2010 Proxy Statement Pursuant to Section 14(a)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant xFiled by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only(as permitted by Rule 14a-6(e)(2)) |
x | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting Material Pursuant to §240.14a-12 |
Gannett Co., Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the
appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
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Craig A. Dubow
Chairman
Chief Executive Officer
March24, 2011
Dear Shareholder:
On
behalf of your Board of Directors and management, we cordially invite you to attend the Annual Meeting of Shareholders to be held on May3, 2011, at 10:00 a.m. at the Company’s headquarters located at 7950 Jones Branch Drive, McLean,
Virginia 22107.
At this meeting, our shareholders will vote
on matters set forth in the accompanying Notice of Annual Meeting and Proxy Statement. I also will provide a report on our Company and will entertain questions of general interest to shareholders.
Your vote is important. Your shares should be represented at the Annual
Meeting whether or not you plan to attend. If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the Internet or by telephone by following the instructions provided
in the Notice of Internet Availability of Proxy Materials that was previously mailed to you or, if you requested printed copies of the proxy materials, you can also vote by mail, by telephone or on the Internet as instructed on the proxy card that
you received. You may revoke your proxy and vote in person if you decide to attend the meeting.
An admission ticket is required for attendance at the Annual Meeting. Please see page 1 of the Proxy Statement for instructions about obtaining tickets.
Thank you for your continued support.
Cordially,
Craig A. Dubow
7950 Jones Branch Drive, McLean, Virginia 22107 (703)854-6000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May3, 2011
To Our Shareholders:
The 2011 Annual Meeting of Shareholders of Gannett Co., Inc. will be held at the Company’s headquarters, 7950 Jones Branch Drive, McLean,
Virginia, at 10:00 a.m. on May3, 2011 for the following purposes:
| (1) | to consider and act upon a proposal to elect to the Company’s Board of Directors nine persons nominated by the Board of Directors; |
| (2) | to consider and act upon a proposal to ratify the appointment of Ernst& Young LLP as the Company’s independent registered public accounting firm for the 2011 fiscal year; |
| (3) | to consider and act upon, by a non-binding advisory vote, a resolution to approve the compensation of our named executive officers; |
| (4) | to conduct a non-binding advisory vote on the frequency of future advisory votes to approve the compensation of our named executive officers; and |
| (5) | to transact such other business, if any, as may properly come before the Annual Meeting. |
The Board of Directors has set the close of business on March4,
2011 as the record date to determine the shareholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.
YOUR VOTE IS IMPORTANT. YOUR SHARES SHOULD BE REPRESENTED AT THE ANNUAL MEETING WHETHER OR NOT YOU PLAN TO ATTEND. IF YOU DO NOT WISH TO VOTE IN
PERSON OR IF YOU WILL NOT BE ATTENDING THE ANNUAL MEETING, YOU MAY VOTE BY PROXY. YOU CAN VOTE BY PROXY OVER THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS PROVIDED IN THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS THAT WAS
PREVIOUSLY MAILED TO YOU OR, IF YOU REQUESTED PRINTED COPIES OF THE PROXY MATERIALS, YOU CAN ALSO VOTE BY MAIL, BY TELEPHONE OR ON THE INTERNET AS INSTRUCTED ON THE PROXY CARD THAT YOU RECEIVED. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU
DECIDE TO ATTEND THE MEETING.
An admission ticket is
required for attendance at the Annual Meeting. Please see page 1 of the Proxy Statement for instructions about obtaining tickets.
By Action of the Board of Directors,
Todd A. Mayman
Senior Vice President
General Counsel and Secretary
McLean, Virginia
March24, 2011
This Notice of Annual Meeting and Proxy Statement are first being
delivered to shareholders on or about March24, 2011.
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PROXY STATEMENT
2011 ANNUAL MEETING OF SHAREHOLDERS
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PROPOSAL 2–RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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PROPOSAL 3–NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE |
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SECURITIES BENEFICIALLY OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL SHAREHOLDERS |
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INVESTMENT IN GANNETT STOCK BY DIRECTORS AND EXECUTIVE OFFICERS |
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PROXY STATEMENT
2011 ANNUAL MEETING OF SHAREHOLDERS
May3, 2011
Why am I receiving this Proxy Statement?
This Proxy Statement is being furnished to you in connection with the
solicitation of proxies by our Board of Directors for the 2011 Annual Meeting of Shareholders to be held on May3, 2011 at 10:00a.m. at the Company’s headquarters located at 7950 Jones Branch Drive, McLean, Virginia. This Proxy
Statement furnishes you with the information you need in order to vote, whether or not you attend the Annual Meeting.
On what am I being asked to vote and how does the Board recommend that I vote?
You are being asked to vote on the Proposals below, and the Board
recommends that you vote as follows:
Proposal 1–FOR
the election of nine nominees named by the Board of Directors;
Proposal 2–FOR the ratification of the appointment of Ernst& Young LLP as the Company’s independent registered public accounting firm for fiscal year 2011;
Proposal 3–FOR a non-binding advisory resolution to approve the
compensation of the Company’s named executive officers as disclosed in the Compensation Discussion and Analysis section and accompanying compensation tables and related discussion contained in this Proxy Statement; and
Proposal 4–FOR a non-binding vote to advise the Board that the
Company should hold future shareholder advisory votes to approve the compensation of our named executive officers EVERY YEAR (as opposed to every two years or every three years).
In addition, if you grant a proxy, your shares will be voted in the
discretion of the proxy holder on any Proposal for which you do not register a vote and any other business that properly comes before the Annual Meeting or any adjournment or postponement thereof.
Will there be any other items of business addressed at the Annual Meeting?
As of the date of this Proxy Statement, we are not
aware of any other matter to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is intended that the holders of the proxies will act in accordance with their best judgment.
What must I do if I want to attend the Annual Meeting in person?
Admission to the Annual Meeting is by ticket only. We will provide
each shareholder with one admission ticket upon request. Either you or your proxy may use your ticket. If you are a shareholder of
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record and plan to attend the Annual Meeting, please call the Company’s shareholder services department at (703)854-6960 to request a ticket. If you hold shares through an
intermediary, such as a bank or broker, and you plan to attend the Annual Meeting, please send a written request for a ticket, along with proof of share ownership, such as a bank or brokerage firm account statement or a letter from the intermediary
holding your shares, confirming ownership to: Secretary, GannettCo., Inc., 7950Jones Branch Drive, McLean, VA 22107. Requests for admission tickets will be processed in the order in which they are received and must be received no later
than April26, 2011. To obtain directions to attend the Annual Meeting, please call the Company’s shareholder services department at (703)854-6960.
Who may vote at the Annual Meeting?
If you owned Company stock at the close of business on March4,
2011 (the “Record Date”), then you may attend and vote at the meeting. At the close of business on the Record Date, we had approximately 240,238,830 shares of common stock outstanding and entitled to vote. Each share is entitled to one
vote on each proposal.
What constitutes a quorum for the Annual Meeting?
The presence, in person or by proxy, of the holders of
a majority of the shares of common stock outstanding on the Record Date will constitute a quorum to conduct business. Shares held by an intermediary, such as a banker or a broker, that are voted by the intermediary on any or all matters will be
treated as shares present for purposes of determining the presence of a quorum.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to Securities and Exchange Commission (the “SEC”) rules, we are permitted to provide access to our
proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders of record and beneficial owners. All shareholders will have the ability to access the
proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In
addition, shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
Choosing to receive your future proxy materials by email or viewing them on the Internet will save us the cost of printing and mailing documents to
you and will reduce the effect of our annual shareholders’ meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a
link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
What is the difference between holding shares as a shareholder of record and as a beneficial owner of shares held in street name?
Shareholder of Record. If your shares are registered directly
in your name with our transfer agent, Wells Fargo Shareowner Services, you are considered the shareholder of record with respect to those shares, and the Notice was sent directly to you by the Company.
Beneficial Owner of Shares Held in Street Name. If your shares
are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of
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shares held in “street name,” and the Notice was forwarded to you by your bank, broker or other intermediary. The organization holding your account is considered the shareholder of
record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.
If I am a shareholder of record of Company shares, how do I vote?
If you are a shareholder of record, you may vote in person at the
Annual Meeting. We will give you a ballot when you arrive.
If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the
Internet or by telephone by following the instructions provided in the Notice or, if you request printed copies of the proxy materials by mail, you can also vote by mail, by telephone or on the Internet.
If I am a beneficial owner of shares held in street name, how do I vote?
If you are a beneficial owner of shares held in street
name and you wish to vote in person at the Annual Meeting, you must obtain a valid legal proxy from the organization that holds your shares.
If you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. Follow the instructions provided to you
by your bank, broker or other intermediary.
What happens if I do not
give specific voting instructions?
Shareholders of
Record. If you are a shareholder of record and you:
| * | |
Indicate when voting on the Internet or by telephone that you wish to vote as recommended by our Board of Directors; or |
| * | |
Sign and return a proxy card without giving specific voting instructions; |
then the proxy holders will vote your shares in the manner recommended by our Board on
all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and
do not provide the organization that holds your shares with specific voting instructions, under the New York Stock Exchange (“NYSE”) rules, the organization that holds your shares may generally vote on routine matters (including Proposal 2
to ratify our appointment of Ernst& Young LLP as our independent registered public accounting firm for fiscal year 2011) but cannot vote on non-routine matters (including the uncontested director election described in Proposal 1 and the
non-binding advisory votes described in Proposals 3 and 4). If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform our
Inspector of Election that it does not have the authority to vote on this matter with respect to your shares and your shares will not be voted. This is generally referred to as a “broker non-vote.” When our Inspector of Election tabulates
the votes for any particular matter, broker non-votes will be counted for purposes of determining whether a quorum is present, but will not otherwise be counted. We encourage you to provide voting instructions to the organization that holds your
shares.
Can I change or revoke my vote?
Yes. If you deliver a proxy by mail, by telephone or via the Internet,
you have the right to revoke your proxy in writing (by mailing another proxy bearing a later date), by phone (by another call at a later
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time), via the Internet (by voting online at a later time), by attending the Annual Meeting and voting in person, or by notifying the Company before the Annual Meeting that you want to revoke
your proxy. Submitting your vote by mail, telephone or via the Internet will not affect your right to vote in person if you decide to attend the Annual Meeting.
How many votes are required for approval of each proposal?
Proposal 1–Election of the director nominees named in Proposal1 requires the affirmative vote of a majority of the votes cast. Votes may
be cast for, or withheld from, the election of all of the director nominees, or any of them.
Proposal 2–Ratification of the appointment of Ernst& Young LLP as the Company’s independent registered public accounting firm for fiscal year 2011, as specified in Proposal 2, requires the
affirmative vote of a majority of the votes cast. Votes may be cast for or against Proposal 2, and a shareholder also may abstain from voting on the proposal. Abstentions, if any, will have the same effect as votes against Proposal 2.
Proposal 3–The non-binding advisory vote to adopt the resolution
to approve the Company’s executive compensation program described in this Proxy Statement requires the affirmative vote of a majority of the votes cast. Votes may be cast for or against Proposal 3, and a shareholder also may abstain from voting
on the proposal. Abstentions, if any, will have the same effect as votes against Proposal 3.
Proposal 4–The favorable vote of a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting will be required for the approval, on an advisory basis,
of the frequency of holding the say on pay vote in the future. As an advisory vote, this proposal is not binding upon the Company. In addition, since shareholders have several voting choices, it is possible that no single choice will receive a
majority of the votes cast. In light of the foregoing, the Board will consider the outcome of the vote when determining the frequency of holding the say on pay vote. While the Board is making a recommendation with respect to this proposal,
shareholders are being asked to vote on the choices specified above, and not whether they agree or disagree with the Board’s recommendation. Abstentions, if any, will have no effect on such vote.
How do I vote my shares in the Company’s Dividend Reinvestment and 401(k)
Plans?
If you participate in the Company’s
Dividend Reinvestment or 401(k) Plans, your shares of stock in those plans can be voted in the same manner as shares held of record. If you do not give instructions, your shares held in the Dividend Reinvestment Plan will not be voted. All shares in
the 401(k) Plan for which no instructions are received will be voted by the trustee of the 401(k) Plan in the same proportion as instructions provided to the trustee by other 401(k) Plan participants.
How do I submit a shareholder proposal or nominate a director for election at the
2012 Annual Meeting?
To be eligible for inclusion in
the proxy materials for the Company’s 2012 Annual Meeting, a shareholder proposal or nomination must be submitted in writing to Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary and must be received by
November25, 2011. A shareholder who wishes to present a proposal or nomination at the Company’s 2012 Annual Meeting, but who does not request that the Company solicit proxies for the proposal or nomination, must submit the proposal to the
Company at the same address no earlier than January4, 2012 and no later than January24, 2012.
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Can shareholders and other interested parties communicate directly with our Board?
Yes. The Company invites shareholders and other interested parties to
communicate directly and confidentially with the full Board of Directors, the presiding director or the non-management directors as a group by writing to the Board of Directors, the Presiding Director or the Non-Management Directors, Gannett Co.,
Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary. The Secretary will forward such communications to the intended recipient and will retain copies for the Company’s records.
How can I obtain a shareholder list?
A list of shareholders entitled to vote at the 2011 Annual Meeting
will be open to examination by any shareholder, for any purpose germane to the 2011 Annual Meeting, during normal business hours for a period of ten days before the 2011 Annual Meeting and during the 2011 Annual Meeting at the Company’s offices
at 7950 Jones Branch Drive, McLean, Virginia 22107.
What is
“householding”?
We have adopted a procedure
approved by the SEC called “householding.” Under this procedure, shareholders of record who have the same address and last name who have elected to receive paper copies of our proxy materials will receive only one copy of our 2010 Annual
Report and this Proxy Statement unless one or more of these shareholders notifies us that they wish to continue receiving multiple copies. This procedure will reduce our printing costs and postage fees. However, if any shareholder residing at such
an address wishes to receive a separate copy of this Proxy Statement or the Company’s 2010 Annual Report, he or she may contact the Company’s Secretary at GannettCo.,Inc., 7950 Jones Branch Drive, McLean, Virginia 22107 or by
calling the Secretary at (703)854-6000. Any such shareholder may also contact the Secretary using the above contact information if he or she would like to receive separate Proxy Statements and Annual Reports in the future. If you are receiving
multiple copies of the Company’s Annual Report and Proxy Statement, you may request householding in the future by contacting the Secretary.
How may I obtain a copy of the Company’s 2010 Annual Report?
A copy of our 2010 Annual Report, which includes the Company’s Annual Report on Form 10-K for the fiscal year ended December26, 2010, is
being provided or made available to all shareholders of record on the Record Date. As permitted by the SEC, the Company is sending a Notice of Internet Availability of Proxy Materials to all shareholders.
If you hold your shares of record on the Record Date, you may request
email or paper copies of our 2010 Annual Report over the Internet, at www.ematerials.com/gci, by toll-free telephone call (in the U.S. and Canada) to 1-866-697-9377, or by email at ep@ematerials.com. Please put “GCI Materials Request” in
the subject line and include the 3-digit company number and 11-digit control number presented on the notice.
If you hold your shares on the Record Date in “street name” through a bank, broker or other intermediary, you may request email or paper
copies of our 2010 Annual Report over the Internet, at www.proxyvote.com, by toll-free telephone call (in the U.S. and Canada) to 1-800-579-1639, or by email to sendmaterial@proxyvote.com. Please put “Paper Material” or “E-mail
Material” in the subject line, followed by the 12-digit control number presented on the notice provided by your bank or broker. Requests, instructions and other inquiries will not be forwarded to your investment advisor.
You may also obtain a copy without charge by writing to: Gannett Co.,
Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary. Our 2010 Annual Report and 2010 Form 10-K are also available through the Company’s website at www.gannett.com. The Company’s Annual Report and Form 10-K are not proxy
soliciting materials.
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PROPOSAL 1–ELECTION OF DIRECTORS
The Board of Directors is currently composed of eleven directors, whose
biographies appear below. Following the 2011 Annual Meeting, the Company will have nine directors as one current director, Donna E. Shalala, has reached the Company’s mandatory retirement age for non-management directors and will retire, and
one current director, Karen Hastie Williams, has decided not to stand for re-election at the 2011 Annual Meeting in order to devote more time to personal and other professional interests.
The Board of Directors held eight meetings during 2010. Each director attended at least 75% of the total number of
meetings of the Board and its committees on which he or she served that were held during the period for which he or she served as a director or committee member, as applicable, during2010. All directors then serving on the Board attended the
2010 Annual Meeting in accordance with the Company’s policy that all directors attend the Annual Meeting.
Nominees elected to our Board at the 2011 Annual Meeting will serve one-year terms.
The Board believes that the nominees will be available and able to serve as directors. If any nominee becomes unable or
unwilling to serve, the Board may do one of three things: recommend a substitute nominee, reduce the number of directors to eliminate the vacancy, or fill the vacancy later. The shares represented by all valid proxies may be voted for the election
of a substitute if one is nominated.
The Company’s
By-laws provide that director nominees are elected by the vote of a majority of the votes cast with respect to the director at the meeting, unless the number of nominees exceeds the number of directors to be elected, in which case directors shall be
elected by the vote of a plurality of the shares present and entitled to vote at the meeting. At the 2011 Annual Meeting, the number of nominees equals the number of directors to be elected so the majority vote standard shall apply. If an incumbent
nominee does not receive an affirmative majority of the votes cast, he or she is required to submit a letter of resignation to the Board’s Nominating and Public Responsibility Committee, which would recommend to the Board the action to be taken
with respect to the letter of resignation. The Board is required to act on the Committee’s recommendation and publicly disclose its decision and its rationale within 90 days after the election results are certified.
The Board of Directors has affirmatively determined that all of our
current directors other than Craig A. Dubow are “independent” of the Company within the meaning of the rules governing NYSE-listed companies. For a director to be “independent” under the NYSE rules, the Board of Directors must
affirmatively determine that the director has no material relationship with the Company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company. To assist it in making these
determinations, the Board has determined that the following categories of relationships between a director and the Company are not material:
| 1. | Employment of a director or a director’s immediate family member by, a director’s position as a director with, or direct or indirect ownership by a director or a director’s immediate family member of a 10% or greater equity interest in, another company or organization that made payments to, or received payments from, the Company or any of its subsidiaries for property or services in an amount which, in each of the last three fiscal years, did not exceed the greater of $1 million or 2% of such other company’s consolidated gross revenues; and |
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| 2. | A relationship of a director or a director’s immediate family member with a charitable organization, as an executive officer, board member, trustee or otherwise, to which the Company or any of its subsidiaries has made, in any of the last three fiscal years, charitable contributions of not more than the greater of $100,000 or 2% of such charitable organization’s consolidated gross revenues. |
In making its independence determinations,
our Board considered all relationships, direct and indirect, between each director and our Company that were identified on questionnaires provided by each Board member. The responses to those questionnaires indicated that there were no relationships
between any director (other than Mr.Dubow) and the Company other than two types of relationships that the Board has determined not to be material in accordance with these objective standards:
| * | |
Board member service at charitable organizations to which the Gannett Foundation made contributions within the permitted thresholds identified above; and |
| * | |
sales by the Company of advertising and purchases by the Company of property and services, on customary terms and conditions and in amounts within the permitted |
Consistent with the NYSE rules, the Company’s Principles of Corporate Governance call for the Company’s non-management directors to meet in regularly scheduled executive sessions without management as
they deem appropriate. The Company’s non-management directors held five executive sessions in 2010, and will meet in executive sessions as appropriate throughout 2011. The Board has established the role of a presiding director, elected by the
independent directors. KarenHastie Williams served as presiding director from 2004 until February 2011. DuncanM. McFarland was elected as the presiding director in February 2011 and will continue in that role for the remainder of 2011.
The presiding director’s responsibilities include:
| * | |
presiding at all executive sessions of non-management directors and at meetings of the full Board if the Chairman is not present; |
| * | |
serving as liaison on Board-wide issues between the Chairman and CEO and the non-management directors, although Company policy also provides that all directors |
| * | |
in consultation with the Chairman and CEO, reviewing and approving Board meeting agendas and materials; |
| * | |
in consultation with the Chairman and CEO, reviewing and approving meeting schedules to assure there is sufficient time for discussion of all agenda items; |
| * | |
calling meetings of the non-management directors, if desired; and |
| * | |
being available when appropriate for consultation and direct communication if requested by shareholders. |
The Company combines the positions of Chairman and CEO. The Company
believes that this is the best leadership structure for the Company because the CEO is the person best suited to set the agendas, priorities and procedures of the Board and to lead discussions of the Company’s strategy due to his in-depth
knowledge of the Company’s business. In addition, combining the positions of Chairman and CEO makes clear who is responsible for managing the Company’s business, under the oversight and review of the Board.
