officers of the
Company.
Summary Compensation Table
Annual Compensation Long Term Compensation (1)
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name and Annual Restricted Other
Principal Compen- Stock Stock LTIP Compen-
Position Year Salary($) Bonus($) sation($) Awards($) Options(#) Payouts($) sation($)
(3) (4) (6) (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Richard D. Gottlieb 1996 $510,000 $ 153,000 $5,000 $ 60,200 20,000 116,350 $ 75,323
President and 1995 460,000 360,000 5,000 112,000 47,906(5) 541,420 94,092
Chief Executive Officer 1994 421,000 315,750 0 96,600 40,000 478,827 165,302
Ronald L. Rickman 1996 320,000 102,400 5,000 32,250 10,000 79,431 46,692
Vice-President-Newspapers 1995 304,400 188,728 5,000 60,000 20,000 351,948 55,194
1994 289,920 176,851 0 51,750 20,000(5) 341,750 100,994
Gary N. Schmedding 1996 265,000 58,300 5,000 32,250 10,000 50,344 34,899
Vice-President-Broadcast 1995 237,900 198,667 5,000 60,000 20,000 169,791 48,463
1994 220,240 165,180 0 51,750 20,000(5) 242,098 107,623
Larry L. Bloom (2) 1996 235,000 77,550 4,000 21,500 7,500 15,663 33,620
Vice President - Finance 1995 216,300 141,802 2,500 40,000 15,000 0 39,126
And Chief Financial 1994 206,000 136,240 72,087 34,500 15,000 0 31,728
Officer
Greg Veon (2) 1996 175,100 52,530 0 21,500 7,500 27,029 23,514
Vice President - Marketing 1995 140,000 117,600 0 20,000 3,000 109,086 27,166
(1) The Executive Compensation Committee of the Company meets following the
conclusion of the Company's fiscal year to determine among other things,
the amount of the annual bonus to be awarded and the long term compensation
grants to be made, if any, for the fiscal year just concluded.
The Summary Compensation Table includes the value of shares of restricted
stock and the number of stock option shares granted by the Executive
Compensation Committee under the Company's 1990 Long Term Incentive Plan in
each of the years indicated for the corresponding fiscal year.
(2) Mr. Bloom joined the Company in May, 1993. Mr. Bloom was paid additional
compensation in 1994 in accordance with the Company's Relocation Policy to
compensate him for certain costs and expenses incurred in connection with
his relocation to the Company's corporate office. Mr. Veon became an
executive officer of the Company in November, 1995.
(3) Represents matching payments made by the Company to charitable
organizations designated by the executive officer.
(4) The amounts shown represent shares of restricted stock in the following
amounts granted to the named individuals in 1994, 1995 and 1996,
respectively: Mr. Gottlieb, 5,600, 5,600 and 2,800 shares; Mr. Rickman,
3,000, 3,000 and 1,500 shares; Mr. Schmedding, 3,000, 3,000 and 1,500
shares; Mr. Bloom, 2,000, 2,000 and 1,000 shares; and Mr. Veon, 600, 1,000
and 1,000 shares. The restricted stock awarded in 1994, 1995 and 1996 will
vest on the third anniversary of the grant date. Holders of restricted
stock are entitled to receive all cash dividends paid in respect thereof
during the restricted period. At September 30, 1996, the number and market
value of shares of restricted stock (including those awarded in October,
1996 but excluding those shares described in paragraph (6)(b) below) held
by each of the named executive officers were as follows: Mr. Gottlieb,
14,000 shares ($320,250); Mr. Rickman, 7,500 shares ($171,563); Mr.
Schmedding, 7,500 shares ($171,563); Mr. Bloom, 5,000 shares ($114,375);
and Mr. Veon 3,864 ($88,389).
(5) Includes replacement (reload) options awarded at exercise of non-qualified
options with payment made with restricted stock to the following executive
officers: (a) 1993: Mr. Rickman 7,000 shares; and Mr. Schmedding, 5,400
shares; (b) 1995: Mr. Gottlieb 7,906 shares.
