-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, o2eSiyH0dAypT1w6gl7AppJ+suxBNMHHKuXzB27VyXExNrwwiDjoaRf8b/TEs95d Xdz/7HKVf4X6VFzFjrclbg== 0000950131-94-000355.txt : 19940322 0000950131-94-000355.hdr.sgml : 19940322 ACCESSION NUMBER: 0000950131-94-000355 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940419 FILED AS OF DATE: 19940321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIBUNE CO CENTRAL INDEX KEY: 0000726513 STANDARD INDUSTRIAL CLASSIFICATION: 2711 IRS NUMBER: 361880355 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 34 SEC FILE NUMBER: 001-08572 FILM NUMBER: 94516920 BUSINESS ADDRESS: STREET 1: 435 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3122229100 DEF 14A 1 DEFINITIVE N & P SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or Section 240.14a-12 Tribune Company ............................................................................. (Name of Registrant as Specified In Its Charter) .............................................................................. (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ....................................................................... 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:* ....................................................................... 4) Proposed maximum aggregate value of transaction: ....................................................................... * Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] 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: ....................................................................... TRIBUNE COMPANY 435 NORTH MICHIGAN AVENUE CHICAGO, ILLINOIS 60611 PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TUESDAY, APRIL 19, 1994, 9:30 A.M. This Proxy Statement is provided in connection with the 1994 Annual Meeting of Stockholders of Tribune Company (the "Company") or any adjournment thereof. The Company's Annual Report for 1993 is enclosed. This Proxy Statement is being mailed to stockholders on or about March 21, 1994. Stockholders of record at the close of business on March 3, 1994 are entitled to vote at the meeting. On that date there were outstanding and entitled to vote 67,167,342 shares of the Common Stock, without par value (the "Common Stock"), and 1,505,259 shares of Series B Convertible Preferred Stock, without par value (the "Preferred Stock"), of the Company. With regard to all matters submitted to a vote at the meeting, each share of Common Stock is entitled to one vote and each share of Preferred Stock, voting together as a class with the Common Stock, is entitled to 4.58 votes. Holders do not have the right to cumulate votes in the election of directors. Accordingly, the holders of a majority of the 74,061,428 votes entitled to be cast are able to elect all directors being elected. A list of stockholders of record entitled to vote at the Annual Meeting will be available for inspection by any stockholder for any purpose germane to the meeting during ordinary business hours for a period of 10 days prior to the meeting at the office of the Company, 435 N. Michigan Ave., Suite 2400, Chicago, IL 60611, in care of the Vice President and Secretary. The enclosed proxy is solicited by the Board of Directors. If the proxy is properly executed and returned, the shares will be voted in accordance with the stockholder's instructions. If no instructions are given with respect to a matter, the proxy will be voted as follows with respect to such matter: FOR the election as directors of the nominees named herein (Proposal 1); FOR approval of an amendment to the 1992 Long-Term Incentive Plan (Proposal 2); and FOR the ratification of the selection of Price Waterhouse as auditors for 1994 (Proposal 3). Any stockholder of record giving a proxy for the meeting may revoke it prior to its being voted by written notice of revocation or by a later proxy, in either case delivered to the Vice President and Secretary, or by voting in person by ballot at the meeting. Stockholders whose shares are held in the name of a broker, bank, or other holder of record may not vote in person at the meeting unless they have first obtained a proxy, executed in the stockholder's favor, from the holder of record. If shares are owned beneficially by participants in the Tribune Company Employee Stock Ownership Plan (the "ESOP"), or the Tribune Company Savings Incentive Plan (the "SIP"), or held by a nominee for partici-pants in the Tribune Company Employee Stock Purchase Plan (the "ESPP"), a voting instruction card is enclosed for the purpose of