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Combining the positions of Chairman and CEO has not compromised the Board’s independent oversight
of management. The Board’s independent oversight continues to be substantial. As referenced above, all directors on the Board other than Mr.Dubow, our Chairman and CEO, are independent under the rules governing NYSE-listed companies.
Further, each of the Board’s Audit, Executive Compensation and Nominating and Public Responsibility Committees are composed entirely of independent directors and these independent committees of the Board are given the authority under their
respective charters to hire independent advisors and consultants, at Company expense, to assist them in carrying out their duties.
In addition to the independence safeguards mentioned above, the Company has established effective principles of corporate governance which describe
the Board’s practices and methods of self-evaluation in detail in order to promote transparency with shareholders. As well, the Company has an independent, non-management presiding director who chairs regularly scheduled executive sessions of
the Company’s non-management directors. The presiding director’s responsibilities are described above.
THE BOARD’S ROLE IN RISK OVERSIGHT
The Board believes that evaluating how senior management identifies,
assesses, manages and monitors the various risks confronting the Company is one of its most important areas of oversight. In carrying out this critical responsibility, the Board oversees the Company’s risk management function through regular
discussions with senior management.
While the Board has
primary responsibility for overseeing the Company’s risk management function, each committee of the Board also considers risk within its area of responsibility. For example, the Audit Committee is primarily responsible for reviewing risks
relating to accounting and financial controls and the Executive Compensation Committee reviews risks related to compensation matters. The Board is apprised by the committee chairs of significant risks and management’s response to those risks
via periodic reports. While the Board and its committees oversee the Company’s risk management function, management is responsible for implementing day-to-day risk management processes and reporting to the Board and its committees on such
matters.
With respect to risk related to compensation
matters, the Compensation Committee has reviewed the Company’s executive compensation program and has concluded that the program does not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation
Committee believes that the design of the Company’s annual cash and long-term equity incentives provides an effective and appropriate mix of incentives to help ensure the Company’s performance is focused on long term profitability and
stockholder value creation and does not encourage unnecessary or excessive risk taking at the expense of long-term results.
The principal occupation and business experience of the Board’s nominees and of the directors who are not standing for re-election are
described below.
Nominees
The following director nominees are currently serving on the Board and
have been nominated to stand for re-election at the 2011 Annual Meeting for a one-year term. The Board of Directors unanimously recommends that the shareholders of the Company vote FOR the election of the nominees to serve as directors.
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John E. Cody
Mr.Cody, 64, served as Executive Vice President and Chief
Operating Officer of Broadcast Music, Inc. from November 2006 until his retirement in November 2010. Previously, he served as BMI’s Senior Vice President and Chief Financial Officer from 1999 to 2006. Before joining BMI, he served as Vice
President/Controller of the Hearst Book Group and Vice President/Finance and Chief Financial Officer for the U.S. headquarters of LM Ericsson. Mr.Cody has broad business, music broadcast and publishing industry experience and financial
expertise from the various senior management roles he held with BMI, Hearst and Ericsson. He is also Chairman of the Tennessee Performing Arts Center. He has been a Gannett director since February 2011.
Craig A. Dubow
Mr.Dubow, 56, is Chairman and Chief Executive Officer of Gannett.
He became President and CEO and a director of Gannett in July 2005, and Chairman of Gannett in July 2006, and served as Chairman, President and CEO until February1, 2010. He was President and CEO of the Gannett Broadcast Division from 2001 to
July 2005, and was President of the Gannett Broadcast Division from 2000 to 2001. He has served the Company in various other executive capacities since 1981. Mr.Dubow is also a director of the Associated Press and Broadcast Music, Inc.
Howard D. Elias
Mr.Elias, age 53, is President and Chief Operating Officer, EMC
Information Infrastructure and Cloud Services. Previously, he served as President, EMC Global Services and Resource Management Software Group, and Executive Vice President, EMC Corporation from September 2007 to September 2009 and as Executive Vice
President, Global Marketing and Corporate Development, at EMC Corporation from October 2003 to September 2007. Mr.Elias has broad business experience and expertise in information technology issues as a result of the various positions he has
held with EMC, Hewlett-Packard Company, Compaq, Digital, AST Research and Tandy Corporation. He has been a Gannett director since 2008.
Arthur H. Harper
Mr.Harper, 55, has served as Managing Partner of GenNx360 Capital Partners, a private equity firm focused on business to business companies,
since January 2006. Previously, he served as President and CEO of General Electric’s Equipment Services division from 2001 to 2005. Mr.Harper has broad business experience and financial expertise from the various senior management roles
he held with General Electric. He is also a director of Monsanto Company. He has been a Gannett director since 2006.
John Jeffry Louis
Mr.Louis, 48, was Co-Founder of Parson Capital Corporation, a Chicago-based private equity and venture capital firm, and served as its
Chairman from 1992 to 2007. He is currently a director of S.C.Johnson and Son, Inc. and Johnson Financial Group, Inc., a trustee of Northwestern University and the Chicago Council on Global Affairs and a commissioner of the US-UK Fulbright
Commission. Mr.Louis has broad business experience, financial expertise and experience as an entrepreneur from his years of experience in the venture capital industry and having co-founded a number of companies. He has been a Gannett director
since 2006.
Marjorie Magner
Ms.Magner, 61, is Managing Partner of Brysam Global Partners, a
private equity firm investing in financial services firms with a focus on consumer opportunities in emerging markets founded in
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January 2007. She was Chairman and CEO of Citigroup’s Global Consumer Group from 2003 to 2005. She served in various roles at Citigroup, and a predecessor company, CitiFinancial (previously
Commercial Credit), since 1987. Ms.Magner currently serves as a director of Accenture Ltd. and Ally Financial Inc. and served as a director of The Charles Schwab Corporation from February 2006 to May 2008. Ms.Magner has broad business
experience and financial expertise from the various senior management roles she held with Citigroup. She has been a Gannett director since 2006.
Scott K. McCune
Mr.McCune, age 54, has served as Vice President and Director, Integrated Marketing at The Coca-Cola Company since January 2005. He was Vice
President Worldwide Media, Vice President Worldwide Sports at The Coca-Cola Company between 2001 and 2004. Mr.McCune has broad business experience and expertise in consumer marketing strategies from the various senior management roles which he
has held with The Coca-Cola Company. He has been a Gannett director since 2008.
Duncan M. McFarland
Mr.McFarland, 67, was Chairman and CEO of Wellington Management Company, LLP from 1994 until his retirement in 2004. He served in various
roles at Wellington Management Company since 1965. He is a director of NYSE Euronext, Inc., and The Asia Pacific Fund, Inc., a closed-end registered investment company traded on the NYSE. Mr.McFarland has broad business experience and
financial expertise from the various senior management roles he held with Wellington Management Company. He has been a Gannett director since 2004.
Neal Shapiro
Mr.Shapiro, 53, is President and CEO of WNET, the public television company which operates Thirteen/WNET and WLIW21, the largest and third
largest public television stations in the country. Before joining WNET in February 2007, Shapiro served in various executive capacities with the National Broadcasting Company beginning in 1993 and was president of NBC News from May2001 to
September 2005. He also is on the board of trustees of American Public Television, the advisory board of Investigative Reporters and Editors (IRE), the Board of Trustees at Tufts University, and the alumni board of the Communications and Media
Studies program at Tufts University. Mr.Shapiro has broad business experience and expertise in broadcasting, news reporting and First Amendment issues from the various senior management roles he has held with WNET and NBC. He has been a
Gannett director since 2007.
Directors Not Standing for
Reelection
Donna E. Shalala will not be standing for
re-election at the 2011 Annual Meeting because she has reached the Company’s mandatory retirement age for non-management directors and will retire. Ms.Shalala, 70, has served as President of the University of Miami since 2001. She was
Secretary of the United States Department of Health and Human Services from 1993 to 2001. Ms.Shalala currently serves as a director of Lennar Corporation and MEDNAX, Inc. and she served as a director of UnitedHealth Group from March 2001 to
June 2007. Ms.Shalala has broad business and government experience and expertise in education and public health issues. She has served as a Gannett director since 2001 and we are grateful for her long-time dedication to Gannett and its
shareholders.
Karen Hastie Williams has decided not to
stand for re-election at the 2011 Annual Meeting in order to devote more time to personal and other professional interests. Ms.Williams, 66, is a retired partner at the law firm of Crowell& Moring, Washington, DC. She is a director
of the National Association of
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Corporate Directors and SunTrust Banks, Inc. Ms.Williams previously served as a director of The Chubb Corporation from December 2000 to November 2010, Continental Airlines, Inc. from May
1993 to September 2010 and WGL Holdings, Inc., the parent company of Washington Gas Light Company, from November 2000 to December 2010. She has broad business, government and public service experience and financial expertise from her service on the
audit committees of a number of companies. Ms.Williams has served as a Gannett director since 1997 and we are grateful for her long-time dedication to Gannett and its shareholders.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the
Board and its five committees: the Audit Committee, Digital Technology Committee, Executive Committee, Executive Compensation Committee, and Nominating and Public Responsibility Committee. The current members of each committee are:
| |
Audit Committee |
|
Digital Technology Committee |
| Executive Committee |
| Executive Compensation Committee |
|
Nominatingand Responsibility |
| | | | | | |||||
Craig A. Dubow |
| | |
x |
|
Chair |
| | | |
| | | | | | |||||
Howard D. Elias |
| | |
x |
| | | | | |
| | | | | | |||||
Arthur H. Harper |
| | | | | | |
x |
|
Chair |
| | | | | | |||||
John Jeffry Louis |
|
x |
|
Chair |
| | | | | |
| | | | | | |||||
Marjorie Magner |
|
Chair |
| | |
x |
|
x |
| |
| | | | | | |||||
Scott K. McCune |
| | |
x |
| | | | |
x |
| | | | | | |||||
DuncanM.McFarland |
|
x |
| | |
x |
|
Chair |
| |
| | | | | | |||||
DonnaE.Shalala |
| | |
x |
| | | | |
x |
| | | | | | |||||
Neal Shapiro |
| | |
x |
| | | | |
x |
| | | | | | |||||
KarenHastieWilliams |
|
x |
| | | | |
x |
| |
John Cody, who joined the Board in February 2011, has not yet been appointed to any Board committees.
The Audit Committee assists the Board of Directors in its oversight of
financial reporting practices and the quality and integrity of the financial reports of the Company. Each member of the Audit Committee meets the independence requirements of the SEC as well as those of the NYSE. In addition, the Board has
determined that Duncan M. McFarland is an audit committee financial expert, as that term is defined under the SEC rules. This Committee met nine times in 2010.
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The Digital Technology Committee assists the Board of Directors in its
oversight of the Company’s digital strategy and initiatives. The Committee’s duties and responsibilities include reviewing and evaluating the Company’s digital strategy, operational plans and initiatives. This Committee met four times
in 2010.
The Executive Committee may exercise the authority of
the Board between Board meetings, except as limited by Delaware law. This Committee did not meet in 2010.
EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee has overall responsibility for
approving and evaluating the compensation plans, principles and programs of the Company. The Committee’s duties and responsibilities include reviewing and approving on an annual basis corporate goals and objectives relevant to compensation of
the Company’s Chairman and CEO, President and Chief Operating Officer (COO) and other senior executives, including members of the Gannett Management Committee, the Gannett U.S. Community Publishing Operating Committee, the Gannett Broadcast
Operating Committee and other Company and divisional officers. This Committee met six times in 2010.
The Committee has primary responsibility for administering the Company’s equity incentive plans and in that role is responsible for making
grants of stock options (SOs) and restricted stock units (RSUs) to our senior executives. The Committee historically has delegated the authority for approving grants of SOs and RSUs to employees, other than our senior executives mentioned above, to
the Chairman and CEO, within the parameters of a pool of shares approved by the Committee. This provides flexibility for equity grants to be made to employees below the senior management level who are less familiar to the Committee.
In November 2007, the Committee hired independent consultantPearl
Meyer& Partners(“PM&P”) to advise on executive compensation matters. Under the terms of the Committee’s agreement withPM&P, the consultant is prohibited from doing any other business for the Company or
its management, and the Committee may contactPM&P without any interaction from Company management. This ensures the independence of the Committee’s compensation consultant.
The PM&P consultant participates in Committee meetings as requested by the chairman of the Committee and communicates
directly with the chairman of the Committee outside of meetings. In 2010, the PM&P consultant specifically provided the following services:
| * | |
Participated in Committee executive sessions without management present to discuss CEO compensation and other relevant matters, including the appropriate |
| * | |
Provided advice to the Committee regarding other aspects of the Company’s executive compensation program, including plan design, best practices and other |
| * | |
Reviewed the compensation, discussion and analysis section of this Proxy Statement. |
Beginning in early 2010, management retained Meridian Compensation Partners, LLC as its executive compensation consultant
to assist it in analyzing total rewards practices and trends.
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NOMINATING AND PUBLIC RESPONSIBILITY COMMITTEE
The Nominating and Public Responsibility Committee is charged with
identifying individuals qualified to become Board members, recommending to the Board candidates for election or re-election to the Board, and considering from time to time the Board committee structure and makeup. The Committee also monitors the
Company’s human resources practices, including its performance in diversity and equal employment opportunity, monitors the Company’s performance in meeting its obligations of fairness in internal and external matters, and takes a
leadership role with respect to the Company’s corporate governance practices. This Committee met three times in 2010.
The Nominating and Public Responsibility Committee charter sets forth certain criteria for the Committee to consider in evaluating potential
director nominees. In addition to evaluating a potential director’s independence, the Committee considers whether director candidates have relevant experience in business and industry, government, education and other areas, and monitors the mix
of skills and experience of directors in order to assure that the Board has the necessary breadth and depth to perform its oversight function effectively. The charter also encourages the Committee to work to maintain a board that reflects the
diversity of the communities we serve. The Committee evaluates potential candidates against these requirements and objectives. For those director candidates who appear upon first consideration to meet the Committee’s criteria, the Committee
will engage in further research to evaluate their candidacy. The members of the Nominating and Public Responsibility Committee and Board of Directors complete an annual questionnaire assessing the effectiveness of the Committee’s performance,
including the Committee’s process for identifying nominees who are qualified to become Board members in light of various factors set forth in the Committee’s charter, and then discuss the results of the questionnaire and their views of the
Committee’s performance.
The Nominating and Public
Responsibility Committee historically has relied primarily on recommendations from management and members of the Board to identify director nominee candidates. However, the Committee will consider timely written suggestions from shareholders.
Shareholders wishing to suggest a candidate for director nomination for the 2012 Annual Meeting should mail their suggestions to Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary. Suggestions must be received by the
Secretary of the Company no later than January24, 2012. The manner in which the Committee evaluates director nominee candidates suggested by shareholders will not differ from the manner in which the Committee evaluates candidates recommended
by other sources.
In addition to the criteria described
above, the Company’s Principles of Corporate Governance require each director to own, directly, beneficially, or through the Company’s Deferred Compensation Plan, at least 1,000 shares of Company stock upon joining the Board of Directors,
and to increase their ownership to at least 10,000 shares within five years after joining the Board. Each director meets or exceeds the applicable share ownership requirement. The By-laws of the Company establish mandatory retirement ages of 70 for
directors who have not been executives of the Company and 65 for directors who have served as executives, except that the Board of Directors may extend the retirement age beyond 65 for directors who are or have been the CEO of the Company. The
Company’s Principles of Corporate Governance also provide that a director who retires from, or has a material change in responsibility or position with, the primary entity by which that director was employed at the time of his or her election
to the Board of Directors shall offer to submit a letter of resignation to the Nominating and Public Responsibility Committee for its consideration. The Committee will make a recommendation to the Board of Directors on whether to accept or reject
the resignation, or whether other action should be taken.
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The written charters governing the Audit Committee, the Digital
Technology Committee, the Executive Compensation Committee and the Nominating and Public Responsibility Committee, as well as the Company’s Principles of Corporate Governance, are posted on the Corporate Governance page of the Company’s
website at www.gannett.com. You may also obtain a copy of any of these documents without charge by writing to: Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia22107, Attn: Secretary.
The Company has long maintained a code of conduct and ethics (the
“Ethics Policy”) that sets forth the Company’s policies and expectations. The Ethics Policy, which applies to every Company director, officer and employee, addresses a number of topics, including conflicts of interest, relationships
with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities and the protection and proper use of the Company’s assets. The Ethics Policy meets the NYSE’s requirements for a code of business conduct and
ethics as well as the SEC’s definition of a code of ethics applicable to the Company’s senior officers. Neither the Board of Directors nor any Board committee has ever granted a waiver of the Ethics Policy.
The Ethics Policy is available on the Corporate Governance page of the
Company’s website at www.gannett.com. You may also obtain a copy of the Ethics Policy without charge by writing to: Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary. Any additions or amendments to the Ethics
Policy, and any waivers of the Ethics Policy for executive officers or directors, will be posted on the Corporate Governance page of the Company’s website and similarly provided to you without charge upon written request to this address.
The Company has a telephone hotline for employees and
others to submit their concerns regarding violations or suspected violations of law and for reporting any concerns regarding accounting or auditing matters on a confidential anonymous basis. Employees and others can report concerns by calling
1-800-234-4206 or by emailing or writing to the addresses provided on the Corporate Governance page of the Company’s website. Any concerns regarding accounting or auditing matters so reported will be communicated to the Company’s Audit
Committee.
The Audit Committee assists the Board of
Directors in its oversight of financial reporting practices and the quality and integrity of the financial reports of the Company, including compliance with legal and regulatory requirements, the independent registered public accounting firm’s
qualifications and independence, and the performance of the Company’s internal audit function. The Audit Committee appoints the Company’s independent registered public accounting firm. The Committee also provides oversight of the
Company’s internal audit function including the review of proposed audit plans and the coordination of such plans with the Company’s independent registered public accounting firm. The Audit Committee oversees the adequacy and effectiveness
of the Company’s accounting and financial controls and the guidelines and policies that govern the process by which the Company undertakes risk assessment and risk management. The Audit Committee also is responsible for reviewing compliance
with the Company’s Ethics Policy and assuring appropriate disclosure of any waiver of or change in the Ethics Policy for executive officers, and for reviewing the Ethics Policy on a regular basis and proposing or adopting additions or
amendments to the Ethics Policy as appropriate. In connection with the Ethics Policy, the Audit Committee has established procedures for the receipt, retention and
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treatment of complaints received by the Company regarding accounting controls or auditing matters and the confidential, anonymous submission by employees of the Company of any accounting or
auditing concerns. The Audit Committee operates under a formal written charter that has been adopted by the Board of Directors.
The Audit Committee members are not professional accountants or auditors, and their role is not intended to duplicate or certify the activities of
management and the independent registered public accounting firm, nor can the Committee certify that the independent registered public accounting firm is “independent” under applicable rules. The Committee serves a board-level oversight
role, in which it provides advice, counsel and direction to management and the independent registered public accounting firm on the basis of the information it receives, discussions with management and the independent registered public accounting
firm, and the experience of the Committee’s members in business, financial and accounting matters.
During fiscal years 2009 and 2010, the Company’s independent registered public accounting firm for each of those years, Ernst& Young
LLP (“E&Y”), billed the Company the following fees and expenses:
| | 2009 | | | 2010 | | ||
Audit Fees(2) |
| $ | 3,858,000 | | | $ | 3,280,000 | |
Audited-Related Fees(3) |
| $ | 99,000 | | | $ | 209,000 | |
Tax Fees(4) |
| $ | 969,000 | | | $ | 648,000 | |
All Other Fees(5) |
| $ | 0 | | | $ | 0 | |
| | | ||||||
Total(1) |
| $ | 4,926,000 | | | $ | 4,137,000 | |
(1) | The total fees reflected above for 2009 and 2010 include amounts for CareerBuilder, LLC, in which the Company acquired a 50.8% controlling interest in September 2008. These fees total $573,000 and $440,000 for 2009 and 2010, respectively, and represent 100% of the amounts billed by E&Y related to services provided to CareerBuilder, LLC, although the Company’s actual share is 50.8% of the total CareerBuilder, LLC fees. |
(2) | Audit Fees principally relate to professional services rendered in connection with the annual integrated audit of the consolidated financial statements and internal control over financial reporting, the review of quarterly reports on Form 10-Q, and statutory audits required internationally. Fees for CareerBuilder, LLC for audit services in 2009 and 2010 were $544,000 and $440,000, respectively. |
(3) | Audit-Related Fees principally relate to professional services rendered in connection with the audits of employee benefit plans. All of these services were pre-approved by the Audit Committee as described below. |
(4) | Tax Fees principally relate to tax planning services and advice in the U.S. and the U.K. CareerBuilder, LLC fees for these tax services in 2009 were $29,000. All of these services were pre-approved by the Audit Committee as described below. |
(5) | No services were rendered during either 2009 or 2010 that would cause E&Y to bill the Company amounts constituting “All Other Fees.” |
The Audit Committee has adopted a policy for the pre-approval of
services provided by the Company’s independent registered public accounting firm. Under the policy, particular services or categories of services have been pre-approved, subject to a specific budget. Periodically, but at least annually, the
Audit Committee reviews and approves the list of pre-approved services and the maximum threshold cost of performance of each. The Audit Committee is provided with a status update on all E&Y services periodically throughout the year and discusses
such services with
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management and E&Y. Pursuant to its pre-approval policy, the Audit Committee has delegated pre-approval authority for services provided by E&Y to its Chair, Marjorie Magner.