(6) The amounts shown represent the aggregate of (a) cash distributions to the
named individuals under the Company's 1990 Long Term Incentive Plan in
1994, and 1995 in lieu of awards for the three year performance cycles
ending in those years; (b) the value at September 30, 1996 of restricted
stock awarded in November, 1993 and vesting in November, 1996 for Mr.
Gottlieb ($116,350), Mr. Rickman ($79,431), Mr. Schmedding ($50,344), Mr.
Bloom, ($15,663) and Mr. Veon ($27,029); and (c) payments in 1994 and 1995
to distribute accrued deferred compensation account balances at September
30, 1994 and 1995 payable under the phaseout of the 1962 Deferred
Compensation Unit Plan which was (discontinued in 1989). The 1994 and 1995
deferred compensation distributions, respectively, to the named executive
officers and included in column (h) were as follows: Mr. Gottlieb, $15,270
and 310,751; Mr. Rickman, $25,991 and 230,234; Mr. Schmedding, $26,473 and
76,299 and Mr. Veon $91,596 in 1995.
(7) The amounts shown represent contributions by the Company on behalf of the
named individuals to the Company's Retirement Account Plan and Supplemental
Retirement Account, which as to the named executive officers in 1996 were
as follows: Mr. Gottlieb, $75,323; Mr. Rickman, $46,692; Mr. Schmedding,
$34,899; Mr. Bloom, $33,620 and Mr. Veon, $23,514.
Option Grants In Last Fiscal Year
Individual Grants
(a) (b) (c) (d) (e) (f)
% of Total
Options Grant
Options Granted to Date
Name Granted Employees Exercise Present
In Price Expiration Value($)
(1) Fiscal Year ($/SH) Date (2)
- --------------------------------------------------------------------------------
Richard D. Gottlieb 20,000 17.1% $ 21.50 8-Nov-06 $122,600
Ronald L. Rickman 10,000 8.6% 21.50 8-Nov-06 61,300
Gary N. Schmedding 10,000 8.6% 21.50 8-Nov-06 61,300
Larry L. Bloom 7,500 6.4% 21.50 8-Nov-06 45,975
Greg Veon 7,500 6.4% 21.50 8-Nov-06 45,975
(1) The options granted to the named individuals were determined by the
Executive Compensation Committee following review of each individual's
performance in fiscal year 1996, and become exercisable in installments of
30% of the original grant on each of the first and second anniversaries of
the grant date and 40% on the third anniversary. All options are for Common
Stock and have an exercise price equal to the closing market price of the
stock on the grant date. The lesser of 25% or the maximum number of shares
permitted by law are designated as incentive stock options, and the balance
are non-qualified options. All options were granted under the Company's 1990
Long Term Incentive Plan, the provisions of which, among other things, allow
an optionee exercising an option to satisfy the exercise price and
withholding tax obligations by electing to have the Company withhold shares
of stock otherwise issuable under the option with a fair market value equal
to such obligations. The Plan also permits an optionee exercising an option
to satisfy the exercise price by delivering previously awarded restricted
stock or previously owned Common Stock. The limitations accompanying the
restricted stock remain in effect and apply to the corresponding number of
shares issued upon the stock option exercise until they lapse according to
their original terms.
(2) The "grant date present value" is a hypothetical value determined under the
Black-Scholes Option Pricing Model. It is one of the methods permitted by
the Securities and Exchange Commission for estimating the present value of
options. The Company's stock options are not transferrable, and the actual
value of the stock options that an executive officer may realize, if any,
will depend on the excess of the market price on the date of exercise over
the exercise price. The Black-Scholes Option Pricing Model is based on
assumptions as to certain variables such as the volatility of the Company's
stock price and prevailing interest rates, so there is no assurance that an
individual will actually realize the option values presented in this table.
(3) Replacement (reload) option awarded at exercise of a non-qualified option
with payment made with restricted stock. The exercise price of the
replacement option is the closing market price of the Company's Common Stock
on the award date, and the replacement option has a term equal to the
remaining term of the option exercised.