instructing the respective plan trust-ees or nominee how to cast the votes related to such shares. Any participant giving instructions to a plan trustee or nominee may revoke or modify such instructions prior to April 16, 1994 by written notice given to the trustee or nominee. Plan shares are held by The Northern Trust Company as trustee for the ESOP and the SIP and by Merrill Lynch, Pierce, Fenner & Smith Incorporated as nominee under the ESPP. The voting instruction card separately summarizes the number of shares which are entitled to be voted on behalf of the participant in one or more of the plans. Shares allocated to participant accounts under these plans will be voted as follows: if instruction cards are received by the trustee or nominee on or before April 15, 1994, votes will be cast in accordance with the instructions; shares held by the ESOP and the SIP for which no instructions are received by April 15 will be voted in the same proportion as the shares in that plan for which instructions were received; shares related to the ESPP for which no instructions are received will be voted in accordance with New York Stock Exchange rules. ESOP shares not allocated to any participant accounts will be voted in the same proportion as the ESOP shares as to which voting instructions are received. OWNERSHIP INFORMATION - -------------------------------------------------------------------------------- PRINCIPAL STOCKHOLDERS The following table and footnotes set forth information as of March 3, 1994 with respect to each person who is known to management of the Company to be the beneficial owner of more than 5% of any class of the Company's stock. The Northern Trust Company as trustee for the ESOP (the "ESOP Trustee") holds 1,505,259 shares of Preferred Stock, of which 431,765 shares were allocated to participant accounts as of March 3, 1994, and 735,501 shares of Common Stock, of which 350,415 shares were allocated to participant accounts. The ESOP trust agreement directs the trustee to vote the shares allocated to participant accounts as directed by the participants and to vote all unallocated shares and any allocated shares for which no timely instructions are received in the 1 same proportion as the allocated 6,021,036 shares based on four shares shares for which instructions are re- of Common Stock for each share of ceived. In addition, the ESOP Trustee Preferred Stock. All ownership is is deemed to beneficially own those shared with the participants in the shares of Common Stock into which the ESOP. Preferred Stock is convertible, or
COMMON STOCK PREFERRED STOCK ------------------------ -------------------- NUMBER OF PERCENT OF NUMBER OF PERCENT OF NAME AND ADDRESS OF OWNER SHARES CLASS SHARES CLASS - ------------------------- ---------- ---------- --------- ---------- Robert R. McCormick Tribune 11,554,436(1) 17.2% -- -- Foundation--10,479,236 shs.; Cantigny Foundation-- 1,075,200 shs. Room 770 435 N. Michigan Avenue Chicago, IL 60611 The Northern Trust Company, as 6,756,537(2) 9.2% 1,505,259 100% ESOP Trustee 50 S. LaSalle Street Chicago, IL 60675
- ------- (1) The investment and voting power for both of these foundations is vested in a board of five directors, consisting of Charles T. Brumback, Stanton R. Cook, James C. Dowdle, Jack Fuller and John W. Madigan, each of whom is an officer or former officer of the Company or a subsidiary thereof. (2) The ESOP Trustee holds 735,501 shares of Common Stock on behalf of the ESOP as of March 3, 1994. The amount shown also includes the 6,021,036 shares of Common Stock into which the Preferred Stock is convertible. The Northern Trust Company is also trustee with respect to other plans. See "Employee Benefit Plan Voting Rights", below. According to a Schedule 13G filed by Northern Trust Corporation with the Securities and Exchange Commission, that corporation has beneficial ownership with respect to 11.7% (8,583,562 shares, including ESOP and other plan shares) of Common Stock, as follows: Sole voting power--461,120 shares, Shared voting power--8,031,836 shares, Sole dispositive power--190,518 shares, Shared dispositive power--8,203,355 shares. - -------------------------------------------------------------------------------- MANAGEMENT OWNERSHIP Beneficial ownership of the Common table, and by all current directors Stock and Preferred Stock as of March and executive officers as a group, is 3, 1994 by each director, by each set forth in the following table: executive officer named in the sum- mary compensation