Ms.Magner may pre-approve up to $100,000 in services provided by E&Y, in the aggregate at any one time, without consultation with the full Audit Committee, provided she reports such approved items to the Audit Committee at its next
scheduled meeting. In determining whether a service may be provided pursuant to the pre-approval policy, consideration is given to whether the proposed service would impair the independence of the independent registered public accounting firm.
In connection with its review of the Company’s 2010
audited financial statements, the Audit Committee received from E&Y written disclosures regarding E&Y’s independence in accordance with applicable requirements of the Public Company Accounting Oversight Board, including a detailed
statement of any relationships between E&Y and the Company that might bear on E&Y’s independence, and has discussed with E&Y its independence. The Audit Committee considered whether the provision of non-audit services by E&Y is
compatible with maintaining E&Y’s independence. E&Y stated that it believes it is in full compliance with all of the independence standards established by the various regulatory bodies. The Audit Committee also discussed with E&Y
various matters required to be discussed by Statements on Auditing Standards No.61, as amended (AICPA, Professional Standards, Vol. 1, AU Section380), as adopted by the PCAOB in Rule 3200T, including, but not limited to, the selection of
and changes in the Company’s significant accounting policies, the basis for management’s accounting estimates, E&Y’s conclusions regarding the reasonableness of those estimates, and the disclosures included in the financial
statements.
The Audit Committee met with management, the
Company’s internal auditors and representatives of E&Y to review and discuss the Company’s audited financial statements for the fiscal year ended December26, 2010. Based on such review and discussion, and based on the Audit
Committee’s reviews and discussions with E&Y regarding the various matters mentioned in the preceding paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the
Company’s Form 10-K covering the 2010 fiscal year, and the Board has approved that recommendation.
Audit Committee
Marjorie Magner, Chair
John Jeffry Louis
Duncan M. McFarland
Karen Hastie Williams
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PROPOSAL 2–RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed Ernst& Young LLP as the Company’s independent registered public
accounting firm for our fiscal year ending December25, 2011. E&Y also served as the Company’s independent registered public accounting firm for our 2010 fiscal year. The Board of Directors is submitting the appointment of E&Y as
the Company’s independent registered public accounting firm for shareholder ratification at the 2011 Annual Meeting. The Board of Directors unanimously recommends that the shareholders of the Company vote FOR the ratification of the appointment
of Ernst& Young LLP as the Company’s independent registered public accounting firm for the current year.
A representative of E&Y is expected to be present at the 2011 Annual Meeting. The E&Y representative will have an opportunity to make a
statement if he or she desires to do so and will be available to respond to appropriate questions from shareholders.
Our By-laws do not require that the shareholders ratify the appointment of E&Y as our independent registered public accounting firm. We are
seeking ratification because we believe it is a good corporate governance practice. If the shareholders do not ratify the appointment, the Audit Committee will reconsider whether to retain E&Y, but may retain E&Y as the Company’s
independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee in its discretion may change the appointment at any time during the year if it determines that a change would be in the best interests of the
Company and its shareholders.
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COMPENSATION DISCUSSION AND ANALYSIS
In this Compensation Discussion and Analysis section,
references to “the Committee” are to the Executive Compensation Committee of the Board of Directors. References to “NEOs” are to our Named Executive Officers, which for the 2010 fiscal year consisted of: Craig A. Dubow (Chairman
and CEO); Gracia C. Martore (President and COO); Paul N. Saleh (Senior Vice President and CFO); Robert J. Dickey (President/U.S. Community Publishing); David L. Hunke (President and Publisher/USA TODAY); and David T. Lougee (President/Broadcasting).
In making compensation decisions, the Committee is guided by the
following principles:
| * | |
Fairness–We believe that compensation should be fair to both executives and shareholders, externally competitive, and designed to align closely the |
| * | |
Pay for performance–We believe that compensation should place a heavy emphasis on pay for performance and that substantial portions of total |
| * | |
Attract, retain and motivate–We are committed to attracting and retaining superior management talent by offering a compensation structure that |
| * | |
Promote stock ownership–We are committed to fostering a compensation structure that aligns our executives’ interests with those of our |
| * | |
Pay competitively–We are committed, as a leader in our industry, to awarding compensation that both reflects our position in the market and is in |
Recent Executive Compensation Policy Changes
In connection with a review of its executive compensation practices, on April15, 2010, the Committee adopted a policy that (i)the
Company will no longer include in new or materially amended agreements entered into by the Company with its executive officers (a)excise tax gross-ups with respect to payments contingent upon a change in control or (b)a modified single
trigger for payments contingent upon a change in control, and (ii)any new participant in the Gannett Transitional Compensation Plan (TCP) on or after April15, 2010, including Mr.Saleh, will not be entitled to the benefit of the
TCP’s excise tax gross-up or modified single trigger provisions. However, participants in the TCP and executive officers who entered into agreements with the Company prior to April15, 2010, including Mr.Dubow, Ms.Martore,
Mr.Dickey, Mr.Hunke and Mr.Lougee, will be “grandfathered” and will continue to be entitled to the benefit of the excise tax gross-up and modified single trigger provisions in the TCP and such agreements.
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Table of Contents
Overview of Executive Compensation Program
The Company has designed an executive compensation program comprised
of several components, as illustrated in the following table, and as more fully discussed in the pages that follow.
Program | | Component | | Description | | Objective |
Cash Compensation |
|
Base Salary |
|
Pay for service in executive role. |
|
Retention. Base salary adjustments also allow the Committee to reflect an individual’s performance or changed responsibilities. |
|
Annual Bonus |
|
Annual cash bonus based on |
|
Retention. To reward performance in attainment of individual and Company qualitative and quantitative performance goals. |
|
Long-Term Incentives |
|
Stock Options (SOs) |
|
Long-term program consisting of SO grants with a four-year vesting period and an eight-year SO term. |
|
To reward for increases in shareholder value and help align ownership interests of management with shareholders. |
|
Restricted Stock Units (RSUs) |
|
Long-term program providing for delivery of shares of common stock upon continued employment for a full four-year vesting period. |
|
To retain and motivate executives in a challenging business environment and to reward for increases in shareholder value |
|
Benefits and Perquisites |
| | |
Executives participate in employee benefit plans available to most Company employees, including medical, life insurance, disability plans and receive certain other perquisites. |
|
Employee benefit plans provide insurance protection for our executives and their families. Perquisites help minimize distractions from important initiatives, complement other compensation components, and enable the |
19
Table of Contents
Program | | Component | | Description | | Objective |
Post-Termination Pay |
|
Gannett Supplemental Retirement Plan (SERP) |
|
Retirement plan that allows certain executives to receive total retirement benefits in excess of those permitted under IRS limits. For most participants, SERP benefits were frozen in August 2008. Executives whose |
|
To provide for executive retirement benefits that cannot be provided under a tax-qualified retirement plan. |
|
Gannett Deferred Compensation Plan (DCP) |
|
Retirement plan that allowscertain executives the opportunity to defer to future years all or part of their base salary and incentive bonus and, beginning in August 2008,to provide benefitsin |
|
Toallow certain executives to save towards retirement bydeferring theirown compensation and, beginning in August 2008,to provide for benefitsthat cannot be provided under the |
|
|
Gannett Transitional Compensation Plan (TCP) |
|
Severance pay arrangement that provides payment in the event of an involuntary termination without “cause,” a voluntary termination for “good reason” or, in the case of executives participating |
|
To provide assurance that the Company would retain top talent and have the continued dedication of, and the availability of objective advice and counsel from, our NEOs and other key executives notwithstanding the |
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Table of Contents
Market Competitiveness: Peer Group and Comparable Group Analysis
Under the direction of our Chairman and CEO, President and COO, Senior
VP/Human Resources and Vice President/Total Rewards, the Company collects market data of certain corporations annually to compare NEO compensation at our Company to that of our peer group of publishing and broadcasting companies (Peer Group), and to
that of companies with revenues and ratios of profit to revenue comparable to ours (Comparable Group). These members of senior management use this and similar information to provide context for their compensation recommendations to the Committee.
2010 Peer Group
A. H. Belo Corporation | | Media General, Inc. |
Journal Communications, Inc. | | The New York Times Company |
Lee Enterprises, Inc. | | The E.W. Scripps Company |
The McClatchy Company | | |
2010
Comparable Group
Advance Auto Parts Inc. |
|
First American Financial Corporation |
|
OGE Energy Corp. |
AGCO Corporation |
|
Flowserve Corporation |
|
Pactiv Corporation |
AGL Resources Inc. |
|
F.N.B. Corporation |
|
Peabody Energy Corporation |
Alliance Data Systems Corporation |
|
Fortune Brands, Inc. |
|
Pitney Bowes Inc. |
Argo Group International |
|
Gap Inc. |
|
Quest Diagnostics Incorporated |
|
Genzyme Corporation |
|
Regal Entertainment Group |
|
BB&T Corporation |
|
Goodrich Corporation |
|
Royal Caribbean Cruises Ltd. |
Cablevision Systems Corporation |
|
Hasbro, Inc. |
|
R.R. Donnelley & Sons Company |
Calpine Corporation |
|
The Hershey Company |
|
Scholastic Corporation |
Campbell Soup Company |
|
Hormel Foods Corporation |
|
Southern Union Company |
CBS Corporation |
|
Mattel, Inc. |
|
SuperMedia Inc. |
The Clorox Company |
|
McCormick & Company, |
|
Symantec Corporation |
CMS Energy Corporation |
| |
Time Warner Cable Inc. |
|
Comcast Corporation |
|
McDermott International, Inc. |
|
Time Warner Inc. |
Cooper Industries plc |
|
The McGraw-Hill Companies, Inc. |
|
V. F. Corporation |
DaVita Inc. |
|
MeadWestvaco Corporation |
|
Viacom Inc. |
The DirecTV Group, Inc. |
|
Mediacom Communications |
|
The Walt Disney Company |
Discovery Communications, Inc. |
| |
The Washington Post Company |
|
DISH Network Corporation |
|
Meredith Corporation |
|
Watson Pharmaceuticals, Inc. |
Dover Corporation |
|
News Corporation |
|
Wiley John & Sons, Inc. |
Dr Pepper Snapple Group, Inc. |
|
Nexen Inc. |
|
Wisconsin Energy Corporation |
EMCOR Group, Inc. |
|
NII Holdings, Inc. |
|
W.W. Grainger, Inc. |
Enbridge Energy Partners, L.P. |
|
NiSource Inc. |
|
Wyndham Worldwide Corporation |
Fidelity National Financial, Inc. |
|
NSTAR |
| |
How Amounts and
Types of Compensation are Determined
In determining
NEO compensation, the Committee relies on its collective judgment of each NEO’s performance in light of the challenges confronting our core businesses and our progress toward achieving our strategic plan, which is focused on competing
successfully in digital businesses.
Key performance
indicators:The Committee makes its determinations regarding NEO compensation by measuring each NEO’s progress against their key performance indicators (KPIs). KPIs consist of individually designed qualitative and
quantitative goals organized around individual,
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operating unit and/or Company performance in the areas of profit, product and people. Qualitative KPIs include, where appropriate, measures of leadership, innovation, collaboration, new products
and programs in support of the Company’s strategic plan, diversity initiatives, First Amendment activities, and other significant qualitative objectives. Quantitative KPIs include, where appropriate, revenue and operating income goals for the
Company and the respective divisions and functions over which each NEO has operational or overall responsibility. In addition, the Committee weighs subjective and objective information regarding our NEOs, including the complexity and
responsibilities of the position, term of service, competitive alternatives in the marketplace, and internal pay equity. The CEO’s KPIs are heavily weighted toward the Company’s financial performance, long-term shareholder return, and the
execution of a strategic plan that positions the Company for the future.
Base Salary
The Committee annually reviews the base salary of each NEO using a variety of factors, including:
| * | |
the nature and responsibility of the NEO’s position, as reflected by the salary grade assigned to each NEO; |
| * | |
a comparison of NEO base salaries to ensure internal pay equity; |
| * | |
the competitiveness of the market for each NEO; |
| * | |
in the case of NEOs other than the CEO and COO, our CEO’s and COO’s recommendations based on their assessment of the achievement of each NEO’s |
| * | |
in the case of the COO, our CEO’s recommendation based on his assessment of the COO’s achievement of her KPIs during the prior year and expected future |
| * | |
in the case of the CEO, market data analyzed and organized into summary sheets comparing the elements and amounts of compensation paid by us to the median and |
Mr.Dubow’s minimum annual base
salary under his employment contract is $1.2 million; however, Mr.Dubow voluntarily reduced his salary to $1million in 2009, 2010 and 2011. Mr.Dubow has not received a base salary increase since January 2006. In connection with her
February1, 2010 promotion to President and COO, Ms.Martore’s annual base salary was increased to $950,000; however, Ms.Martore voluntarily reduced her salary to $900,000 in 2010 and 2011. If their employment terminates,
Mr.Dubow’s and Ms.Martore’s benefits under their employment contracts, the SERP and certain other plans will be calculated assuming they did not voluntarily reduce their salaries. Mr.Lougee took a 6% voluntary permanent
reduction in base salary in 2009. The Committee also accepted Mr.Dubow’s recommendation that the division presidents would not receive base salary increases in 2009, 2010 or 2011. The Committee agreed with management that these salary
actions were appropriate in light of the challenges facing the Company’s businesses, including the uneven economic recoveries in the U.S. and the U.K., and their impact on advertising demand.
Based on these factors, the Committee set 2011 base salaries for our
NEOs as follows:
Mr.Dubow |
| $ | 1,000,000 | |
Ms.Martore |
| $ | 900,000 | |
Mr. Saleh |
| $ | 600,000 | |
Mr.Dickey |
| $ | 625,000 | |
Mr.Hunke |
| $ | 525,000 | |
Mr.Lougee |
| $ | 517,000 | |
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In January 2011, the Company announced an employee furlough program for its U.S Community Publishing
division during the first quarter of 2011. Certain domestic employees–including Mr.Dickey–will be furloughed the equivalent of one work week during the quarter. During the furlough period, employees will not be paid and will not be
permitted to work. Their benefits will not be interrupted. In addition, Mr.Dubow and Ms.Martore will take a reduction in base salary equivalent to a week’s furlough during the quarter. As a result of the salary reductions and
furloughs, the base salaries for Mr.Dubow, Ms.Martore and Mr.Dickey reported in the table above will be reduced accordingly.
Executive Incentive Bonuses
All NEOs participate in our annual Executive Incentive Compensation Program (EICP), which offers incentive opportunity linked to attainment of the
Company’s annual financial and qualitative performance goals and each executive’s KPIs set at the beginning of the year. Awards under the EICP are determined at the sole discretion of the Committee. The Committee does not rely on any one
particular objective, formula or financial metric in determining appropriate short-term incentives, but rather on what we consider to be value-added quantitative and qualitative goals in furtherance of our compensation principles. No NEO is
guaranteed an award and, if performance is unsatisfactory, no bonus is paid under the EICP.
The Committee determined the amount of the EICP bonus pool at the end of the fiscal year based primarily on the Company’s financial performance during the year. The financial performance measures considered by
the Committee include total revenues, operating income, net income attributable to Gannett Co., Inc., income from continuing operations, earnings per share, return on equity, operating cash flow, free cash flow, net income attributable to Gannett
Co., Inc. as a percent of sales, dividends per share, dividend payout ratio, weighted average cost of capital, debt outstanding, debt to earnings before interest, taxes, depreciation and amortization, stock price and market value, although no one
measure is given greater weight than the others. The Committee selected these financial measures because it considers them to be broad enough to capture the most significant financial aspects of an organization as large as ours yet also focused
enough to represent the financial measures that we believe drive our financial success. The Committee also evaluated the Company’s progress toward the goals of its strategic plan, as well as the achievement of qualitative goals including
leadership in defending the First Amendment, promoting an ethical Company work environment and diverse workforce, and maintaining its reputation as a good corporate citizen of the local, national and international communities in which it does
business. The Committee also considered bonus guidelines for our NEOs developed by senior management. These guideline amounts are generally determined by salary grade level and take into account, for each salary grade, the nature and responsibility
of the positions at that grade, internal equity among salary grades, the guideline amounts for the preceding year, the funds available for bonuses, and the financial performance measures described above.
The Committee considered the following accomplishments by the Company
and its management team in 2010 in reaching its NEO bonus decisions:
| * | |
Earnings from continuing operations per share (diluted):$2.44 (excluding the net unfavorable impact of $0.09 per share for |
| * | |
Operating cash flow:$1.3 billion (representing operating income increased by depreciation, intangible asset amortization, non-cash |
| * | |
Free cash flow:$816 million (representing net cash flow from operating activities decreased by property, plant and equipment |
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| * | |
Operating cash flow margin:23.6% (determined by dividing operating cash flow as described above by total revenues), up from 19.6% |
| * | |
Return on equity:30.1% [calculated by dividing the sum of income from continuing operations attributable to Gannett Co., Inc. plus |
| * | |
These financial results were among the best in our industry despite a very difficult economy. |
| * | |
We grew Company-wide digital revenues to approximately $1 billion, representing more than 18% of the Company’s total operating revenues for the year. |
| * | |
We issued $500 million of new bonds with maturities in 2015 and 2018 to repay borrowings outstanding under our revolving credit facilities and term loan and we |
| * | |
We reduced our debt by $710 million in 2010 to $2.35 billion by year-end and reduced our senior leverage ratio to 1.97x, well below the 3.5x maximum senior |
| * | |
We made significant voluntary cash contributions to the Gannett Retirement Plan totaling $130 million which, combined with the strong investment return on the |
| * | |
The Company achieved substantial expense reductions through a variety of efforts, including continued centralization and consolidation efforts and salary |
Based on the foregoing, the Committee awarded annual bonuses to our NEOs based on 2010 performance as follows.
Mr. Dubow |
| $ | 1,750,000 | |
Ms. Martore |
| $ | 1,250,000 | |
Mr. Saleh |
| $ | 75,000 | |
Mr. Dickey |
| $ | 600,000 | |
Mr. Hunke |
| $ | 375,000 | |
Mr. Lougee |
| $ | 450,000 | |
The Committee determined that these bonus amounts, which may vary from each NEO’s bonus guideline amount, were appropriate given their individual performance, which generally met or exceeded their KPIs, the
performance of the Company, divisions and operations for which they are responsible, the Company’s financial performance, the Company’s progress toward its strategic goals, and the qualitative and other achievements noted in the discussion
above, notwithstanding the challenges facing the Company’s businesses, including the uneven economic recoveries in the U.S. and the U.K. and their impact on advertising demand. In setting bonuses for NEOs other than Mr.Dubow and
Ms.Martore, the Committee considered Mr.Dubow’s and Ms.Martore’s recommendations but exercised its own discretion in making final determinations. In setting Ms.Martore’s bonus, the Committee considered
Mr.Dubow’s recommendation but exercised its own discretion in making its final determination. In setting Mr.Dubow’s bonus, the Committee made its own findings and determinations based on similar criteria described above used
for our other NEOs. The bonus amount for Mr.Saleh was prorated based on his November15, 2010 start date.
Long-Term Incentives
Our long-term incentives consist of stock options and restricted stock units. We use these awards to recognize the performance of certain executives
who drive the development and execution of our
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business strategies and goals. The primary purposes of these awards are to align further the executive’s interests with the Company’s longer-term objectives, to drive shareholder
return, to foster stock ownership and to promote retention.
SO and RSU Grants
The Company grants SOs because it believes SOs reward for increases in shareholder value, thus aligning our NEOs’ interests with those of our
shareholders. Because a financial gain from SOs is only possible if the price of our stock increases over time, the Company believes SO grants encourage executives to focus on behaviors and initiatives intended to lead to an increase in the price of
the Company’s stock over the eight-year term of the SOs, which benefits all shareholders. The Company grants RSUs because RSUs foster stock ownership and serve to retain our executives in a challenging business environment since they generally
only vest based on continued employment with the Company over a full four-year vesting period. The four-year vesting period is longer than the three-year vesting period often used by companies for RSU grants. The Committee believes that imposing a
longer vesting period for RSUs more closely aligns the interests of our executive officers with those of our shareholders because the value of the grant increases and decreases in line with the Company’s stock price for a longer time period.