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year End Option Values
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Value Options at Options at
Acquired On Realized FY End (#) FY End ($)
Name Exercise (#) ($) Exercisable/ Exercisable/
Unexercisable Unexercisable
(1) (2) (3) (4)
- ----------------------------------------------------------------------------
Richard D. Gottlieb 20,000 $192,500 406,266 $3,748,912
102,240 422,900
Ronald L. Rickman 16,000 154,000 218,696 1,974,570
53,680 229,050
Gary N. Schmedding 0 0 147,092 1,377,268
50,160 204,850
Larry L. Bloom 0 0 9,140 64,025
34,760 133,975
Greg Veon 4,000 38,500 43,140 413,555
17,200 52,813
(1) All options are for Common Stock and were granted under the Company's 1982
Incentive Stock Option Plan or the 1990 Long Term Incentive Plan.
(2) Market value of underlying securities at exercise date minus the exercise
price.
(3) Options granted under the Company's 1990 Long Term Incentive Plan become
exercisable in three installments over a period of three years from the
date of grant. The number of unexercisable options shown includes those
granted by the Executive Compensation Committee in November, 1996 for the
fiscal year just concluded.
(4) Market value of underlying securities at September 30, 1996 ($22.875),
minus the exercise price.
Long Term Incentive Plans - Awards in Last Fiscal Year
The Executive Compensation Committee decided in January, 1993 to
cancel, as to executive officers of the Company, outstanding performance units
awarded for three year performance cycles ending in 1993 and 1994. The Committee
recognized that such termination would have an adverse financial impact for the
Company's executive officers, and determined in November, 1993 and 1994 to pay
each executive officer, in cash, a discretionary amount equal to one-half of the
value of performance units earned at the end of the 1993 and 1994 cycles. Each
executive officer named in the Summary Compensation Table (except Messrs. Bloom
and Veon, who were not affected by the Committee's decision) received payment in
cash, the amount of which is shown in column (h) of the Table.
The Committee further determined in November, 1992 not to make any
performance unit awards in future fiscal years under the Company's Long Term
Incentive Plan. The Committee made its decisions after careful examination of
the Plan, the award of performance units thereunder, and the relationship
between award performance and the compensation objectives of the Committee for
executive officers of the Company. The Committee does not intend to make
performance unit awards during fiscal year 1997.
Pension Plans
Under the Company's Retirement Account and Supplementary Benefit
Plans, the Company matches employee contributions up to 5% of employee
compensation and, in addition, contributes 6.2% of a participant's total
compensation plus an additional 5.7% of such compensation in excess of $62,700.
These retirement plans are defined contribution plans and were adopted in 1980
to replace the Company's Pension Plan, a defined benefit plan. The Company and
employee contributions are invested and the total amount standing to each
employee's credit is paid following his or her retirement. The amounts credited
in fiscal 1996 under the Retirement Account and Supplementary Benefit Plans to
the accounts of the persons listed in the Summary Compensation Table were as
follows: Mr. Gottlieb, $75,323; Mr. Rickman, $46,692; Mr. Schmedding, $34,899;
Mr. Bloom, $33,620; and Mr. Veon, $23,514.
The Company's Pension Plan was superseded in 1980 by the Retirement
Account Plan. Annual benefits under the Pension Plan payable upon retirement at
age 65 to the individuals listed in the Summary Compensation Table are as
follows: Mr. Gottlieb, none; Mr. Rickman, $11,574; Mr. Schmedding, $1,376; Mr.
Bloom, none; and Mr. Veon, $328.
Executive Agreements
The Company is obliged under written agreements to pay to Messrs.
Gottlieb, Rickman, and Schmedding a multiple of three times the executive
officer's base salary in the event of termination of his employment without
cause. The Company decided in 1991 not to enter into such agreements in the
future with its executive officers.
1991 1992 1993 1994 1995 1996
---------------------------------------------------------
Lee $100.00 $144.71 $145.75 $164.25 $211.39 $227.73
S&P Publishing/
Newspapers-Index $100.00 118.86 121.48 122.22 149.80 194.38
S&P 500 $100.00 111.05 125.49 130.11 168.81 203.13
Performance Presentation
The following graph compares the yearly percentage change in the
cumulative total shareholder return of the Company, the Standard & Poor's (S &
P) 500 Stock Index, and the S & P Publishing/Newspapers Index, in each case for
the five years ending September 30, 1996. Total shareholder return is measured
by dividing (a) the sum of (i) the cumulative amount of dividends declared for
the measurement period, assuming dividend reinvestment and (ii) the difference
between the issuer's share price at the end and the beginning of the measurement
period, by (b) the share price at the beginning of the measurement period.