COMMON STOCK PREFERRED STOCK ------------------------------------------------------- ----------------- ADDITIONAL SHARES DEEMED BENEFICIALLY OWNED(1) ------------------------ BENEFICIAL OWNERSHIP BENEFICIAL PERCENT PERCENT NUMBER OF NOT OWNERSHIP OF NUMBER OF OF NAME SHARES OWNED DISCLAIMED DISCLAIMED TOTAL CLASS SHARES(2) CLASS ---- ------------ ---------- ---------- --------- ------- --------- ------- Charles T. Brumback..... 118,276 291,428(3) 20,000 429,704 * 468 * Stanton R. Cook......... 411,194 377,887(3) 9,600 798,681 1.2% -- -- James C. Dowdle......... 104,270 202,672(3) -- 306,942 * 468 * Donald C. Grenesko...... 1,048 67,776(3) -- 68,824 * 428 * Diego E. Hernandez...... 900 -- -- 900 * -- -- David D. Hiller......... 451 46,730(3) -- 47,181 * 367 * John E. Houghton........ 219 215,394(3) -- 215,613 * -- -- Robert E. La Blanc...... 9,800 -- -- 9,800 * -- -- John W. Madigan......... 229,955 249,795(3) 20,620 500,370 * 468 * Andrew J. McKenna....... 45,000 -- -- 45,000 * -- -- Kristie Miller.......... 176,158 -- 8,928 185,086 * -- -- Newton N. Minow......... 4,500 2,000 -- 6,500 * -- -- James J. O'Connor....... 3,100 -- -- 3,100 * -- -- Donald H. Rumsfeld...... 3,200 -- -- 3,200 * -- -- Scott C. Smith.......... 16,856 70,307(3) 600 87,763 * 468 * Arnold R. Weber......... 1,900 -- -- 1,900 * -- -- Twenty-eight (28) direc- tors and executive of- ficers of the Company as a group............. 1,162,906 1,834,586(3) 59,748 3,057,240 4.4% 5,766 *
- ------- *Less than 1%. (1) Does not include 11,554,436 shares owned by the Robert R. McCormick Tribune Foundation and the Cantigny Foundation (see "Principal Stockholders"). (2) Represents shares allocated to individual participant accounts under the ESOP. 2 (3) Includes rights to acquire shares pursuant to stock options which are available for exercise prior to May 2, 1994 and upon conversion of ESOP Preferred Stock allocated to individual accounts, as follows: Mr. Brumback-- 284,021 shs.; Mr. Cook--377,887 shs.; Mr. Dowdle--202,041 shs.; Mr. Grenesko-- 65,912 shs.; Mr. Hiller--45,968 shs.; Mr. Houghton--157,800 shs.; Mr. Madigan-- 249,407 shs.; Mr. Smith--69,919 shs.; all directors and executive officers as a group--1,759,636 shs. - -------------------------------------------------------------------------------- EMPLOYEE BENEFIT PLAN VOTING RIGHTS The Northern Trust Company as trustee holds shares of Common Stock and Preferred Stock for the benefit of employees. The stock held in trust as of March 3, 1994, and the percentage of total votes represented, are as follows:
COMMON STOCK PREFERRED STOCK ----------------- ----------------- NUMBER PERCENT NUMBER PERCENT OF OF OF OF PERCENT OF NAME OF BENEFIT PLAN OR TRUST SHARES CLASS SHARES CLASS TOTAL VOTES - ----------------------------- --------- ------- --------- ------- ----------- Tribune Company Employee Stock Own- ership Plan (1).................... 735,501 1.1% 1,505,259 100% 10.3% Tribune Company Savings Incentive Plan (1)........................... 1,108,875 1.7% -- -- 1.5% Tribune Company Master Pension Trust (2)................................ 423,725 .6% -- -- .6% --------- --------- Total......................... 2,268,101 3.4% 1,505,259 100% 12.4% ========= === ========= === ====
- ------- (1) Employee participants have the right to instruct the trustee on how the shares allocated to their accounts are to be voted. The trust agreement directs the trustee to vote all allocated shares for which no participant instructions are received and all unallocated shares, if any, in the same proportion as votes cast on behalf of participants who completed and returned a voting instruction card. (2) Shares are held on behalf of the Tribune Company Employees' Pension Plan and other retirement plans for employees of the Company and its subsidiaries. The shares are voted at the direction of the Tribune Company Employee Benefits Investment Committee, presently consisting of five officers of the Company. VOTING REQUIREMENTS The holders of shares representing 37,030,715 votes, represented in person or by proxy, shall constitute a quorum to conduct business. A stockholder may, with respect to the election of directors, (i) vote for all five nominees named herein, (ii) withhold authority to vote for all such nominees or (iii) vote for all such nominees other than any nominee with respect to whom the stockholder withholds authority to vote. The nominees receiving the highest number of votes cast for the number of positions to be filled shall be elected. Accordingly, withholding authority to vote for a director nominee will not prevent him or her from being