Timing of Awards
RSU grants to NEOs are generally approved at the last Committee
meeting of each year in December. The Committee generally makes its determinations with respect to SO grants to NEOs in February, allowing the Committee to factor into the SO awards our final operating results and to reward performance for the prior
full fiscal year and provide appropriate long-term incentives for future years. In the case of each type of grant, the Company’s practice has been for the Committee to select a grant date to occur after the Committee meeting date if management
is scheduled to make an analyst presentation shortly thereafter. This practice permits the market to absorb any material information that may be presented at an analyst conference before the applicable grant date. The aggregate grant date fair value
of the SO grants to NEOs made in February 2011 is reflected in the Supplemental Compensation Table on page31 and will be reported in the Summary Compensation Table of future Proxy Statements.
Key Terms of Awards
The exercise price of SO grants is set at fair market value on the
grant date. The Company does not discount, backdate or spring-load SOs, grant SOs with a so-called “reload” feature, nor does it loan funds to employees to enable them to exercise SOs. SOs generally vest in four equal annual installments
beginning on the first anniversary of the grant date and have eight-year terms. Vesting and exercise rights generally cease upon termination of employment except in the case of retirement (defined as at least 55 years of age with at least five years
of service), disability or death. After retirement, disability or death, SOs continue to vest and generally will remain exercisable for the shorter of a three-year period or the original expiration date. RSUs generally vest on the fourth anniversary
of the grant date based on continued employment with the Company through the vesting date. Executives are generally entitled to receive a prorated portion of their RSU grants upon retirement, disability or death. See “Additional Information
Regarding the Summary Compensation Table and the Grants of Plan-Based Awards Table” for special rules that apply to RSUs and SOs awarded to Mr.Dubow, Ms.Martore and Mr.Saleh.
Long-Term Equity Award Targets
The Committee considered long-term incentive equity award targets for
each NEO position expressed as a percentage of base salary. These target amounts are generally divided by salary grade
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level and take into account, for each salary grade, the nature and responsibility of the positions at that grade, internal equity among salary grades, and an appropriate allocation of SOs and
RSUs. Positions at higher salary grades have target amounts based on a higher percentage of base salary and weighted more heavily in favor of SOs, thereby putting a larger proportion of compensation at risk. In formulating a recommendation to the
Committee of appropriate target amounts for each NEO position, our Chairman and CEO, President and COO, Senior VP/Human Resources and Vice President/Total Rewards evaluated market data at Peer Group and Comparable Group companies, stock-based
compensation expense, the overall size of the long-term award pool, and the financial performance measures described in the Executive Incentive Bonuses section above.
Based on the foregoing, the Committee made RSU awards to our NEOs in
December 2010 and SO awards to our NEOs in February 2011 based on 2010 performance as follows:
Executive | | SOs | | | RSUs | | ||
Mr. Dubow |
| | 235,000 | | | | 110,000 | |
Ms. |
| | 184,000 | | | | 90,000 | |
Mr. |
| | 125,000 | | | | 50,000 | |
Mr. |
| | 105,000 | | | | 45,000 | |
Mr. |
| | 61,000 | | | | 30,000 | |
Mr. |
| | 69,000 | | | | 35,000 | |
The Committee determined that these long-term equity awards, which may vary from each NEO’s SO and RSU target
amounts, were appropriate given their individual performance, which generally met or exceeded their KPIs, the performance of the Company, divisions and operations for which they are responsible, the Company’s financial performance, the
Company’s progress toward its strategic goals, and the qualitative and other achievements noted in the discussion of 2010 bonus awards, notwithstanding the challenges facing the Company’s businesses, including the uneven economic
recoveries in the U.S. and the U.K. and their impact on advertising demand. In setting awards for NEOs other than Mr.Dubow and Ms.Martore, the Committee considered Mr.Dubow’s and Ms.Martore’s recommendations but
exercised its own discretion in making final determinations. Mr.Saleh’s awards were made in connection with his hiring. In setting awards for Ms.Martore, the Committee considered Mr.Dubow’s recommendations but exercised
its own discretion in making final determinations. In setting awards for Mr.Dubow, the Committee made its own findings and determinations based on similar criteria described above used for our other NEOs.
Benefits and Perquisites
The Company’s NEOs are provided a limited number of perquisites
(described in footnote 6 to the Summary Compensation Table), the primary purpose of which is to minimize distractions from the executives’ attention to important Company initiatives. In October 2010, the Company adopted a Key Executive Life
Insurance Program (KELIP) under which, subject to the completion of underwriting by the insurance carrier, NEOs (other than Mr.Dubow and Ms.Martore who currently participate in a similar program) may participate during 2011. Under the
KELIP, the Company will pay premiums (or make cash payments in lieu of premiums) on individual life insurance policies to be owned by the executives, which premiums are expected to range between approximately $25,000–$50,000 per participant in
2011. Subject to the terms of his or her participation agreement, the participant’s right to receive future annual premium payments may become vested if the participant’s employment terminates after attaining both five years of service
with the Company and age 55. The personal benefits and perquisitesthe Company provides to our NEOs are substantially the same as those offered to other senior executives, with the exception ofcertain perquisites thatwill
beprovided to
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Mr.Dubow after his retirement under the terms of his employment contract. For additional information about these post-retirement benefits, see the perquisites discussion under the
“Other Potential Post-Employment Payments” section.
Post-Termination Pay
The Company sponsors a tax-qualified defined benefit retirement plan, the Gannett Retirement Plan (GRP), and a nonqualified retirement plan, the
Gannett Supplemental Retirement Plan (SERP). The Company also offers a tax-qualified defined contribution plan, the Gannett 401(k) Savings Plan (401(k)Plan), as well as a tax-advantaged Deferred Compensation Plan (DCP) and a Transitional
Compensation Plan (TCP), which together with the GRP and SERP, assist the Company in recruiting and retaining employees and in providing management stability and long-term commitment.
On August1, 2008, as part of a comprehensive evaluation of its retirement program, the Company made significant
changes to the GRP, SERP, 401(k) Plan and DCP. As discussed in greater detail below, on August1, 2008, the following changes became effective:
| * | |
The benefits for almost all participants in the GRP and SERP were frozen. |
| * | |
Participants whose benefits were frozen under the GRP and, if applicable, the SERP commenced receiving higher matching contributions under the 401(k) Plan. The |
| * | |
Certain employees, including Mr.Dubow, Ms.Martore, Mr.Dickey and Mr.Hunke, continued to accrue benefits under the SERP after |
Gannett Retirement Plan (GRP)
The GRP provides retirement income to the majority of the
Company’s employees based in the United States. The plan provides benefits for employees based upon years of credited service, and the highest consecutive five-year average of an employee’s compensation out of the final ten years of
employment, referred to as final average earnings, or FAE. Subject to Internal Revenue Code limits, compensation generally includes a participant’s base salary, performance-based bonuses, and pre-tax contributions to the Company’s benefit
plans other than the DCP.
Effective January1, 1998,
the Company made a significant change to the GRP for service after that date. Certain employees who were either retirement-eligible or had a significant number of years of service with the Company were “grandfathered” in the plan
provisions applicable to them prior to the change (pre-1998 plan provisions). Other employees were transitioned to the post-1997 plan provisions under the GRP.
The pre-1998 GRP provisions provide for a benefit that is expressed as a monthly annuity at normal retirement equal to a gross benefit reduced by a
portion of the participant’s Social Security benefit. Generally, a participant’s gross benefit is calculated by multiplying the participant’s years of credited service by specified percentages (generally 2% for a participant’s
first 25 years of credited service and 0.7% for years of credited service in excess of 25) and multiplying such amount by the participant’s FAE. Benefits under the pre-1998 GRP provisions are paid in the form of monthly annuity payments for the
life of the participant and, if applicable, the participant’s designated beneficiary. The pre-1998 GRP provisions provide for early retirement subsidies for participants who terminate employment after attaining age 55 and completing five years
of service and elect to commence benefits before age 65. Under these provisions, a participant’s gross benefit that would otherwise be
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paid at age 65 is reduced by 4% for each year the participant retires before age 65. If a participant terminates employment after attaining age 60 with 25 years of service, the participant’s
gross benefit that would otherwise be paid at age 65 is reduced by 2.5% for each year the participant retires before age 65.
The post-1997 GRP provisions provide for a benefit under a pension equity formula, which generally expresses a participant’s benefit as a
current lump sum value based on the sum of annual percentages credited to each participating employee. The percentages increase with years of service, and, in some circumstances, with age. Upon termination or retirement, the total percentages are
applied to a participant’s FAE resulting in a lump sum benefit value. The pension equity benefit can be paid as either a lifetime annuity or a lump sum.
The GRP benefit for each of our NEOs is calculated under the post-1997 GRP provisions (except for Mr.Saleh who does not participate in the
GRP). However, as noted below, Mr.Dubow’s, Ms.Martore’s, Mr.Dickey’s and Mr.Hunke’s SERP benefits are calculated under the pre-1998 GRP provisions. Each of the NEOs (other than Mr.Saleh who does not
participate in the GRP) is fully vested in his or her GRP benefit as of December26, 2010.
On August1, 2008, the Gannett Retirement Plan was frozen such that most participants, including each of the NEOs (other than Mr.Saleh who does not participate in the GRP), ceased to earn additional
benefits for compensation or service earned on or after that date. Until benefits commence, participants’ frozen benefits are periodically adjusted to reflect increases in a specified cost-of-living index (i.e., the consumer price index for all
urban consumers published by the U.S. Department of Labor Bureau of Statistics for U.S. all items less food and energy).
Gannett Supplemental Retirement Plan (SERP)
The SERP is a nonqualified retirement plan maintained to attract and retain a highly-motivated executive workforce by providing eligible employees
with retirement benefits that cannot be provided under the GRP due to the Internal Revenue Code, which limits the compensation that can be recognized under qualified retirement plans as well as imposes limits on the amount of benefits which can be
paid. For some participants, including Mr.Dubow, Ms.Martore, Mr.Dickey and Mr.Hunke, the SERP also provides a benefit equal to the difference between the benefits calculated under the pre-1998 GRP formula and the amount they
will receive from the GRP under the post-1997 formula. Mr.Saleh is not a participant in the SERP and Mr.Lougee’s SERP benefit is calculated under the post-1997 GRP formula. For all SERP participants, the benefit calculated under the
applicable SERP formula is reduced by benefits payable from the GRP.
In conjunction with the Company’s decision to freeze benefits under the GRP, the Company also decided to make changes to benefits under the SERP. Generally, SERP participants whose SERP benefits were
calculated under the pre-1998 GRP formula will continue to accrue benefits under the SERP. However, their benefits for credited service after August1, 2008 are calculated at a rate that is one-third less than the pre-August1, 2008 rate.
NEOs affected by this change are Mr.Dubow, Ms.Martore, Mr.Dickey and Mr.Hunke. Mr.Dubow, Ms.Martore and Mr.Hunke are currently eligible for early retirement under the pre-1998 GRP formula that applies to
them under the SERP; Mr.Dickey is not.
Effective
August1, 2008, SERP participants whose SERP benefits were not calculated under the pre-1998 GRP formula had their SERP benefits frozen such that they ceased to earn additional benefits for compensation or service earned on or after that date.
Until benefits commence, such participants’ frozen benefits are periodically adjusted to reflect increases in a specified cost-of-living index. Mr.Lougee is the only NEO affected by this change.
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SERP benefits are generally paid in the form of a lump sum amount when a participant separates from
service or, if later, the date the participant attains age 55, except that payment is accelerated in the event that the Company undergoes a change in control. As of December26, 2010, Mr.Dubow, Ms.Martore and Mr.Hunke are
fully vested in their SERP benefits, Mr.Lougee is not vested in his SERP benefit, and Mr.Dickey is partially vested in his SERP benefit.
Gannett 401(k) Savings Plan (401(k)Plan)
Most of the Company’s employees based in the United States can participate in the 401(k) Plan, which permits eligible participants to make
pre-tax contributions and provides for matching and other employer contributions. Effective August1, 2008, new participants as well as participants whose benefits have been frozen under the GRP and, if applicable, the SERP, commenced receiving
higher matching contributions under the 401(k) Plan. Under the new formula, the matching contribution rate generally increased from 50% of the first 6% of compensation that an employee elects to contribute to the plan to 100% of the first 5% of
compensation. Mr.Saleh and Mr.Lougee receive matching contributions under the new formula, and the other NEOs receive matching contributions under the old formula. The Company also makes additional employer contributions to the 401(k)
Plan on behalf of certain employees, but none of the NEOs. For purposes of the 401(k) Plan and subject to Internal Revenue Code limits, compensation generally includes a participant’s base salary, performance-based bonuses, and pre-tax
contributions to the Company’s benefit plans. Company contributions under the 401(k) Plan vest 25% after one year of service, 50% after two years of service and 100% after three years of service.
Gannett Deferred Compensation Plan (DCP)
Each NEO who participates in the DCP may elect to defer all or a
portion of his or her compensation under the DCP, provided that the minimum deferral must be $5,000 for each form of compensation (base salary and bonus) for the year of deferral. The amounts deferred by each NEO are vested and will be deemed
invested in the fund or funds designated by such NEO from among a number of funds selected by the Committee. The investment options available to our NEOs under the DCP are generally the same as those available to all employee-participants under the
401(k) Plan.
Effective August1, 2008, the DCP was
amended to provide for Company contributions on behalf of certain employees whose benefits under the 401(k) Plan are capped by Internal Revenue Code rules that limit the amount of compensation that can be taken into account when calculating benefits
under a qualified plan. Generally, Company contributions to the DCP are calculated by applying the same formula that applies to an employee’s matching and additional employer contributions under the 401(k) Plan to the employee’s
compensation in excess of the Internal Revenue Code compensation limit. However, participants are not required to make elective contributions to the DCP to receive an employer contribution under the DCP. Company contributions under the DCP vest 25%
after one year of service, 50% after two years of service and 100% after three years of service. Mr.Lougee will be credited with Company contributions to the DCP based on his 2010 compensation in excess of the Internal Revenue Code
compensation limit, and Mr.Lougee is immediately vested in such contributions when they are made. Executives who continue to accrue reduced benefits under the SERP after August1, 2008, including Mr.Dubow, Ms.Martore,
Mr.Dickey and Mr.Hunke, do not receive Company contributions under the DCP. Mr.Saleh will be eligible to receive Company contributions under the DCP for 2011.
Amounts that a participant elects to defer into the DCP are generally
paid at the time and in the form elected by the participant, provided that if the participant terminates employment before attaining age 55 and completing five years of service, benefits are paid in a lump sum amount upon such termination (although
for pre-2005 deferrals the Committee may pay such deferrals in five annual
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installments). The DCP permits participants to receive in-service withdrawals of participant contributions for unforeseeable emergencies and certain other circumstances. Prior to when the
deferrals are made, a participant may make a special election as to the time and form of payment for benefits that become payable due to the participant’s death or disability if payments have not already commenced, and deferrals will be paid in
accordance with such elections under those circumstances. Company contributions to the DCP are generally paid in the form of a lump sum amount when a participant separates from service. The payment of post-2004 Company and participant DCP
contributions is accelerated in the event that the Company undergoes a change in control.
Gannett Transitional Compensation Plan (TCP)
The TCP provides severance pay upon a change in control of the Company for all NEOs. The plan provides payments in the event of an involuntary termination without “cause,” a voluntary termination for
“good reason” or, in the case of executives participating in the TCP before April15, 2010 (but not those who first participate in the TCP on or after that date), a voluntary termination within 30 days after the first anniversary of
the change in control.
The TCP assures the Company that it
would have the continued dedication of, and the availability of objective advice and counsel from, our NEOs and other key executives notwithstanding the possibility, threat or occurrence of a change in control and promotes the retention and
continuity of our NEOs and certain key executives for at least one year after a change in control. Change in control arrangements also facilitate the Company’s ability to attract and retain management as the Company competes for talented
employees in a marketplace where such protections are common. See “Change in Control” under “Other Potential-Post Employment Payments.”
Recoupment
The Company includes a “claw back” provision in its SO awards requiring repayment of all profit realized during the twelve-month period
following the first public issuance or filing with the SEC of a financial document that is subsequently restated. The claw back applies if the restatement occurred because of the grantee’s misconduct or the grantee is subject to automatic
forfeiture under Section304 of the Sarbanes-Oxley Act of 2002.
Tax Considerations
Section162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid to
a company’s CEO and its three other most highly compensated executive officers other than the CFO for any fiscal year. However, Section162(m) exempts qualifying performance-based compensation from the deduction limit if specified
requirements are met. The Committee has structured, and intends to continue to structure, performance-based compensation, including SOs and annual bonuses, to executive officers who may be subject to Section162(m) in a manner that satisfies
those requirements. For example, in February 2010, the Committee established a limit on NEO annual bonuses based on a percentage of the Company’s operating cash flow for the purpose of preserving their deductibility under Section162(m).
However, the Committee reserves the authority to award non-deductible compensation in circumstances as it deems appropriate. Because of ambiguities and uncertainties as to the application and interpretation of Section162(m) and the regulations
issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation intended by the Company to satisfy the requirements for deductibility under Section162(m) does in fact do so. For 2010, approximately $220,000 of the
compensation paid to Mr.Dubow was not deductible under Section162(m).
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While it is responsible for evaluating all of our Company’s
compensation policies and practices, the Committee focuses its annual efforts on assessing the total direct compensation paid to our NEOs and ensuring that these amounts are appropriate in relation to our performance and the performance of each NEO
in achieving or exceeding his or her KPIs. The Committee’s decision-making cycle for each year starts in December of the prior year, when base salaries for the upcoming year are determined. RSU awards are then made the following December, once
much of the year’s performance has occurred. The cycle concludes in February of the following year, when annual bonus and SO awards are made to reward performance for the completed prior fiscal year and, on the basis of such performance, to
provide appropriate long term incentives to our NEOs. SO awards are also made in February to ensure that the market has fully absorbed the announced results of the full fiscal year to which the awards relate. The Committee believes that the grant
date fair value of the SO awards made each February is appropriately viewed as an element of the total direct compensation of each NEO earned in respect of his or her performance in the prior fiscal year.
The Supplemental Compensation Table below shows each NEO’s total
direct compensation for each of the past three years. We believe this Table offers a useful view of the Committee’s determinations of total direct compensation for all parts of its decision-making cycle in respect of each year, and accurately
reflects the results of the Committee’s efforts to tie our NEOs’ pay to their performance in each year presented.
This Supplemental Compensation Table is not intended to be a substitute for the Summary Compensation Table which appears on page33. The
Supplemental Compensation Table differs from the Summary Compensation Table in two key respects:
| * | |
In the “Option Awards” column, the Supplemental Compensation Table shows the grant date fair value of SO awards made in respect of the service year to |
| * | |
The Supplemental Compensation Table excludes amounts relating to Change in Pension Value and Non-Qualified Deferred Compensation Earnings because these items are |
SUPPLEMENTAL COMPENSATION TABLE
NameandPrincipal Position |
| Year | | | Salary ($) |
| | Bonus ($) |
| | Stock Awards ($) |
| | Option Awards ($) |
| | All Other Compensation ($) |
| | Total Direct Compensation ($) |
| |||||||
CraigA.Dubow (Chairman and CEO) |
| | 2010 | | | | 980,769 | | | | 1,750,000 | | | | 1,657,700 | | | | 1,844,750 | | | | 159,465 | | | | 6,392,684 | |
| | 2009 | | | | 942,308 | | | | 1,450,000 | | | | 1,255,000 | | | | 3,379,200 | | | | 173,850 | | | | 7,200,358 | | |
| | 2008 | | | | 1,166,667 | | | | 875,000 | | | | 132,000 | | | | 585,000 | | | | 150,902 | | | | 2,909,569 | | |
Gracia C. Martore (President and COO) |
| | 2010 | | | | 866,026 | | | | 1,250,000 | | | | 1,718,050 | | | | 1,444,400 | | | | 110,652 | | | | 5,389,128 | |
| | 2009 | | | | 659,615 | | | | 950,000 | | | | 1,054,200 | | | | 2,818,000 | | | | 104,056 | | | | 5,585,871 | | |
| | 2008 | | | | 700,000 | | | | 300,000 | | | | 69,564 | | | | 234,000 | | | | 100,572 | | | | 1,404,136 | | |
Paul N. Saleh (Senior Vice President and CFO) |
| | 2010 | | | | 77,692 | | | | 225,000 | | | | 1,536,750 | | | | 981,250 | | | | 4,608 | | | | 2,825,300 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert J. Dickey (President/USCP) |
| | 2010 | | | | 612,981 | | | | 600,000 | | | | 678,150 | | | | 824,250 | | | | 69,732 | | | | 2,785,113 | |
| | 2009 | | | | 588,942 | | | | 410,000 | | | | 376,500 | | | | 844,800 | | | | 70,734 | | | | 2,290,976 | | |
| | 2008 | | | | 588,000 | | | | 360,000 | | | | 188,546 | | | | 140,400 | | | | 418,788 | | | | 1,695,734 | | |
David L. Hunke (President and Publisher/USA TODAY) |
| | 2010 | | | | 514,904 | | | | 375,000 | | | | 452,100 | | | | 478,850 | | | | 97,107 | | | | 1,917,961 | |
| | 2009 | | | | 463,141 | | | | 355,000 | | | | 307,250 | | | | 520,960 | | | | 405,711 | | | | 2,052,062 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DavidT.Lougee (President/Broadcasting) |
| | 2010 | | | | 517,020 | | | | 450,000 | | | | 527,450 | | | | 541,650 | | | | 100,707 | | | | 2,136,827 | |
| | 2009 | | | | 501,790 | | | | 300,000 | | | | 276,100 | | | | 563,200 | | | | 77,482 | | | | 1,718,572 | | |
| | 2008 | | | | 550,000 | | | | 245,000 | | | | 60,978 | | | | 99,450 | | | | 88,919 | | | | 1,044,347 | |
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EXECUTIVE COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee met with management to review and
discuss the Compensation Discussion and Analysis disclosures included in this Proxy Statement. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this
Proxy Statement and incorporated by reference in the Company’s Form10-K for its 2010 fiscal year, and the Board has approved that recommendation.