The (S & P) 500 Stock Index includes 500 U.S. companies in the
industrial, transportation, utilities and financial sectors and is weighted by
market capitalization. The S & P Publishing/Newspapers Index, which is also
weighted by market capitalization, includes the following six publishing
companies: Gannett Co., Inc., Knight-Ridder, Inc., The New York Times Company,
The Times Mirror Company, Dow Jones & Company, Inc. and Tribune Company.
Report of the Executive Compensation Committee of the
Board of Directors on Executive Compensation
The Committee
The Executive Compensation Committee of the Board of Directors (the
"Committee") is composed of four independent outside directors. No executive
officer of the Company is a member of the board of directors of any company with
which a member of the Committee is affiliated. The Board of Directors has
delegated to the Committee the authority to review, consider and determine the
compensation of the Company's executive officers and other key executive
employees and, in accordance with Rule 16b-3 of the Exchange Act, make the final
determination regarding awards of stock options, restricted stock, and other
stock-based awards to such persons.
Compensation Policies
The Committee operates on the principle that the compensation of the
Company's executive management, including its Chief Executive Officer and the
other executive officers named in the Summary Compensation Table, should be
competitive with compensation of executive management at comparable companies
but should not be at the top of any range derived from such comparisons. The
Committee also follows a policy of basing a significant portion of the cash
compensation of senior executive officers on the operating performance of the
Company, and of other members of the executive management team on the
performance of the enterprises, units or functions over which they exercise
significant management responsibility. The Committee's policies are designed to
assist the Company in attracting and retaining qualified executive management by
providing competitive levels of compensation that integrate the Company's annual
and long term performance goals, reward strong corporate performance, and
recognize individual initiative and achievements. The Committee also believes
that stock ownership by management and stock-based performance compensation
arrangements are beneficial in the linking management's and stockholders'
interests in the enhancement of stockholder value.
The Company's executive compensation program is comprised of three
elements: (1) base salary; (2) annual incentive bonus; and (3) long term
incentive compensation.
Base Salary
Salary levels for executive management are set so as to reflect the
duties and level of responsibilities inherent in the position, and to reflect
competitive conditions in the lines of business in which the Company is engaged
in the geographic areas where services are being performed. Comparative salaries
paid by other companies in the industries and locations where the Company does
business are considered in establishing the salary for a given position. The
Company participates annually in the Towers Perrin Media Industry Compensation
Survey (the "Towers Survey"), which is widely used in its industry and gives
relevant compensation information on executive positions. The Company strives to
place fully competent and highly performing executives at or above the median
level of compensation, as reported annually in the Towers Survey.
The Towers Survey provides annual compensation analyses for executives
in the media industry based on revenues, industry segments including publishing
and broadcasting, and market type and size. The statistical information,
including revenues and compensation levels, provided by survey participants is
utilized by the Towers Survey to develop statistical equations based on
revenues, industry segments and markets. These equations, along with other data,
are used by the Company to determine the median and other levels of compensation
of the executive management of media companies with profiles comparable to that
of the Company. Base salaries for executives named in the Summary Compensation
Table are reviewed annually by the Committee taking into account the competitive
level of pay as reflected in the Towers Survey. In setting base salaries, the
Committee also considers a number of factors relating to the particular
executive, including individual performance, level of experience, ability and
knowledge of the job. Base salaries were increased in 1996 for executive
management by 4.9% on a composite basis. The Committee believes the base salary
levels are reasonable and necessary to retain these key employees.