Executive Compensation Committee
Duncan M. McFarland, Chair
Arthur H. Harper
Marjorie Magner
Karen Hastie Williams
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NameandPrincipal Position |
| Year | | | Salary ($)(1) |
| | Bonus ($)(2) |
| | Stock Awards ($)(3) |
| | Option Awards ($)(4) |
| | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) |
| | All Other Compensation ($)(6) |
| | Total ($) |
| ||||||||
CraigA.Dubow (Chairman and CEO) |
| | 2010 | | | | 980,769 | | | | 1,750,000 | | | | 1,657,700 | | | | 3,379,200 | | | | 1,477,915 | | | | 159,465 | | | | 9,405,049 | |
| | 2009 | | | | 942,308 | | | | 1,450,000 | | | | 1,255,000 | | | | 585,000 | | | | 292,534 | | | | 173,850 | | | | 4,698,692 | | |
| | 2008 | | | | 1,166,667 | | | | 875,000 | | | | 132,000 | | | | 817,800 | | | | 0 | | | | 150,902 | | | | 3,142,369 | | |
Gracia C. Martore (President and COO) |
| | 2010 | | | | 866,026 | | | | 1,250,000 | | | | 1,718,050 | | | | 2,818,000 | | | | 1,413,218 | | | | 110,652 | | | | 8,175,946 | |
| | 2009 | | | | 659,615 | | | | 950,000 | | | | 1,054,200 | | | | 234,000 | | | | 1,016,323 | | | | 104,056 | | | | 4,018,194 | | |
| | 2008 | | | | 700,000 | | | | 300,000 | | | | 69,564 | | | | 215,760 | | | | 0 | | | | 100,572 | | | | 1,385,896 | | |
Paul N. Saleh (Senior Vice President and CFO) |
| | 2010 | | | | 77,692 | | | | 225,000 | | | | 1,536,750 | | | | 1,080,000 | | | | 0 | | | | 4,608 | | | | 2,924,050 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert J. Dickey (President/USCP) |
| | 2010 | | | | 612,981 | | | | 600,000 | | | | 678,150 | | | | 844,800 | | | | 642,117 | | | | 69,732 | | | | 3,447,780 | |
| | 2009 | | | | 588,942 | | | | 410,000 | | | | 376,500 | | | | 140,400 | | | | 350,015 | | | | 70,734 | | | | 1,936,591 | | |
| | 2008 | | | | 588,000 | | | | 360,000 | | | | 188,546 | | | | 125,580 | | | | 259,261 | | | | 418,788 | | | | 1,940,175 | | |
David L. Hunke (President and Publisher/USA TODAY) |
| | 2010 | | | | 514,904 | | | | 375,000 | | | | 452,100 | | | | 520,960 | | | | 531,694 | | | | 97,107 | | | | 2,491,765 | |
| | 2009 | | | | 463,141 | | | | 355,000 | | | | 307,250 | | | | 73,800 | | | | 249,759 | | | | 405,711 | | | | 1,854,661 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DavidT.Lougee (President/Broadcasting) |
| | 2010 | | | | 517,020 | | | | 450,000 | | | | 527,450 | | | | 563,200 | | | | 6,719 | | | | 100,707 | | | | 2,165,096 | |
| | 2009 | | | | 501,790 | | | | 300,000 | | | | 276,100 | | | | 99,450 | | | | 3,845 | | | | 77,482 | | | | 1,258,667 | | |
| | 2008 | | | | 550,000 | | | | 245,000 | | | | 60,978 | | | | 87,000 | | | | 42,754 | | | | 88,919 | | | | 1,074,651 | |
(1) | Mr.Dubow voluntarily reduced his base salary from the $1.2 million minimum provided in his employment contract to $1million beginning November1, 2008 and continuing through 2010. Ms.Martore received an increase in base salary to $950,000 in connection with her promotion to President and Chief Operating Officer in February 2010; however, she voluntarily reduced it to $900,000. She continued to serve as Chief Financial Officer until November 2010. Mr.Saleh joined Gannett as Senior Vice President and Chief Financial Officer in November 2010. Mr.Dickey received an increase in base salary in connection with his promotion to President/USCP in February 2008. Mr.Hunke received an increase in base salary in connection with his promotion to President and Publisher/USA TODAY in April 2009. Mr.Lougee took a 6% voluntary permanent reduction in base salary beginning in 2009. The amounts reported in this column for 2010 reflect a reduction of salary as a result of the Company’s furlough and salary reduction program in the equivalent amount of one week’s salary (almost 2%) for Mr.Dubow, Ms.Martore, Mr.Dickey and Mr.Hunke. The amounts reported in this column for 2009 reflect a reduction of salary as a result of the Company’s furlough and salary reduction program in the equivalent amount of (i)three weeks’ salary (almost 6%) for Mr.Dubow, Ms.Martore, Mr.Dickey and Mr.Lougee, and (ii)two weeks’ salary (almost 4%) for Mr.Hunke. |
(2) | See the “Compensation Discussion and Analysis” section for a discussion of how the bonus amounts were determined. The amount reported in this column for Mr.Saleh in 2010 includes a $150,000 sign-on bonus in connection with his appointment as the Company’s Senior Vice President and Chief Financial Officer. |
(3) | Amounts in this column represent the aggregate grant date fair value of RSU awards computed in accordance with Accounting Standards Codification 718, Compensation–Stock Compensation (“ASC 718”) based on the assumptions set forth in note 11 to the Company’s 2010 audited financial statements. |
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(4) | Amounts in this column represent the aggregate grant date fair value of SO awards computed in accordance with ASC 718 based on the assumptions set forth in note 11 to the Company’s 2010 audited financial statements. |
(5) | Amounts in this column represent the aggregate increase, if any, of the accumulated benefit liability relating to the NEO under the GRP and the SERP in the applicable fiscal year. The 2008 amounts shown for Mr.Dubow and Ms.Martore do not reflect the year over year decrease in the aggregate value of their pensions of $595,237 and $232,528, respectively. Amounts are calculated by comparing values as of the pension plan measurement date used for the Company’s financial statements for the applicable fiscal years. This includes the value of any additional service accrued, the impact of any compensation increases received, the impact of any plan amendments made during the period, and growth attributable to interest, if applicable. The Company uses the same assumptions it uses for financial reporting under generally accepted accounting principles with the exception of retirement age, pre-retirement mortality and probability of terminating employment prior to retirement. The assumed retirement age for the above values is the earliest age at which an executive could retire without any benefit reduction due to age. The above values are calculated assuming each NEO survives to the assumed retirement age. To the extent the assumptions used for reporting changed from the prior year to the current year, the impact is reflected in the above values. For example, during 2010, the accounting discount rates for the GRP and the SERP reporting decreased, leading to an increase in the pension values. The amount shown for Mr.Saleh reflects the fact that he does not participate in the GRP or the SERP. |
(6) | Amounts for 2010 reported in this column include (i)annual life insurance premiums paid by the Company for Mr.Dubow in the amount of $52,090 and for Ms.Martore in the amount of $29,450; (ii)a matching contribution of $7,350 to each NEO’s 401(k) account other than Mr.Saleh and Mr.Lougee who received matching contributions of $2,500 and $12,250 to their respective 401(k) accounts; (iii)a Company contribution into Mr.Lougee’s DCP account in the amount of $28,601 (for an explanation of this payment, see discussion of the Deferred Compensation Plan beginning on page29); (iv)premiums paid by the Company for supplemental medical coverage; (v)Company-provided automobile, (vi)occasional personal use of Company aircraft; (vii)Company-provided lunch during working hours, as needed; (viii)legal and financial services; (ix)payment to Mr.Hunke in the amount of $19,473 to reimburse him for closing costs incurred as a result of the purchase of his new residence in connection with his relocation to USA TODAY headquarters following his promotion to President and Publisher of USA TODAY in 2009 and a tax gross-up payment in the amount of $13,084 to Mr.Hunke in respect of that relocation benefit, each as provided under the Company’s relocation policy applicable to management employees generally; (x)Gannett Foundation grants to eligible charities recommended by each NEO (other than Mr.Saleh) of up to $15,000 annually; and (xi)premiums paid by the Company for travel accident insurance. The NEOs also occasionally receive tickets to sporting events for personal use if the tickets are not needed for business use, for which the Company does not incur incremental costs. |
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Name |
| Grant Date (1) |
| | Committee Meeting Date |
| | AllOther Stock Awards: Number of Shares of Stock or Units (#)(2) |
| | All Other Option Awards: Number of Securities Under- lying Options (#)(3) |
| | Exerciseor Base Price of Option Awards ($/Sh) (4) |
| | Grant DateFair Value of Stock and Option Awards ($)(5) |
| ||||||
Mr. Dubow |
| | 2/24/10 | | | | 2/23/10 | | | | | | | | 480,000 | | | | 15.00 | | | | 3,379,200 | |
| | | 12/10/10 | | | | 12/7/10 | | | | 110,000 | | | | | | | | | | | | 1,657,700 | |
Ms. Martore |
| | 2/2/10 | | | | 1/29/10 | | | | | | | | 100,000 | | | | 15.08 | | | | 706,000 | |
| | | 2/2/10 | | | | 1/29/10 | | | | 25,000 | | | | | | | | | | | | 361,750 | |
| | | 2/24/10 | | | | 2/23/10 | | | | | | | | 300,000 | | | | 15.00 | | | | 2,112,000 | |
| | | 12/10/10 | | | | 12/7/10 | | | | 90,000 | | | | | | | | | | | | 1,356,300 | |
Mr. Saleh |
| | 11/15/10 | | | | 10/25/10 | | | | | | | | 180,000 | | | | 12.67 | | | | 1,080,000 | |
| | | 11/15/10 | | | | 10/25/10 | | | | 65,000 | | | | | | | | | | | | 783,250 | |
| | | 12/10/10 | | | | 12/7/10 | | | | 50,000 | | | | | | | | | | | | 753,500 | |
Mr. Dickey |
| | 2/24/10 | | | | 2/23/10 | | | | | | | | 120,000 | | | | 15.00 | | | | 844,800 | |
| | | 12/10/10 | | | | 12/7/10 | | | | 45,000 | | | | | | | | | | | | 678,150 | |
Mr. Hunke |
| | 2/24/10 | | | | 2/23/10 | | | | | | | | 74,000 | | | | 15.00 | | | | 520,960 | |
| | | 12/10/10 | | | | 12/7/10 | | | | 30,000 | | | | | | | | | | | | 452,100 | |
Mr. Lougee |
| | 2/24/10 | | | | 2/23/10 | | | | | | | | 80,000 | | | | 15.00 | | | | 563,200 | |
| | | 12/10/10 | | | | 12/7/10 | | | | 35,000 | | | | | | | | | | | | 527,450 | |
(1) | See the “Compensation Discussion and Analysis” section for a discussion of the timing of various pay decisions. |
(2) | The RSU grants reported in this column generally vest in full on the fourth anniversary of the grant date, at which time each officer will receive an equivalent number of shares of Company stock. If an individual retires after attaining age 55 and completing five years of service before the fourth anniversary of the grant date, the shares underlying the award generally are issued on a pro rata basis. |
(3) | The SOs reported in this column as granted in February 2010 generally vest in four equal annual installments beginning on February24, 2011 and will expire on February23, 2018, however, the SOs granted to Ms.Martore on February2, 2010 vest in four equal annual installments beginning on December11, 2010 and will expire on December11, 2017. The SOs granted to Mr.Saleh in November 2010 vest in four equal annual installments beginning on December10, 2011 and will expire on December10, 2018. The SOs and RSUs granted to Mr.Saleh in November 2010 were one-time awards related to his hiring. |
(4) | These SOs have an exercise price equal to the closing price of the Company’s stock on the grant date. |
(5) | The full grant date fair value was computed in accordance with ASC718, based on the assumptions set forth in note 11 to the Company’s 2010 audited financial statements. There can be no assurance that the ASC718 amounts shown in the table will ever be realized by an executive officer. |
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ADDITIONAL INFORMATION REGARDING THE SUMMARY COMPENSATION TABLE AND THE
GRANTS OF PLAN-BASED AWARDS TABLE
Mr.Dubow
In February 2007, the Company entered into an employment contract with Mr.Dubow. The contract provides for a rolling
three-year term until such time as either Mr.Dubow or the Company provides notice of non-extension, in which case the term of the contract would expire on December31 of the second year following the effective time of the notice. During
his employment, Mr.Dubow is entitled to receive an annual base salary of $1.2 million or such greater amount as the Committee determines, and an annual bonus at the discretion of the Committee. (Mr.Dubow voluntarily reduced his base
salary to $1million in 2009, 2010 and again in 2011; however, in the event Mr.Dubow is terminated, his benefits under his employment contract, the SERP and certain other plans will be calculated assuming he did not voluntarily reduce his
salary.) All SOs and RSUs granted to Mr.Dubow will vest fully within four years from the grant date, will vest immediately upon termination of employment (other than by the Company for “good cause”) and, in the case of SOs, upon any
such termination, will remain exercisable for the lesser of the remaining term or four years. Also, upon termination of employment prior to his 58th birthday, other than by the Company for “good cause,” by Mr.Dubow without “good reason,” as a result
of death or by reason of Mr.Dubow failing to renew his term of employment, Mr.Dubow’s SERP benefit would reflect service credit as if he had remained employed through his 58th birthday and compensation during the additional service period shall be assumed equal to his annual base salary at the time of
termination, before reflecting any voluntary reductions in salary, plus the greater of (1)his most recent incentive bonus or (2)the average of his three most recent incentive bonuses. See also the “Other Potential Post-Employment
Payments” section for more information about Mr.Dubow’s post-employment benefits.
Ms.Martore
In February 2007, the Company entered into an employment contract with Ms.Martore. The contract provides for a rolling three-year term until such time as either Ms.Martore or the Company provides notice
of non-extension, in which case the term of the contract would expire on December31 of the second year following the effective time of the notice. During her employment, Ms.Martore will receive an annual base salary of $700,000 or such
greater amount as the Committee determines, and an annual bonus at the discretion of the Committee. (Ms.Martore’s current base salary is $950,000; however, she voluntarily reduced it to $900,000 in 2010 and again in 2011. In the event
Ms.Martore is terminated, her benefits under her employment agreement, the SERP and certain other plans will be calculated assuming that she did not voluntarily reduce her base salary.) All SOs and RSUs granted to Ms.Martore will vest
fully within four years from the grant date, will vest immediately upon termination of employment (other than by the Company for “good cause”) and, in the case of SOs, upon any such termination, will remain exercisable for the lesser of
the remaining term or three years. Also, upon termination of employment prior to her 60th birthday, other than by the Company for “good cause,” by Ms.Martore without “good reason,” as a result of death or by reason of Ms.Martore failing to renew her term of employment,
Ms.Martore’s SERP benefit would reflect service credit as if she had remained employed through her 60th birthday and compensation during the additional service period shall be assumed equal to her annual base salary at the time of termination, before reflecting any voluntary reductions in salary, plus the greater of
(1)her most recent incentive bonus or (2)the average of her three most recent incentive bonuses. Ms.Martore will turn 60 in September 2011. See also the “Other Potential Post-Employment Payments” section for more
information about Ms.Martore’s post-employment benefits.
Mr.Saleh
In November 2010, Mr.Saleh was appointed the Company’s Senior Vice President and Chief Financial Officer. In connection with his
appointment, Mr.Saleh received a signing bonus of $150,000
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and was granted SOs to purchase 180,000 shares of the Company’s common stock and 65,000 RSUs. Each of these grants was subject to the Company’s standard vesting schedule, except that
the SOs and RSUs that Mr.Saleh received on November15, 2010 (but not subsequent SO and RSU grants) will immediately vest in full and those SOs will remain exercisable for the lesser of the remaining term or three years if the Company
terminates Mr.Saleh’s employment without “good cause” as defined in his termination benefits agreement. See also the “Other Potential Post-Employment Payments” section for more information about Mr.Saleh’s
post-employment benefits.