Annual Incentive Bonus Program
The purpose of the annual incentive bonus program is to motivate and
reward executive management so that they consistently achieve specific financial
targets, and are compensated for the accomplishment of certain non-financial
objectives. These targets and objectives are reviewed and approved by the
Committee annually in conjunction with its review of the Company's strategic and
operating plans. A target bonus level, stated as a percent of year-end salary,
is established for each member of the executive management team, other than
executive officers, by the executive officer exercising responsibility over an
enterprise unit or function. For executive officers other than the Chief
Executive Officer, the bonus level and achievement targets are determined by the
Chief Executive Officer and approved by the Committee. Similarly, the Committee
determines the annual bonus opportunity and performance objectives of the Chief
Executive Officer. While the annual incentive bonus awards for executives other
than the Chief Executive Officer are generally approved upon the recommendation
of the Chief Executive Officer, the Committee retains the right to adjust the
recommended bonus awards to reflect its evaluation of the Company's overall
performance.
Long Term Incentive Plan
Under the Company's Long Term Incentive Plan, the Committee is
authorized, in its discretion, to grant stock options, restricted stock awards,
and performance units payable in cash or restricted stock of the Company, in
such proportions and upon such terms and conditions as the Committee may
determine. The Committee meets following the end of each year to evaluate the
performance of the Company for the preceding fiscal year and determine the
annual incentive bonus and long term incentive awards of executive management of
the Company, for the fiscal year just ended. In October, 1996 the Committee made
the following determinations with respect to long term compensation for the
Company's executive management.
Performance Unit Awards
As noted above, performance unit awards made in 1990 and 1991 for the
three year cycles ending in 1993 and 1994 were cancelled, as to executive
officers, by the Committee in January, 1993. The Committee agreed to permit
completion of the three year cycles and related performance unit awards
previously made for persons other than executive officers, but made no
performance unit awards for the three year cycles commencing in fiscal years
1993 and 1994. The Committee has considered and will continue to consider, in
addition to objective performance criteria, certain non-quantitative factors
including the accomplishment of specific goals established by the Board of
Directors and the Committee in connection with long term compensation to
executive officers for 1996 and succeeding years.
Stock Option Grants
The number of stock options granted to each executive officer in 1996
was determined by dividing a specified dollar amount for the grant by a
hypothetical fair market value of the stock option as of the grant date, based
upon the Black-Scholes Option Pricing Model. The more responsible the executive
officer's position, the greater the dollar amount of the grant. All stock
options granted have an exercise price equal to the fair market value of the
Common Stock at time of grant. In order to assure the retention of high level
executives and to tie the compensation of those executives to the creation of
long term value for shareholders, the Committee provided that these stock
options generally vest in specified portions over a three year period.
Restricted Stock Awards
In November, 1996, the Committee granted to executive officers and
other key employees awards of restricted stock, which represent shares of the
Common Stock and which the recipient cannot sell or otherwise transfer until the
applicable restriction period lapses. The number of shares of restricted stock
awarded is generally determined by dividing a specified dollar amount for the
target award by the fair market value of the Company's Common Stock on the date
such awards are approved. The number of shares then determined is reviewed by
the Committee and may be increased or decreased to reflect a number of criteria
including, but not limited to, the Company's past operating performance, the
individual executive's role in accomplishment of the Company's operating
objectives, and that individual's potential for long term growth and
contribution to the Company's strategic objectives. Restricted stock awards are
also intended to increase the ownership of executives in the Company, through
which the value of long term stockholder ownership and growth can be enhanced.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to certain
executive officers in any taxable year beginning on or after January 1, 1994.
Performance-based compensation and payments in respect of binding obligations
entered into prior to February 17, 1993 are not subject to the deduction limit
if certain requirements are met. The Company currently intends to structure the
performance-based portion of the compensation of its executive officers in a
manner that complies with section 162(m).
Compensation of Chief Executive Officer
The Committee determined the 1996 base salary for the Company's Chief
Executive Officer, Richard D. Gottlieb, in a manner consistent with the base
salary guidelines applied to executive officers of the Company as described
above. The annual bonus paid to Mr. Gottlieb for 1996 was based upon a
subjective evaluation of the performance of the Company in relation to past
years and the performance of comparable media companies, and to a lesser extent,
his accomplishment of certain non-financial performance objectives. Consistent
with the philosophy expressed above, the Committee reduced the bonus awarded in
1996 because the Company did not achieve its planned performance targets. In
making that evaluation, the Committee did note the favorable performance of the
Company overall and in several categories in relation to peer group companies
for the current and past three years.