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name |
| Number of securities underlying unexer- cised Options (#) Exerci- sable |
| | Number of securities underlying unexercised Options (#) Unexer- cisable |
| | Option Exer- cise Price ($) |
| | Option Expiration Date |
| | Number of Shares or Units of Stock That HaveNot Vested (#) |
| | Market Value of Shares orUnits ofStock That HaveNot Vested ($) |
| ||||||
Mr. Dubow |
| | 70,000 | | | | | | | | 69.35 | | | | 12/2/2011 | | | | | | | | | |
| | | 80,000 | | | | | | | | 70.21 | | | | 12/3/2012 | | | | | | | | | |
| | | 77,000 | | | | | | | | 87.33 | | | | 12/12/2013 | | | | | | | | | |
| | | 69,000 | | | | | | | | 80.90 | | | | 12/10/2012 | | | | | | | | | |
| | | 225,000 | | | | | | | | 71.94 | | | | 12/10/2012 | | | | | | | | | |
| | | 200,000 | | | | | | | | 60.29 | | | | 12/9/2013 | | | | | | | | | |
| | | 225,000 | | | | 75,000 | (1) | | | 61.26 | | | | 2/27/2015 | | | | | | | | | |
| | | 117,500 | | | | 117,500 | (2) | | | 31.75 | | | | 2/26/2016 | | | | | | | | | |
| | | 125,000 | | | | 375,000 | (3) | | | 3.75 | | | | 2/24/2017 | | | | | | | | | |
| | | | | | | 480,000 | (4) | | | 15.00 | | | | 2/23/2018 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 35,000 | (5) | | | 540,050 | |
| | | | | | | | | | | | | | | | | | | 100,000 | (6) | | | 1,543,000 | |
| | | | | | | | | | | | | | | | | | | 100,000 | (7) | | | 1,543,000 | |
| | | | | | | | | | | | | | | | | | | 110,000 | (8) | | | 1,697,300 | |
Ms.Martore |
| | 40,000 | | | | | | | | 69.35 | | | | 12/2/2011 | | | | | | | | | |
| | | 48,000 | | | | | | | | 70.21 | | | | 12/3/2012 | | | | | | | | | |
| | | 10,000 | | | | | | | | 75.30 | | | | 12/3/2012 | | | | | | | | | |
| | | 60,000 | | | | | | | | 87.33 | | | | 12/12/2013 | | | | | | | | | |
| | | 56,000 | | | | | | | | 80.90 | | | | 12/10/2012 | | | | | | | | | |
| | | 51,000 | | | | | | | | 60.29 | | | | 12/9/2013 | | | | | | | | | |
| | | 35,000 | | | | | | | | 55.99 | | | | 12/9/2013 | | | | | | | | | |
| | | 47,250 | | | | 15,750 | (1) | | | 61.26 | | | | 2/27/2015 | | | | | | | | | |
| | | 31,000 | | | | 31,000 | (2) | | | 31.75 | | | | 2/26/2016 | | | | | | | | | |
| | | 50,000 | | | | 150,000 | (3) | | | 3.75 | | | | 2/24/2017 | | | | | | | | | |
| | | 25,000 | | | | 75,000 | (9) | | | 15.08 | | | | 12/11/2017 | | | | | | | | | |
| | | | | | | 300,000 | (4) | | | 15.00 | | | | 2/23/2018 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 20,000 | (5) | | | 308,600 | |
| | | | | | | | | | | | | | | | | | | 52,700 | (6) | | | 813,161 | |
| | | | | | | | | | | | | | | | | | | 84,000 | (7) | | | 1,296,120 | |
| | | | | | | | | | | | | | | | | | | 25,000 | (7) | | | 385,750 | |
| | | | | | | | | | | | | | | | | | | 90,000 | (8) | | | 1,388,700 | |
Mr.Saleh |
| | | | | | 180,000 | (10) | | | 12.67 | | | | 12/10/2018 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 65,000 | (8) | | | 1,002,950 | |
| | | | | | | | | | | | | | | | | | | 50,000 | (8) | | | 771,500 | |
Mr. Dickey |
| | 1,100 | | | | | | | | 69.35 | | | | 12/04/2011 | | | | | | | | | |
| | | 12,500 | | | | | | | | 69.35 | | | | 12/02/2011 | | | | | | | | | |
| | | 14,500 | | | | | | | | 70.21 | | | | 12/03/2012 | | | | | | | | | |
| | | 13,000 | | | | | | | | 87.33 | | | | 12/12/2013 | | | | | | | | | |
| | | 11,000 | | | | | | | | 80.90 | | | | 12/10/2012 | | | | | | | | | |
| | | 7,500 | | | | | | | | 63.86 | | | | 12/10/2012 | | | | | | | | | |
| | | 33,000 | | | | | | | | 60.29 | | | | 12/09/2013 | | | | | | | | | |
| | | 15,000 | | | | 5,000 | (1) | | | 61.26 | | | | 2/27/2015 | | | | | | | | | |
| | | 10,000 | | | | 10,000 | (2) | | | 31.75 | | | | 2/26/2016 | | | | | | | | | |
| | | 13,500 | | | | 4,500 | (11) | | | 29.98 | | | | 12/7/2015 | | | | | | | | | |
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| | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name |
| Number of securities underlying unexer- cised Options (#) Exerci- sable |
| | Number of securities underlying unexercised Options (#) Unexer- cisable |
| | Option Exer- cise Price ($) |
| | Option Expiration Date |
| | Number of Shares or Units of Stock That HaveNot Vested (#) |
| | Market Value of Sharesor Unitsof Stock That HaveNot Vested ($) |
| ||||||
| | | 30,000 | | | | 90,000 | (3) | | | 3.75 | | | | 2/24/2017 | | | | | | | | | |
| | | | | | | 120,000 | (4) | | | 15.00 | | | | 2/23/2018 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 3,600 | (5) | | | 55,548 | |
| | | | | | | | | | | | | | | | | | | 7,000 | (5) | | | 108,010 | |
| | | | | | | | | | | | | | | | | | | 22,300 | (6) | | | 344,089 | |
| | | | | | | | | | | | | | | | | | | 30,000 | (7) | | | 462,900 | |
| | | | | | | | | | | | | | | | | | | 45,000 | (8) | | | 694,350 | |
Mr. Hunke |
| | 1,500 | | | | | | | | 69.35 | | | | 12/4/2011 | | | | | | | | | |
| | | 22,000 | | | | | | | | 69.35 | | | | 12/2/2011 | | | | | | | | | |
| | | 24,000 | | | | | | | | 70.21 | | | | 12/3/2012 | | | | | | | | | |
| | | 22,000 | | | | | | | | 87.33 | | | | 12/12/2013 | | | | | | | | | |
| | | 19,000 | | | | | | | | 80.90 | | | | 12/10/2012 | | | | | | | | | |
| | | 13,500 | | | | | | | | 60.29 | | | | 12/9/2013 | | | | | | | | | |
| | | 11,500 | | | | | | | | 59.96 | | | | 12/8/2014 | | | | | | | | | |
| | | 4,950 | | | | 1,650 | (11) | | | 35.84 | | | | 12/7/2015 | | | | | | | | | |
| | | 9,750 | | | | 9,750 | (12) | | | 7.53 | | | | 12/12/2016 | | | | | | | | | |
| | | 22,500 | | | | 22,500 | (12) | | | 4.37 | | | | 12/12/2016 | | | | | | | | | |
| | | | | | | 74,000 | (4) | | | 15.00 | | | | 2/23/2018 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 300 | (13) | | | 4,629 | |
| | | | | | | | | | | | | | | | | | | 1,850 | (5) | | | 28,546 | |
| | | | | | | | | | | | | | | | | | | 4,300 | (6) | | | 66,349 | |
| | | | | | | | | | | | | | | | | | | 15,000 | (14) | | | 231,450 | |
| | | | | | | | | | | | | | | | | | | 20,000 | (7) | | | 308,600 | |
| | | | | | | | | | | | | | | | | | | 30,000 | (8) | | | 462,900 | |
Mr.Lougee |
| | 12,000 | | | | | | | | 48.14 | | | | 12/8/2014 | | | | | | | | | |
| | | 12,500 | | | | 12,500 | (2) | | | 31.75 | | | | 2/26/2016 | | | | | | | | | |
| | | | | | | 63,750 | (3) | | | 3.75 | | | | 2/24/2017 | | | | | | | | | |
| | | | | | | 80,000 | (4) | | | 15.00 | | | | 2/23/2018 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 4,000 | (5) | | | 61,720 | |
| | | | | | | | | | | | | | | | | | | 13,800 | (6) | | | 212,934 | |
| | | | | | | | | | | | | | | | | | | 22,000 | (7) | | | 339,460 | |
| | | | | | | | | | | | | | | | | | | 35,000 | (8) | | | 540,050 | |
(1) | The unvested portion of these SOs will vest on February28, 2011. |
(2) | The unvested portion of these SOs will vest in two equal annual installments beginning February27, 2011. |
(3) | The unvested portion of these SOs will vest in three equal annual installments beginning February25, 2011. |
(4) | The unvested portion of these SOs will vest in four equal annual installments beginning February24, 2011. |
(5) | These RSUs will vest on December7, 2011. The value of these RSUs is based on the product of the number of RSUs multiplied by $15.43, the closing price of a share of Company stock on December23, 2010. There can be no assurance that the amounts shown in the table will ever be realized by an executive officer. |
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(6) | These RSUs will vest on December12, 2012. The value of these RSUs is based on the product of the number of RSUs multiplied by $15.43, the closing price of a share of Company stock on December23, 2010. There can be no assurance that the amounts shown in the table will ever be realized by an executive officer. |
(7) | These RSUs will vest on December11, 2013. The value of these RSUs is based on the product of the number of RSUs multiplied by $15.43, the closing price of a share of Company stock on December23, 2010. There can be no assurance that the amounts shown in the table will ever be realized by an executive officer. |
(8) | These RSUs will vest on December10, 2014. The value of these RSUs is based on the product of the number of RSUs multiplied by $15.43, the closing price of a share of Company stock on December23, 2010. There can be no assurance that the amounts shown in the table will ever be realized by an executive officer. |
(9) | The unvested portion of these SOs will vest in three equal installments beginning December11, 2010. |
(10) | The unvested portion of these SOs will vest in four equal installments beginning December10, 2011. |
(11) | The unvested portion of these SOs will vest on December7, 2011. |
(12) | The unvested portion of these SOs will vest in two equal installments beginning December12, 2011. |
(13) | These RSUs will vest on March1, 2011. The value of these RSUs is based on the product of the number of RSUs multiplied by $15.43, the closing price of a share of Company stock on December23, 2010. There can be no assurance that the amounts shown in the table will ever be realized by an executive officer. |
(14) | These RSUs will vest on May1, 2013. The value of these RSUs is based on the product of the number of RSUs multiplied by $15.43, the closing price of a share of Company stock on December23, 2010. There can be no assurance that the amounts shown in the table will ever be realized by an executive officer. |
OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | | Stock Awards | | ||||||||||
Name |
| Numberof Shares Acquiredon Exercise(#) |
| | Value Realized onExercise($) |
| | Numberof Shares Acquiredon Vesting(#) |
| | Value Realized onVesting($)(3) |
| ||||
Craig A. Dubow |
| | 0 | | | | 0 | | | | 10,000 | (1) | | | 157,800 | |
Gracia C. Martore |
| | 0 | | | | 0 | | | | 6,000 | (1) | | | 94,680 | |
Paul N. Saleh |
| | 0 | | | | 0 | | | | 0 | | | | 0 | |
Robert J. Dickey |
| | 0 | | | | 0 | | | | 5,200 | (2) | | | 67,536 | |
David L. Hunke |
| | 0 | | | | 0 | | | | 800 | (1) | | | 12,624 | |
David T. Lougee |
| | 21,250 | | | | 275,090 | | | | 9,000 | (1) | | | 142,020 | |
(1) | These RSUs vested in their entirety on December8, 2010, the fourth anniversary of their December8, 2006 grant date, except in the case of Mr.Lougee, whose RSUs had a July30, 2007 grant date. The NEOs continue to retain ownership of the vested shares (less the number of shares held back to pay withholding taxes). |
(2) | 4,000 of these RSUs vested in their entirety on October23, 2010, the fourth anniversary of their October23, 2006 grant date, and the remaining 1,200 of these RSUs vested in their entirety on December8, 2010, the fourth anniversary of their December8, 2006 grant date. Mr.Dickey continues to retain ownership of the vested shares (less the number of shares held back to pay withholding taxes). |
(3) | These amounts equal the product of the number of vested shares multiplied by the closing price of a share of Company stock on the vesting date. |
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The table below shows the actuarial present value as of
December26, 2010 of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each, under each of the Gannett Retirement Plan, or GRP, and the Supplemental Retirement Plan, or SERP, in each case,
determined using assumptions consistent with those used in the Company’s financial statements, except with respect to pre-retirement mortality, probability of turnover prior to retirement and retirement age. The assumed retirement age reflected
below is age 65 for Mr.Dubow, Ms.Martore, Mr.Dickey and Mr.Hunke, and age 55 for Mr.Lougee under the SERP but is immediate with respect to the GRP for all NEOs. These reflect payment at the earliest point in time at
which benefits are available without any reduction for age. Information regarding the GRP and SERP can be found in the “Compensation Discussion and Analysis” section under the heading “Post-Termination Pay.” Mr.Saleh does
not participate in the GRP or the SERP.
Amounts shown in
the table below give effect to additional service credit for each of Mr.Dubow and Ms.Martore, as provided under their employment contracts. If the additional service period extends service beyond the executive’s actual termination
date, compensation during the additional service period is assumed equal to the executive’s annual base salary (but no less than the minimum contractually provided base salaries for Mr.Dubow and Ms.Martore, and ignoring any
voluntary reduction of their salaries) plus the greater of (1)the executive’s most recent incentive bonus or (2)the average of the executive’s three most recent incentive bonuses. However, if the executive’s employment
were terminated by the Company for “good cause,” by the executive without “good reason,” as a result of death, or by reason of the executive failing to extend the employment contract, their respective actual periods of credited
service under the SERP and present value of accumulated benefits under the SERP would be reduced to 29.08 years and $8,640,583 in the case of Mr.Dubow; and 25.67 years and $5,136,046 in the case of Ms.Martore.
Name |
| Plan Name |
| Number of years credited service(#) |
| | Present Value of Accumulated Benefit ($) |
| | Payments During LastFiscal Year ($) |
| |||
Mr. Dubow |
| GRP | | | 26.67 | | | | 429,598 | | | | 0 | |
| | SERP | | | 30.92 | | | | 9,028,241 | | | | 0 | |
Ms. Martore |
| GRP | | | 23.25 | | | | 524,341 | | | | 0 | |
| | SERP | | | 26.42 | | | | 5,804,502 | | | | 0 | |
Mr. Dickey |
| GRP | | | 18.75 | | | | 279,489 | | | | 0 | |
| | SERP | | | 21.17 | | | | 1,729,739 | | | | 0 | |
Mr. Hunke |
| GRP | | | 15.92 | | | | 267,267 | | | | 0 | |
| | SERP | | | 18.33 | | | | 1,602,310 | | | | 0 | |
Mr. Lougee |
| GRP | | | 6.58 | | | | 71,333 | | | | 0 | |
| | SERP | | | 6.58 | | | | 61,588 | | | | 0 | |
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NON-QUALIFIED DEFERRED COMPENSATION
The Gannett Deferred Compensation Plan, or DCP, is a non-qualified plan
that allows Company executives to defer all or a portion of their compensation. Participant contributions that are not treated as if invested in the Company’s stock are generally distributed in cash, and amounts that are treated as if invested
in the Company’s stock are generally distributed in shares of stock or cash, at the Company’s election. Effective August1, 2008, the DCP also provides for Company contributions for certain participants. Information regarding the DCP
can be found in the “Compensation Discussion and Analysis” section under the heading “Post-Termination Pay.”
Name |
| Executive Contributions in Last FY ($) |
| | Registrant Contributions in Last FY ($) |
| | Aggregate earnings in Last FY ($)(2) |
| | Aggregate withdrawals/ distributionsin Last FY ($) |
| | Aggregate balance at Last FYE ($) |
| |||||
Mr. Dubow |
| | 0 | | | | 0 | | | | (505 | ) | | | 0 | | | | 293,236 | |
Ms. Martore |
| | 0 | | | | 0 | | | | 219,177 | | | | 46,303 | | | | 2,450,884 | |
Mr. Saleh |
| | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Mr. Dickey |
| | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Mr. Hunke |
| | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Mr. Lougee |
| | 0 | | | | 28,601 | (1) | | | 13,452 | | | | 0 | | | | 101,950 | (1) |
(1) | The Company makes contributions to the DCP in the form of Company stock on behalf of Mr.Lougee in an amount equal to 5% of his compensation that exceeds the Internal Revenue Code limits on the amount of compensation that can be taken into account when calculating benefits under a qualified plan. Company contributions are distributed in cash. The amounts shown in these columns reflect the Company contribution made in February 2011 for services provided by Mr.Lougee in 2010. |
(2) | The amount shown for Mr.Dubow reflects negative earnings (losses) during the Company’s 2010 fiscal year. |
OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS
The Company’s employee benefit programs provide
the NEOs with post-termination benefits in a variety of circumstances. The amount of compensation payable may vary depending on the nature of the termination, whether as a result of retirement/voluntary termination, involuntary not-for-cause
termination, termination following a change in control and in the event of disability or death of the executive. The discussion below describes the varying amounts payable to each NEO in each of these situations. It assumes, in each case, that the
officer’s termination was effective as of December26, 2010. In presenting this disclosure, we describe amounts earned through December26, 2010, taking into account, where applicable, bonuses paid in 2011 but earned as a result of
2010 performance, and, in those cases where the actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company, our estimates of the amounts which would be paid out to the executives upon their
termination, had it occurred on December26, 2010. Some payments would be automatically delayed or modified if required under Section409A of the Internal Revenue Code.
Retirement/Voluntary Termination
In the case of a NEO’s retirement or voluntary termination, the
Company would provide the executive with post-retirement or post-termination benefits that currently include the following:
| * | |
Pension.The vested portions of the executive’s GRP and SERP benefits are payable at the date of termination, in the case of |
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|
|
| * | |
RSUs and SOs.Executives who retire or voluntarily terminate after attaining age 55 and completing five years of service are |
Potential Payment Obligation Upon Retirement/Voluntary Termination
| | Mr.Dubow ($) |
| | Ms.Martore ($) |
| | Mr.Saleh ($) |
| | Mr.Dickey ($) |
| | Mr.Hunke ($) |
| | Mr.Lougee ($) |
| ||||||
Pension |
| | 11,121,157 | | | | 6,674,459 | | | | 0 | (3) | | | 362,603 | | | | 2,209,707 | | | | 71,333 | |
Stock Options |
| | 6,046,400 | | | | 2,500,000 | | | | 0 | | | | 0 | | | | 675,615 | | | | 0 | |
RestrictedStockUnits |
| | 5,323,350 | | | | 4,192,331 | | | | 0 | | | | 0 | | | | 227,786 | | | | 0 | |
TOTAL(1) |
| | 22,490,907 | (2) | | | 13,366,790 | | | | 0 | | | | 362,603 | | | | 3,113,108 | | | | 71,333 | |
(1) |
In addition to the amounts reported in this table, our NEOs receive certain post-retirement perquisites. Mr.Dubow and Ms.Martore own universal life |
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|
|
(2) | In addition to the benefits described in footnote 1 to this table, Mr.Dubow would receive the following additional perquisites under his employment contract following his voluntary termination or retirement: (i)a Medicare supplement and reimbursement for the cost of Medicare Part B coverage, beginning at age 65 and continuing for life; (ii)legal and financial counseling services on the same basis as available to an active executive at the time his employment terminates, for three years after his employment terminates, at an estimated incremental cost to the Company of approximately $25,000 annually; (iii)use of Company aircraft for three years after his employment terminates, at times not inconveniencing the Company, the cost of which would be reimbursed by Mr.Dubow at the Company’s then-effective incremental hourly rate; (iv)ownership of existing home office equipment would be transferred to Mr.Dubow; (v)home computer assistance, for three years after his employment terminates; (vi)use of an office, secretarial assistance and access to Company facilities at no charge for three years after his employment terminates; and (vii)access, for three years after his employment terminates, to one country club selected by Mr.Dubow of which the Company is a member at the time of his retirement and to which Mr.Dubow had access during the time of his employment, the usage cost of which would be paid by Mr.Dubow. These post-retirement perquisites would terminate in the event that Mr.Dubow provides competitive services to a competitor of the Company, as described in his employment contract. We estimate annual incremental costs to the Company associated with these perquisites of approximately $50,000. |
(3) | The amount shown for Mr.Saleh reflects the fact that he does not participate in the GRP or the SERP. |
Death
If the employment of a NEO is terminated as a result of the executive’s death, then each executive’s estate would be entitled to the
following benefits:
| * | |
Pension.The spouse of an executive whose employment is terminated as a result of death would be entitled to receive the vested |
| * | |
RSUs and SOs.The executive’s estate generally would be entitled to receive a prorated portion of the executive’s RSU |
| * | |
Life insurance.Death benefits are payable under individual policies maintained by the Company and owned by Mr.Dubow and |
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Potential Payment Obligation Upon Death
| | Mr.Dubow ($) |
| | Ms.Martore ($) |
| | Mr.Saleh ($) |
| | Mr.Dickey ($) |
| | Mr.Hunke ($) |
| | Mr.Lougee ($) |
| ||||||
Pension |
| | 11,121,157 | | | | 6,674,459 | | | | 0 | (4) | | | 362,603 | | | | 2,209,707 | | | | 71,333 | |
Stock Options |
| | 6,046,400 | (1) | | | 2,500,000 | (1) | | | 372,600 | | | | 1,440,300 | | | | 675,615 | | | | 770,400 | |
Restricted Stock Units |
| | 5,323,350 | (1) | | | 4,192,331 | (1) | | | 20,895 | | | | 410,438 | | | | 227,786 | | | | 237,622 | |
Life Insurance |
| | 6,200,000 | | | | 2,729,000 | | | | 0 | (5) | | | 1,225,000 | | | | 900,000 | | | | 967,000 | |
Additional Death Benefit |
| | 5,900,000 | (2) | | | 4,400,000 | (2) | | | – | | | | – | | | | – | | | | – | |
TOTAL(3) |
| | 34,590,907 | | | | 20,495,790 | | | | 393,495 | | | | 3,438,341 | | | | 4,013,108 | | | | 2,046,355 | |
(1) | Pursuant to their employment contracts, upon a termination of employment as a result of death, the estates of Mr.Dubow and Ms.Martore would be entitled to the same value of accelerated vesting of SOs and RSUs as described in the Retirement/Voluntary Termination disclosure section. |
(2) | Pursuant to their employment contracts, upon a termination of employment as a result of death, the estates of Mr.Dubow and Ms.Martore would be entitled to a lump sum cash payment in an amount equal to two times the sum of (a)the executive’s base salary as of the date of death (but no less than the minimum contractually provided base salaries for Mr.Dubow and Ms.Martore, and ignoring any voluntary reduction of their salaries) and (b)the greater of (i)the amount of the executive’s annual bonus earned with respect to the year ended prior to the year of death, or (ii)the average of the executive’s three most recent annual bonuses as of the date of death. |
(3) | In addition to the amounts reported in this table, the Company would continue to provide supplemental medical insurance coverage for the executive’s eligible dependents in addition to the regular post-retirement medical insurance coverage available to the NEOs on the same terms as provided to Company retirees generally, for the duration of the life of the eligible dependents. We estimate annual incremental costs to the Company for this benefit of approximately $8,000 for each of the NEOs. |
(4) | The amount shown for Mr.Saleh reflects the fact that he does not participate in the GRP or the SERP. |
(5) | The amount shown for Mr.Saleh reflects the fact that as of December26, 2010 he was not eligible to participate in the Company’s group life insurance program applicable to all employees. Mr.Saleh will commence participation in the plan on March1, 2011 (when he has satisfied the waiting period requirement). |
Disability
If the employment of a NEO is terminated upon the executive’s disability, then the executive would be entitled to
the following post-termination benefits:
| * | |
Pension.Executives terminated due to disability are entitled to receive the vested portions of their GRP and SERP benefits. The |
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| * | |
RSUs and SOs.Executives are generally entitled to receive a prorated portion of their RSU grants, based on the number of full |
| * | |
Disability Benefits.Mr.Dubow and Ms.Martore are entitled to disability benefits under their employment contracts in |
Potential Payment Obligation Upon Disability
| | Mr.Dubow ($) |
| | Ms.Martore ($) |
| | Mr.Saleh ($) |
| | Mr.Dickey ($) |
| | Mr.Hunke ($) |
| | Mr.Lougee ($) |
| ||||||
Pension |
| | 12,925,343 | | | | 8,503,136 | | | | 0 | (5) | | | 362,603 | | | | 2,209,707 | | | | 71,333 | |
Stock Options |
| | 6,046,400 | (1) | | | 2,500,000 | (1) | | | 372,600 | | | | 1,440,300 | | | | 675,615 | | | | 770,400 | |
Restricted Stock Units |
| | 5,323,350 | (1) | | | 4,192,331 | (1) | | | 20,895 | | | | 410,438 | | | | 227,786 | | | | 237,622 | |
Disability Benefits(2) |
| | 6,893,943 | | | | 3,984,546 | | | | 0 | (6) | | | 6,434,288 | | | | 2,328,582 | | | | 5,743,954 | |
Additional Disability Benefits |
| | 5,900,000 | (3) | | | 4,400,000 | (3) | | | – | | | | – | | | | – | | | | – | |
TOTAL(4) |
| | 37,089,036 | | | | 23,580,013 | | | | 393,495 | | | | 8,647,629 | | | | 5,441,690 | | | | 6,823,309 | |
(1) | Pursuant to their employment contracts, SOs and RSUs granted to Mr.Dubow and Ms.Martore would vest in the same manner as described in the Retirement/Voluntary Termination disclosure section. |
(2) | In the event of a disability, each NEO is entitled to a Company-paid monthly disability benefit. The amounts set forth above represent the present value of the disability benefit applying the following assumptions: (i)the NEO incurred a qualifying disability on December26, 2010 and the NEO remains eligible to receive disability benefits for the maximum period provided under the plan; (ii)the disability benefits are reduced by certain offsets provided for under the plan (e.g., a portion of the NEO’s SERP benefits); and (iii)IRS-prescribed mortality and interest rate assumptions are used to calculate the present value of such benefits. |
(3) |
Pursuant to their employment contracts, upon a termination of employment as a result of disability, Mr.Dubow and Ms.Martore would be entitled to a |
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|
|
(4) | In addition to the amounts reported in this table, each NEO would receive life and medical insurance and post-termination perquisites with the same respective values described in footnotes 1 and 2 to the Retirement/Voluntary Termination table. |
(5) | The amount shown for Mr.Saleh reflects the fact that he does not participate in the GRP or the SERP. |
(6) | The amount shown for Mr.Saleh reflects the fact that as of December26, 2010 he was not eligible to participate in the Company’s disability plans applicable to all employees. Mr.Saleh will commence participation in the plan on November15, 2011 (when he has satisfied the waiting period requirement). |
Change in Control
The Company has a Transitional Compensation Plan (TCP) to assure the
Company would have the continued dedication of, and the availability of objective advice and counsel from, key executives notwithstanding the possibility, threat or occurrence of a change in control and to promote retention and continuity of certain
key executives for at least one year after a change in control. The Board believes it is imperative that the Company and the Board be able to rely upon key executives to continue in their positions and be available for advice, if requested, in
connection with any proposal relating to a change in control without concern that those individuals might be distracted by the personal uncertainties and risks created by such a proposal.
With those goals in mind, the TCP provides that participants, including the NEOs, would be entitled to compensation
following a change in control if (1)within two years from the date of the change in control the participant’s employment is terminated by the Company other than for “cause,” or by the employee for “good reason” or
(2)in the case of executives participating in the TCP before April15, 2010 (but not those who first participate in the TCP on or after that date), within a 30-day window period beginning on the first anniversary of the change in control,
the executive terminates his or her employment voluntarily. Mr.Saleh is the only NEO who first participated in the TCP on or after April15, 2010.
Following is a summary of several key terms of the TCP:
| * | |
“change in control” means the first to occur of: (1)the acquisition of 20% or more of our then-outstanding shares of common stock or the combined |
| * | |
“cause” means (1)any material misappropriation of Company funds or property; (2)the executive’s unreasonable and persistent neglect or |
| * | |
“good reason” means the occurrence after a change in control of any of the following without the participant’s express written consent, unless |
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|
|
| * | |
“severance period” means a number of whole months equal to the participant’s months of continuous service with the Company or its affiliates |
A NEO entitled to compensation under the TCP would receive:
| * | |
Pension.In addition to their vested GRP and SERP benefits, upon their termination of employment, TCP participants are entitled to |
| * | |
Cash severance payment.Upon a TCP participant’s termination of employment, the participant is entitled to receive a lump sum |
| * | |
Excise Tax Gross-Ups.Executives participating in the TCP before April15, 2010 (but not those who first participate in the |
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|
|
| * | |
Retiree Medical and Life Insurance Credit.For purposes of determining a TCP participant’s eligibility for retiree life |
In addition to the benefits afforded
under the TCP, all SOs and RSUs immediately vest upon a change in control, and our NEOs would receive other benefits under the SERP, DCP and the Omnibus Plan upon a change in control that qualifies as a change in control under Code
Section409A, including:
| * | |
SERP.All SERP benefits become immediately vested and benefits accrued up to the date of the change in control are paid out in the |
| * | |
DCP.All post-2004 DCP benefits accrued up to the date of the change in control are paid in the form of a lump sum distribution |
| * | |
Omnibus Plan.All RSUs are paid shortly after the change in control. |
In certain cases the tax laws deny an income tax deduction to a company
for payments that are contingent upon a change in control.
Potential Payment Obligation Upon Change in Control
| | Mr. Dubow ($) |
| | Ms.Martore ($) |
| | Mr.Saleh ($) |
| | Mr.Dickey ($) |
| | Mr.Hunke ($) |
| | Mr.Lougee ($) |
| ||||||
Pension(1) |
| | 15,047,160 | | | | 12,385,596 | | | | 0 | (4) | | | 4,315,533 | | | | 3,980,205 | | | | 141,616 | |
Stock Options |
| | 6,046,400 | | | | 2,500,000 | | | | 496,800 | | | | 1,453,200 | | | | 683,570 | | | | 779,000 | |
Restricted Stock Units |
| | 5,323,350 | | | | 4,192,331 | | | | 1,774,450 | | | | 1,664,897 | | | | 1,102,474 | | | | 1,154,164 | |
Severance |
| | 10,954,477 | | | | 8,057,261 | | | | 1,731,600 | (5) | | | 4,397,223 | | | | 3,291,288 | | | | 2,529,088 | |
Excise Tax Gross-up |
| | 7,751,211 | (2) | | | 6,933,523 | (2) | | | 0 | (5) | | | 3,110,278 | | | | 2,498,125 | | | | 983,873 | |
TOTAL(3) |
| | 45,122,598 | | | | 34,068,711 | | | | 4,002,850 | | | | 14,941,131 | | | | 11,555,662 | | | | 5,587,741 | |
(1) | These amounts reflect the full benefits payable in the event of a change in control, including the additional pension credit to which the executive is entitled under the TCP (or his or her employment contract, if greater). |
(2) | The amounts of theexcise tax gross-ups for Mr.Dubow and Ms.Martore do not take into account a reasonable value allocable to the covenant-not-to-compete obligations that restrict Mr.Dubow and Ms.Martore for two years after he or she ceases employment with the Company.To the extent of the reasonable value allocable toMr. Dubow’s and Ms.Martore’s covenants-not-to-compete, each of their excise tax gross-up amounts would decrease. |
(3) | In addition to the amounts reported in this table, each NEO would receive life and medical insurance benefits for the severance period in amounts no less than those that would have been provided had the executive not been terminated. We estimate incremental costs to the Company for these benefits as follows: Mr.Dubow–$179,000, Ms.Martore–$111,000, Mr.Saleh–$23,000, Mr.Dickey–$23,000, Mr.Hunke–$23,000, and Mr.Lougee–$23,000. Each NEO would also receive a lump sum distribution in the amount shown in the DCP table on page42. Each NEO also would receive post-termination perquisites with the same respective values described in footnotes 1 and 2 to the Retirement/Voluntary Termination table. |
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(4) | The amount shown for Mr.Saleh reflects the fact that he does not participate in the GRP or the SERP. |
(5) | Mr.Saleh is not entitled to receive an excise tax gross-up under the TCP. In the event that Mr.Saleh is subject to the excise tax under Code Section4999, his change in control benefits will be reduced to $1 less than the amount that would trigger such taxes if such a reduction would put him in a better after-tax position. The full amount of Mr.Saleh’s severance is reflected in the Table. |
Other Potential Post-Termination Payments to
Mr.Dubow and Ms.Martore under their Employment Contracts and to Mr.Saleh under his Termination Benefits Agreement.
The Company may terminate the employment of Mr.Dubow, Ms.Martore or Mr.Saleh for “good cause.” “Good cause”
means (1)an intentional, non-incidental, misappropriation of funds or property of the Company by the executive; (2)unreasonable and persistent neglect or refusal by the executive to perform the duties described in Mr.Dubow’s
or Ms.Martore’s employment contract or Mr.Saleh’s termination benefits agreement, which he or she does not remedy within 30 days after receipt of written notice; (3)the material breach by the executive of certain
provisions of Mr.Dubow’s or Ms.Martore’s employment contract or Mr.Saleh’s termination benefits agreement, which he or she does not remedy within 30 days after receipt of written notice; or (4)conviction of the
executive of a felony. In the event of termination of employment for good cause, the executive would not receive any post-termination payments or benefits, with the exception of vested pension benefits, which would be payable at times and in amounts
as described in the Retirement/Voluntary Termination disclosure section, and, in the case of Mr.Dubow and Ms.Martore, his or her SOs and RSUs.
Mr.Dubow, Ms.Martore and Mr.Saleh each may terminate his or her employment for “good reason.” “Good reason”
would be deemed to exist if: (1)the executive is not elected or retained in his or her current positions (or such other senior executive position as the executive may agree to serve in); (2)the Company acts to materially reduce the
duties and responsibilities described in Mr.Dubow’s or Ms.Martore’s employment contract or Mr.Saleh’s termination benefits agreement; (3)the executive is required to report to anyone other than the Board of
Directors, in the case of Mr.Dubow, or the Company’s CEO, in the case of Ms.Martore; (4)the Company changes the principal geographic location of the performance of Mr.Dubow’s or Ms.Martore’s duties away
from the Washington, D.C. metropolitan area; or (5)the Company materially breaches the applicable agreement with the executive. In the event of termination of employment by the executive for “good reason” or by the Company without
“good cause,” the Company would provide certain post-termination benefits in addition to the benefits afforded to them upon early retirement, which currently include the following:
| * | |
Pension.Mr.Dubow and Ms.Martore would be entitled to pension payments in amounts equivalent to those reflected in the |
| * | |
Severance, SOs and RSUs.Mr.Dubow and Ms.Martore would be entitled to cash severance payments equivalent in amount to |
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PROPOSAL 3–NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF
OUR
NAMED EXECUTIVE OFFICERS
Background of the Proposal
The Dodd-Frank Act requires all public companies, beginning with their shareholder meetings on or after January21, 2011, to hold a separate
non-binding, advisory shareholder vote to approve the compensation of named executive officers (NEOs) as described in the Compensation Discussion and Analysis, the executive compensation tables and any related information in the company’s proxy
statement (commonly known as a “Say on Pay” proposal).
Compensation of Our Named Executive Officers
The Board of Directors and its Executive Compensation Committee support compensation policies that place a heavy emphasis on pay for performance.
The Committee recognizes the broad concern in today’s economic environment about excessive NEO compensation. The Committee also recognizes the importance of competitive compensation programs that are essential to recruiting and retaining the
key executive talent needed to drive shareholder value.
Pay
for performance in 2010:
Key performance
indicators:The Committee makes its determinations regarding NEO compensation by measuring each NEO’s progress against their key performance indicators (KPIs). KPIs consist of individually designed qualitative and
quantitative goals organized around individual, operating unit and/or Company performance in the areas of profit, product and people. Qualitative KPIs include, where appropriate, measures of leadership, innovation, collaboration, new products and
programs in support of the Company’s strategic plan, diversity initiatives, First Amendment activities, and other significant qualitative objectives. Quantitative KPIs include, where appropriate, revenue and operating income goals for the
Company and the respective divisions and functions over which each NEO has operational or overall responsibility. In addition, the Committee weighs subjective and objective information regarding our NEOs, including the complexity and
responsibilities of the position, term of service, competitive alternatives in the marketplace, and internal pay equity. The CEO’s KPIs are heavily weighted toward the Company’s financial performance, long-term shareholder return, and the
execution of a strategic plan that positions the Company for the future.
2010 Performance:Our NEOs generally met or exceeded their KPIs in 2010. The Company recognized early on that the media landscape is changing and relied on our NEOs to take proactive
measures to best position the Company to succeed in a rapidly changing media environment. We have faced our challenges head on and charted a better course for the Company’s future. Over the last year, we have:
| * | |
Built an unmatched local market presence in both our publishing and broadcast segments. |
| * | |
Ramped up our cross platform sales efforts, resulting in higher digital revenue. |
| * | |
Leveraged our diverse portfolio, enabling us to serve customers on any platform they choose. |
| * | |
Launched partnerships with Yahoo! and DataSphere, both of which greatly enhance our digital sales opportunities. |
| * | |
Restructured costs and created efficiencies throughout the Company. |
| * | |
Strengthened our balance sheet and enhanced our financial flexibility. |
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Our management team has also created significant value for our shareholders. Our 2010 financial
results were among the best in our industry despite a very difficult economy, as demonstrated by the following accomplishments, which are described in greater detail in the “Compensation Discussion and Analysis” section of this Proxy
Statement:
| * | |
Earnings from continuing operations per share (diluted) are up 32% from 2009 after excluding certain non-recurring items in both years. |
| * | |
Operating cash flow increased 19% to $1.3 billion. |
| * | |
Free cash flow of $816 million. |
| * | |
Operating cash flow margin increased to 23.6%, up from 19.6% last year. |
| * | |
Return on equity was 30.1%, up from 26.7% in 2009. |
| * | |
Company-wide digital revenues were approximately $1 billion, representing more than 18% of the Company’s total operating revenues for the year. |
| * | |
We reduced our debt by $710 million to $2.35 billion by year-end and reduced our senior leverage ratio to 1.97x, well below the 3.5x maximum senior leverage |
| * | |
We increased the profitability of each of our business segments compared to last year. |
As further evidence of the value created by our management team, the following graph compares the cumulative total return
to shareholders of the Company’s common stock during the period from June30, 2009 (the date the National Bureau of Economic Research announced as the end of the recession in the U.S.) to December31, 2010 with the performance of the
S&P 500 Media Index, the S&P 500 Publishing Index and the Company’s 2010 Peer Group over the same period of time.
The graph depicts the results of
investing $100 in the Company’s common stock, the S&P 500 Media Index, the S&P 500 Publishing Index and the Company’s Peer Group at closing prices on June30, 2009, assuming that dividends are reinvested on a monthly basis.
The S&P 500 Media Index
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is comprised of Cablevision Systems Corporation, CBS Corporation, Comcast Corporation, The DirecTV Group, Inc., Discovery Communications Inc., Gannett Co., Inc., The Interpublic Group of
Companies, Inc., The McGraw-Hill Companies, Inc., Meredith Corporation, News Corporation, Omnicom Group, Inc., Scripps Networks Interactive, Inc., Time Warner Cable Inc., Time Warner Inc., Viacom Inc., The Walt Disney Company, and The Washington
Post Company. The S&P 500 Publishing Index consists of Gannett Co., Inc., The McGraw-Hill Companies, Inc., Meredith Corporation and The Washington Post Company. The Company’s Peer Group is listed on page21.
CEO Pay for Performance Alignment
The following graph shows the relationship of our CEO’s Total
Direct Compensation (as reflected in the Supplemental Compensation Table on page31) compared to the cumulative total shareholder return (TSR) of the Company’s common stock over the last five fiscal years, assuming that a stockholder
invested $100 in the Company’s common stock at the beginning of the period shown. As shown below, our CEO’s Total Direct Compensation has generally aligned with our TSR performance during that period. Mr.Dubow’s compensation has
decreased when our TSR has declined and increased with improvement in our TSR. As reflected in the Supplemental Compensation Table, the increase in Mr.Dubow’s Total Direct Compensation from 2008 to 2009 was due primarily to the
significant increase in the value (for proxy reporting purposes) of his SO grant, which resulted primarily from the substantial year over year increase in the Company’s stock price during that period. The grant date stock price and fair value
per share of Mr.Dubow’s SO grant for 2008 (awarded in February 2009) were $3.75 and $1.17, respectively, compared to the respective grant date stock price and fair value per share of Mr.Dubow’s SO grant for 2009 (awarded in
February 2010) of $15.00 and $7.04. Mr.Dubow’s SO grant for 2009 also reflected the fact that the Company’s TSR nearly doubled in 2009 and outperformed the median annual TSR for our Peer Group and the S&P 500 Media Index. In
2010, while the Company’s financial results were among the best in our industry despite a very difficult economy and the Company made significant strides toward its strategic goals, the Company’s TSR underperformed the median annual TSR
for the S&P 500 Media Index (although we outperformed the median annual TSR for our Peer Group), and Mr.Dubow’s reduced SO grant for 2010 (awarded in February 2011) and reduced Total Direct Compensation for 2010 reflected this
performance.
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For the foregoing reasons, the Board of Directors recommends a vote “FOR” adoption of the
following resolution:
“RESOLVED, that the
shareholders of Gannett Co., Inc. approve the compensation of the Company’s named executive officers as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis, the compensation tables and the related
discussion.”
While the advisory vote we are asking you
to cast is non-binding, the Company’s Executive Compensation Committee and the Board value the views of our shareholders and will take the outcome into account when considering future compensation decisions affecting our named executive
officers.
PROPOSAL
4–NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY
VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS
Background of the Proposal
The Dodd-Frank Act also requires all public companies, beginning with
their shareholder meetings on or after January21, 2011, to permit a separate non-binding, advisory shareholder vote with respect to the frequency of the vote on the Say on Pay proposal thereafter. Companies must give shareholders the choice of
whether to cast an advisory vote on the Say on Pay proposal every year, every two years or every three years (commonly known as the “Frequency Vote on Say on Pay”). Shareholders may also abstain from making a choice, pursuant to rules
recently issued by the SEC. After such initial votes are held, the Dodd-Frank Act requires all public companies to submit to their shareholders no less often than every six years thereafter the Frequency Vote on Say on Pay.
Frequency Vote on Say on Pay
As discussed above, the Board of Directors believes that our current
executive compensation programs closely link executive compensation to our financial performance and align the interests of our executive officers with those of our shareholders. The Board believes that giving our shareholders the right to cast an
advisory vote every year on their approval of the compensation arrangements of our NEOs is a good corporate governance practice and is in the best interests of our shareholders, by allowing our shareholders to provide us with input on our executive
compensation philosophy, policies and practices as disclosed in our proxy statement every year.
Although the Board recommends that the Say on Pay proposal be voted on every year, our shareholders will be able to specify one of four choices for the Frequency Vote on Say on Pay proposal as follows:
(i)every year, (ii)every two years, (iii)every three years or (iv)abstain. Shareholders are not voting to approve or disapprove of the Board’s recommendation of an annual vote on the Say on Pay proposal. Because this
vote is advisory and will not be binding on the Board or the Company, the Board may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the
option most frequently specified by our shareholders.
The
Board of Directors recommends a vote FOR the Company to hold future advisory votes to approve the compensation of our NEOs EVERY YEAR.