The Committee made long term compensation awards of stock options and
restricted stock to Mr. Gottlieb in 1996 by applying the same criteria described
for the determination of such awards to other executive officers of the Company.
The Committee did not consider past stock options and restricted stock grants to
Mr. Gottlieb in determining the amount of his 1996 grants. The Committee did
consider the 1996 performance of the Company, as more particularly described
above, in the final determination of such grants.
Executive Compensation Committee Participation
The current members of the Executive Compensation Committee are
Phyllis Sewell, Chairman, Mark Vittert, Rance E. Crain and Andrew E. Newman.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen, LLP, Certified Public Accountants, has
been designated by the Board of Directors of the Company to audit the financial
statements of the Company, its divisions and subsidiaries, for the fiscal year
to end September 30, 1997. Said firm has audited the Company's accounts since
1960 and is considered to be well qualified.
Representatives of McGladrey & Pullen will be present at the 1997
annual meeting and will be afforded the opportunity to make a statement, if they
desire to do so, and will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders with regard to nominees for the Board of
Directors or other matters intended to be presented at the 1998 annual meeting
of the Company must be received by the Company for inclusion in its proxy
statement and form of proxy relating to that meeting by August 15, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Act")
requires the Company's directors and executive officers and persons who own more
than ten percent of the Company's Common Stock or Class B Common Stock to file
initial reports of ownership and reports of changes in that ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Specific due
dates for these reports have been established, and the Company is required to
disclose in its proxy statement any failure to file by these dates during the
Company's 1996 fiscal year.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all filing requirements applicable to its executive
officers and directors were satisfied.
OTHER MATTERS
The Management of the Company knows of no matters to be presented at
the meeting other than those set forth in the Notice of Annual Meeting. However,
if any other matters properly come before the meeting, your proxy, if signed and
returned, will give discretionary authority to the persons designated in it to
vote in accordance with their best judgment.
The cost of the solicitation of proxies will be borne by the Company.
In addition to solicitation by mail, some of the officers and regular employees
of the Company may, without extra remuneration, solicit proxies personally or by
telephone or telegraph. The Company may also request brokerage houses, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial owners
of stock held of record and will reimburse such persons for their expenses. The
Company has retained Morrow & Co., Inc. to aid in the solicitation of proxies,
for which the Company will pay an amount which it is estimated will not exceed
$7,000 plus expenses.
/s/ Richard D. Gottlieb
-------------------------------------
RICHARD D. GOTTLIEB
President and Chief Executive Officer
LEE ENTERPRISES, INCORPORATED
PROXY FOR ANNUAL MEETING--JANUARY 29, 1997
COMBINED PROXY FOR COMMON STOCK AND CLASS B COMMON STOCK
Lloyd G. Schermer and Richard D. Gottlieb, or either of them, each
with power of substitution, are authorized to vote all shares of Common Stock
and Class B Common Stock which the undersigned is entitled to vote at the annual
meeting of stockholders of Lee Enterprises, Incorporated to be held January 29,
1997 and at any adjournment thereof, on the following matters.
Management recommends a vote FOR:
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary
below).
WITHHOLD AUTHORITY to vote for all nominees listed below.
Nominee Term
J. P. Guerin 3 years
Charles E. Richershauser, Jr. 3 years
Mark Vittert 3 years
Richard W. Sonnenfeldt 1 year
2. In their discretion, upon such other matters as may properly come before
the meeting.
THIS PROXY IS SOLICITED BY MANAGEMENT. EVERY PROPERLY SIGNED PROXY WILL BE VOTED
AS DIRECTED. UNLESS OTHERWISE DIRECTED, PROXIES WILL BE VOTED FOR ITEM 1 AND IN
THE DISCRETION OF MANAGEMENT IN CONNECTION WITH ITEM 2.
DATED: __________________, 199_. ________________________________________
Signature
________________________________________
Signature
(PLEASE sign exactly as your name appears hereon. Executors, administrators,
trustees, custodians, etc. should give full title. If shares are registered in
joint names, each owner should sign.)