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The compensation year for directors begins at each Annual Meeting of
shareholders and ends at the following Annual Meeting of shareholders. For this period, the Company paid its directors the following:
| * | |
an annual retainer fee of $45,000; |
| * | |
an additional retainer fee of $15,000 to committee chairs and an additional retainer fee of $25,000 to the presiding director; |
| * | |
$2,000 for each Board meeting attended; |
| * | |
$1,000 for each committee meeting attended; |
| * | |
a long-term award, consisting of either 2,000 restricted shares or 8,000 SOs, granted on the first day of the compensation year; |
| * | |
travel accident insurance of $1,000,000; and |
| * | |
a match from the Gannett Foundation of charitable gifts made by directors up to a maximum of $10,000 each year. |
In lieu of receiving their retainer and meeting
fees in cash, directors may elect to receive their fees in restricted shares valued at 110% of the applicable cash fee, or in SOs to purchase a number of shares equal to four times the number of shares that would be payable as restricted shares, in
either case based on the closing market value of the Company’s stock on the grant date. Retainer fees are paid quarterly during the compensation year, in the case of cash, or are paid on the first day of the compensation year with quarterly
vesting during the compensation year, in the case of restricted shares and SOs. Meeting fees, regardless of their form, are payable on the last day of the compensation year. Meeting fees paid as restricted shares or SOs fully vest upon grant.
Long-term awards are made on the first day of the compensation year. Long-term awards in the form of restricted shares vest at a rate of 1/36th of the shares per month. Long-term awards in the form of SOs vest at a rate of
1/4th of the shares on each anniversary of the grant date and are exercisable for eight years after the grant date. Restricted
shares receive dividends or, if deferred, dividend equivalent rights. All vested restricted shares shall be held by the Company for the benefit of the director until the director leaves the Board and shall be transferred to the director on that
date. When a non-employee director leaves the Board, all unvested shares shall be forfeited to the Company or, in the case of unvested deferred restricted shares, shall not be issued except, if a non-employee director retires from the Board due to
the age of service limitations set forth in the Company’s By-laws, all restricted shares shall fully vest upon retirement, and SOs held by a director who has served at least three years shall fully vest upon retirement.
Directors may elect to defer their cash or restricted share fees under
the DCP, which for cash fee deferrals provides for the same investment choices, including mutual funds and a Gannett stock fund, made available to other DCP participants. Fees paid as restricted shares and deferred at the election of the director
must be invested in the Gannett stock fund of the DCP.
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The following table shows the compensation paid to our independent directors for the fiscal year ended
December26, 2010. Mr.Dubow received no separate compensation for his service as a director and therefore is not included in the following table. Mr.Cody was elected to the Board of Directors in February 2011.
Name |
| Fees Earnedor Paidin Cash ($)(1) |
| | Stock Awards ($)(1) |
| | Option Awards ($)(1) |
| | All Other Compensation ($)(2) |
| | Total ($) |
| |||||
Howard D. Elias(3) |
| | 29,000 | | | | 49,508 | | | | 62,320 | | | | 10,000 | | | | 150,828 | |
Arthur H. Harper(3) |
| | 0 | | | | 101,204 | | | | 62,320 | | | | 0 | | | | 163,524 | |
John Jeffry Louis |
| | 0 | | | | 0 | | | | 254,585 | | | | 0 | | | | 254,585 | |
Marjorie Magner |
| | 74,000 | | | | 33,160 | | | | 0 | | | | 10,000 | | | | 117,160 | |
Scott K. McCune |
| | 80,000 | | | | 0 | | | | 62,320 | | | | 0 | | | | 142,320 | |
Duncan M. McFarland(3) |
| | 48,000 | | | | 49,508 | | | | 62,320 | | | | 0 | | | | 159,828 | |
Donna E. Shalala(3) |
| | 25,000 | | | | 82,668 | | | | 0 | | | | 1,866 | | | | 109,534 | |
Neal Shapiro |
| | 57,000 | | | | 0 | | | | 62,320 | | | | 10,000 | | | | 129,320 | |
Karen Hastie Williams(3) |
| | 137,667 | | | | 33,160 | | | | 0 | | | | 0 | | | | 170,827 | |
(1) | Amounts shown in these columns reflect the compensation paid to each director based upon the form in which the director elected to receive his or her retainer fees, meeting fees and long-term awards. Amounts in the stock awards and option awards columns represent the aggregate grant date fair value of RSU and SO awards computed in accordance with ASC 718 based on the assumptions set forth in note 11 to the Company’s 2010 audited financial statements. |
(2) | Represents charitable gifts matched by the Gannett Foundation pursuant to the GannettMatch program. The GannettMatch program matches eligible gifts made by Company employees and directors up to an aggregate of $10,000 a year. Gifts must be made to eligible organizations, including tax exempt charitable organizations, tax exempt hospitals or medical centers, and tax exempt colleges, universities, graduate or professional schools, engineering or technical institutions and public and private preschools, elementary and secondary schools in the U.S. and its territories. |
(3) | Mr.Elias, Mr.Harper and Ms.Williams deferred all payments they received in the form of restricted stock. Mr.McFarland and Ms.Shalala deferred all payments they received in the form of cash and restricted stock. |
OUTSTANDING DIRECTOR EQUITY AWARDS
AT FISCAL YEAR-END
Name |
| RestrictedStockAwards (vested/unvested) (#) |
| StockOptionAwards(#) (exercisable/ unexercisable) |
Howard D. Elias |
| 18,352/1,493 | | 1,250/11,750 |
Arthur H. Harper |
| 36,938/1,991 | | 16,714/14,250 |
John Jeffry Louis |
| 0/0 | | 160,951/23,462 |
Marjorie Magner |
| 4,623/2,377 | | 0/0 |
Scott K. McCune |
| 0/0 | | 1,250/11,750 |
Duncan M. McFarland |
| 33,479/2,084 | | 2,500/10,500 |
Donna E. Shalala |
| 16,850/3,870 | | 42,789/1,250 |
Neal Shapiro |
| 15,187/765 | | 0/8,000 |
Karen Hastie Williams |
| 8,373/2,377 | | 7,000/0 |
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EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of the end of
the Company’s 2010 fiscal year for (i)compensation plans previously approved by the Company’s shareholders and (ii)compensation plans not previously approved by the Company’s shareholders: (1)the number of securities
to be issued upon the exercise of outstanding SOs, warrants and rights; (2)the weighted-average exercise price of such outstanding SOs, warrants and rights; and (3)other than securities to be issued upon the exercise of such outstanding
SOs, warrants and rights, the number of securities remaining available for future issuance under the plans.
Plan Category |
| NumberofSecuritiestobe Issued Upon Exercise of Outstanding Options, Warrants and Rights |
| | Weighted-Average Exercise Price of OutstandingOptions, Warrants and Rights |
| | NumberofSecurities RemainingAvailablefor Future Issuance Under EquityCompensationPlans (Excluding Securities Reflected in Column(a)) |
| |||
| (a) | | | (b) | | | (c) | | ||||
Equitycompensationplans approved by |
| | 28,812,249 | | | $ | 52.0752 | (3) | | | 28,579,429 | |
Equitycompensationplans not approved by shareholders(2) |
| | 131,174 | | | | – | | | | – | |
Total |
| | 28,943,423 | | | | – | | | | 28,579,429 | |
(1) | The equity compensation plan approved by the Company’s shareholders is the 2001 Omnibus Incentive Compensation Plan, as amended and restated on May4, 2010 (the “Omnibus Plan”). The number in column (a)includes 23,648,990 shares subject to outstanding SOs and 5,163,259 shares subject to outstanding restricted stock units. |
(2) | The Gannett Deferred Compensation Plan, or DCP, is a non-qualified plan that provides benefits to key executives of the Company. The DCP has not been approved by the Company’s shareholders. The amounts elected to be deferred by each participant are credited to such participant’s account in the DCP, and the Company credits these accounts with earnings as if the amounts deferred were invested in the Company’s stock or other selected investment funds as directed by the participant. Amounts that are not treated as if invested in the Company’s stock are distributed in cash, and amounts that are treated as if invested in the Company’s stock are generally distributed in shares of stock or cash, at the Company’s election. However, deferrals of SO income and deferrals by directors of restricted stock grants thereon are required to be distributed in stock under the terms of the DCP. The number of shares to be issued upon the exercise of outstanding SOs, warrants and rights in the first row above includes 149,865 shares credited to participants’ accounts in the DCP as a result of deferrals of grants made under the Omnibus Plan. Not included in this number are 9,510 shares of stock credited to participants’ accounts in the DCP that represent the deferral of shares issued under the Omnibus Plan, as this number of shares was subtracted from the number of shares available for grant under the Omnibus Plan upon the award or exercise of the related grant. The table above does not include any shares that may in the future be credited to participants’ accounts in the DCP as a result of salary deferrals or transfers of other funds held in the plan. Participants in the DCP are general unsecured creditors of the Company with respect to their benefits under the plan. |
(3) | Represents the weighted-average exercise price of the outstanding SOs granted under the Omnibus Plan. |
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SECURITIES BENEFICIALLY OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND
PRINCIPAL
SHAREHOLDERS
The information presented below regarding beneficial ownership of common stock has been presented in accordance with SEC rules and is not
necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership of common stock includes any shares as to which a person, directly or indirectly, has or shares voting power or investment power and any
shares as to which a person has the right to acquire such voting or investment power within 60 days through the exercise of any SO or other right.
The following table presents, as of the Record Date, information based on the Company’s records and filings with the SEC regarding beneficial
ownership of each person who is known to be the beneficial owner of more than five percent of the Company’s common stock, each director and each nominee to the Board of Directors, the Company’s NEOs in 2010, and all directors and executive
officers of the Company as a group. None of the shares owned by the Company’s directors or executive officers were pledged.
Name of Beneficial Owner(1) |
| Shares Owned |
| | PercentofClass | | ||
JPMorgan Chase& Co.(2) |
| | 21,366,380 | | | | 8.9 | % |
AllianceBernstein L.P.(3) |
| | 16,919,720 | | | | 7.1 | % |
BlackRock, Inc.(4) |
| | 15,227,104 | | | | 6.4 | % |
Ariel Investments, LLC(5) |
| | 14,877,088 | | | | 6.2 | % |
The Vanguard Group, Inc.(6) |
| | 12,852,238 | | | | 5.4 | % |
Craig A. Dubow |
| | 1,618,127 | | | | * | |
Gracia C. Martore |
| | 632,118 | | | | * | |
Paul N. Saleh |
| | 329 | | | | * | |
Robert J. Dickey |
| | 242,570 | | | | * | |
David L. Hunke |
| | 176,183 | | | | * | |
David T. Lougee |
| | 60,266 | | | | * | |
John E. Cody |
| | 1,000 | | | | * | |
Howard D. Elias |
| | 4,500 | | | | * | |
Arthur H. Harper |
| | 32,368 | | | | * | |
John Jeffry Louis |
| | 311,200 | | | | * | |
Marjorie Magner |
| | 8,750 | | | | * | |
Scott K. McCune |
| | 5,500 | | | | * | |
Duncan M. McFarland |
| | 40,550 | | | | * | |
Donna E. Shalala |
| | 45,039 | | | | * | |
Neal Shapiro |
| | 2,250 | | | | * | |
Karen Hastie Williams |
| | 8,000 | | | | * | |
All directors and executive officers as a group (23persons including those named above) |
| | 4,214,229 | | | | 1.7 | % |
* | Less than one percent. |
(1) |
Except as otherwise noted below, the address of each person listed in the table is: c/oGannettCo.,Inc., 7950 Jones Branch Drive, McLean, |
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|
|
(2) | Based upon information as of December31, 2010, contained in a Schedule 13G/A filed with the SEC on January24, 2011 by JPMorgan Chase& Co., reporting, in the aggregate, sole voting power over 17,327,520 shares, shared voting power over 370,734 shares, sole dispositive power over 20,995,445 shares, and shared dispositive power over 367,935 shares. The address for JP Morgan Chase& Co. is 270 Park Avenue, New York, NY 10017. |
(3) | Based upon information as of December31, 2010, contained in a Schedule 13G filed with the SEC on February9, 2011 by AllianceBernstein L.P., reporting, in the aggregate, sole voting power over 13,072,406 shares, sole dispositive power over 16,899,746 shares and shared dispositive power over 19,974 shares. The address for AllianceBernstein L.P. is 1345 Avenue of the Americas, New York, NY 10105. |
(4) |
Based upon information as of December31, 2010, contained in a Schedule 13G filed with the SEC on February4, 2011 by BlackRock, Inc., reporting, in |
(5) | Based upon information as of December31, 2010, contained in a Schedule 13G filed with the SEC on February14, 2011 by Ariel Investments, LLC, reporting, in the aggregate, sole voting power over 14,613,457 shares and sole dispositive power over 14,877,088 shares. The address for Ariel Investments, LLC is 200 E. Randolph Drive, Suite 2900, Chicago, IL 60601. |
(6) | Based upon information as of December31, 2010, contained in a Schedule 13G filed with the SEC on February10, 2011 by The Vanguard Group, Inc., reporting, in the aggregate, sole voting power over 297,934 shares, sole dispositive power over 12,554,304 shares and shared dispositive power over 297,934 shares. The address for The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, PA 19355. |
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INVESTMENT IN GANNETT STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table presents, as of the Record Date,
the total investment position in the Company’s stock of its directors and executive officers, based on the Company’s records and filings with the SEC.
Name of Officer or Director |
|
Title |
| Share Investment |
| |
Craig A. Dubow |
| Chairman and CEO | | | 1,637,181 | |
Gracia C. Martore |
| President and COO | | | 640,997 | |
Paul N. Saleh |
| Senior Vice President and CFO | | | 329 | |
Robert J. Dickey |
| President/USCP | | | 242,570 | |
David L. Hunke |
| President and Publisher/USA TODAY | | | 176,183 | |
David T. Lougee |
| President/Broadcasting | | | 62,158 | |
John E. Cody |
| Director | | | 1,000 | |
Howard D. Elias |
| Director | | | 24,256 | |
Arthur H. Harper |
| Director | | | 71,642 | |
John Jeffry Louis |
| Director | | | 311,200 | |
Marjorie Magner |
| Director | | | 8,750 | |
Scott K. McCune |
| Director | | | 5,500 | |
Duncan M. McFarland |
| Director | | | 76,887 | |
Donna E. Shalala |
| Director | | | 66,404 | |
Neal Shapiro |
| Director | | | 17,774 | |
Karen Hastie Williams |
| Director | | | 18,417 | |
All directors and executive officers as a group (23 persons including those named above) |
| | | | 4,399,376 | |
This table reflects the same information as the table in the preceding section, but it also includes shares of the Company’s stock that each person holds through the Company’s Deferred Compensation Plan.
As of the Record Date, shares of the Company’s stock in the following amounts were deemed to be credited to the accounts of the Company’s directors and executive officers under the Company’s Deferred Compensation Plan:
Mr.Dubow–19,054; Ms.Martore–8,879; Mr.Lougee–1,892; Mr.Elias–19,756; Mr.Harper–39,274; Mr.McFarland–36,337; Ms.Shalala–21,365; Mr.Shapiro–15,524;
Ms.Williams–10,417; and all directors and executive officers as a group–185,147. These shares are not deemed to be “beneficially owned” under SEC rules and are therefore not included in the table in the preceding section.
The cost of soliciting proxies
will be borne by the Company. In addition to the solicitation of proxies by mail, certain of the officers and employees of the Company, without extra compensation, may solicit proxies personally, by telephone or other means. The Company also will
request that brokerage houses, nominees, custodians and fiduciaries forward soliciting materials to the beneficial owners of stock held of record and will reimburse them for forwarding the materials. In addition, the Company has retained Innisfree
M&A Incorporated, New York, New York (“Innisfree”), to aid in the solicitation of proxies at a fee of $20,000, plus out of pocket expenses. The Company has agreed to indemnify and hold harmless Innisfree and certain related persons
against certain liabilities arising out of or in connection with the engagement.
SECTION16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that all of our current and former directors and executive officers reported on a timely basis all transactions required to be reported
by Section16(a).
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To the extent that this Proxy Statement is incorporated by reference
into any other filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, the sections of this Proxy Statement entitled “Executive Compensation Committee Report” and “Report of the Audit
Committee” (to the extent permitted by SEC rules) will not be deemed incorporated, unless specifically provided otherwise in such filing.
March24, 2011
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Shareowner ServicesSM P.O. Box 64945 St. Paul, MN |
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COMPANY # |
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Voting Instructions For Gannett Co., 2011 Annual Meeting of Shareholders |
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| | Gannett Co., Inc. shareholders of record on March4, 2011 may vote their shares for matters to be covered at the Company’s 2011 Annual Meeting of Shareholders using a toll-free telephone number, via the Internet or using the attached proxy card. Your telephone or Internet vote authorizes the Named Proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Below are voting instructions for all three options. |
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| INTERNET – www.eproxy.com/gci |
| | | | Use the Internet to vote your shares at any time 24 hours a day, 7 days a week, until 11:59 p.m. (Central Time) on May2, 2011. Have your proxy card in hand. You will be provided with simple voting instructions. |
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| PHONE – 1-800-560-1965 |
| | | | Use any touch tone telephone to vote your shares at any time 24 hours a day, 7 days a week, until 11:59 p.m. (Central Time) on May2, 2011. Have your proxy card in hand when you call. You will be provided with simple voting instructions. |
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| MAIL – Mark, sign and date the attached proxy card and return it in the enclosed postage-paid envelope by May2, 2011. |
If you are a current or former employee of Gannett Co., Inc. and own shares of Gannett
common stock through the Gannett Co., Inc. 401(k) Plan, we must receive your completed and executed proxy card or your submission of an Internet or telephone vote by 11:59 p.m. (Central Time) on April28, 2011 to allow time for the 401(k) plan
administrator to vote on your behalf. If your vote by proxy card, Internet or telephone is not received by 11:59 p.m. (Central Time) on April28, 2011, the plan shares credited to your 401(k) account will be voted by the 401(k) plan
administrator in the same proportions as the proxy votes which were timely and properly submitted by other plan participants.
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS
BELOW, SIMPLY SIGN, DATE, AND RETURN THIS
PROXY CARD.
ò Please detach here ò
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THE BOARD RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2 AND 3. | | | ||||||||||||||||||||||||||
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1. | | Electionof directors: | |
01John E. Cody 02Craig A. Dubow 03Howard D. Elias |
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04Arthur H. Harper 05JohnJeffryLouis 06Marjorie Magner |
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07Scott K. McCune 08DuncanM.McFarland 09Neal Shapiro |
| ¨ | | VOTEFORall nomineesexceptthose | | | | | | ¨ | |
VOTE WITHHELD from all nominees |
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(Instructions: To withhold authority to vote for any |
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2. | | PROPOSAL TO RATIFY the appointment of Ernst& Young LLP as the Company’s independent registered public accounting firm for the 2011 fiscal year. | | | | | | ¨ | | For | | | | ¨ | | Against | | ¨ | | Abstain | ||||||||||
3. | | NON-BINDING ADVISORY VOTE TO APPROVE the compensation of the Company’s named executive officers. | | | | | | ¨ | | For | | | | ¨ | | Against | | ¨ | | Abstain | ||||||||||
THE BOARD RECOMMENDS A VOTE FOR “EVERY YEAR” FOR PROPOSAL 4 | ||||||||||||||||||||||||||||||
4. | | NON-BINDING ADVISORY VOTE ON THE FREQUENCY of future advisory votes approving the compensation of the Company’s named executive officers | | | |
¨ Year |
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Every 2Years |
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Every 3 Years |
| ¨ | | Abstain |
THE PROXIES are authorized to vote in their discretion upon such other business, if any, as may properly come before the Annual Meeting or any adjournment thereof.
Address Change? Mark box, sign, and indicate changes below:¨ | | | | Date | |
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Signature(s) in Box |
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Please sign EXACTLY as name appears at the left. Joint |
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Table of Contents
GANNETT CO., INC.
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May3, 2011
10:00 a.m.
Gannett Co., Inc.
7950
Jones Branch Drive
McLean, VA 22107
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Gannett Co., Inc. |
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7950 Jones Branch Drive |
| | proxy
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McLean, VA 22107 |
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This Proxy is Solicited on Behalf of the Board of Directors
Annual Meeting of Shareholders
— May3, 2011
The undersigned hereby appoints Craig A. Dubow,
Gracia C. Martore and Todd A. Mayman, or any of them, attorneys and proxies each with power of substitution to represent the undersigned at the Annual Meeting of Shareholders of the Company to be held on May3, 2011 and at any adjournment or
adjournments thereof, with all the power that the undersigned would possess if personally present, and to vote all shares of stock that the undersigned may be entitled to vote at said Annual Meeting, as designated on the reverse, and in accordance
with their best judgment in connection with such other business as may come before the Annual Meeting.
Please cast your votes on the reverse side, by telephone or online as described on the reverse side. The Board of Directors recommends a vote FOR Proposals 1, 2 and 3 and that you vote for “EVERY YEAR”
for Proposal 4. To vote in accordance with the Board of Directors’ recommendations, just sign the reverse side; no boxes need to be checked. Unless marked otherwise, this proxy will be voted in accordance with the Board of Directors’
recommendations.
See reverse for voting instructions.