elected. A stockholder may, with respect to each other matter specified in the notice of the meeting (i) vote "FOR", (ii) vote "AGAINST" or (iii) "ABSTAIN" from voting. A vote to abstain from voting has the legal effect of a vote against. A proxy may indicate that all or a portion of the shares represented by such proxy are not being voted with respect to a particular matter. This could occur, for example, when a broker is not permitted to vote stock held in street name on certain matters in the absence of instructions from the beneficial owner of the stock. These "non-voted shares" will be considered shares not present and entitled to vote on such matter, although such shares may be considered present and entitled to vote for other purposes and will count for purposes of determining the presence of a quorum. Non-voted shares will not affect the determination of the outcome of the vote on any proposal to be decided at the meeting. 3 ELECTION OF DIRECTORS (PROPOSAL 1) Five directors will be elected at nominees becomes unavailable for the 1994 Annual Meeting to hold of- election, an event which is not now fice for three years and until their anticipated, the enclosed proxy may respective successors are elected be voted for the election of a sub- and qualified, or until their resig- stitute nominee. nation or removal. The nominees re- ceiving the highest numbers of votes cast for the number of positions to be filled shall be elected. Additional information regarding each of the five nominees and the eight directors continuing in office follows. The descriptions of the business experience of these indi- viduals include the principal posi- tions held by them from March 1989 to the date of this Proxy Statement. It is intended that all proxies in the accompanying form, unless con- trary instructions are given there- on, will be voted for the election as directors of James C. Dowdle, Di- ego E. Hernandez, Robert E. La Blanc, John W. Madigan and Andrew J. McKenna. All of the nominees are currently directors of the Company. In case any of the THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NAMED NOMINEES AS DIRECTORS OF THE COMPANY (PROPOSAL 1). - -------------------------------------------------------------------------------- NOMINATED FOR ELECTION AT THIS MEETING AND, IF ELECTED, TO SERVE UNTIL THE 1997 ANNUAL MEETING: JAMES C. DOWDLE (60) DIEGO E. HERNANDEZ (60) --DIRECTOR SINCE 1985. --DIRECTOR SINCE 1991. Consultant. Senior Vice Executive Vice Presi- President, Right Asso- dent of the Company ciates (management con- since August 1991 and sultants) from December President and Chief Ex- 1991 to February 1993; ecutive Officer, Trib- Consultant from August une Broadcasting Compa- 1991 to November 1991; ny.* Vice Admiral, U.S. Navy (Retired), Deputy Com- mander, U.S. Space Com- mand until February 1991. ROBERT E. LA BLANC (60) JOHN W. MADIGAN (56) --DIRECTOR SINCE 1982. --DIRECTOR SINCE 1975. Executive Vice Presi- President, Robert E. La dent of the Company and Blanc Associates, Inc. President and Chief Ex- (consultants in infor- ecutive Officer, Trib- mation technology). Di- une Publishing Company* rector of Contel Cellu- since August 1991 and lar, Inc.; Storage Publisher, Chicago Technology, Inc.; M/A Tribune since August Com Inc.; TIE/com- 1990. President and munications, Inc.; Pru- Chief Executive Offi- dential Global Fund; cer, Chicago Tribune Prudential Pacific Company* until Septem- Growth Fund, Inc.; Pru- ber 1993. Director of dential Short-Term QUNO Corporation. Global Income Fund, Inc. Trustee of Pruden- tial U.S. Government Fund. ANDREW J. MCKENNA (64) --DIRECTOR SINCE 1982. Chairman, President and Chief Executive Offi- cer, Schwarz Paper Com- pany (paper converter). Director of Aon Corpo- ration; Dean Foods Com- pany; First Chicago Corporation; The First National Bank of Chica- go; McDonald's Corpora- tion; Skyline Corpora- tion. - ------- * A subsidiary of the Company. 4 - -------------------------------------------------------------------------------- THE FOLLOWING DIRECTORS CONTINUE IN OFFICE UNTIL THE 1995 ANNUAL MEETING: STANTON R. COOK (68) JOHN E. HOUGHTON (62) --DIRECTOR SINCE 1972. --DIRECTOR SINCE 1980. Retired since January Consultant since Janu- 1993. Chairman, Chief ary 1993, Acting Chief Executive Officer (un- Executive Officer and til January 1991), QUNO Chairman of the Board, Corporation. Director Chicago National League of QUNO Corporation. Ball Club, Inc.* Re- tired Chairman (until January 1993), and Chief Executive Officer (until August 1990) of the Company (Publisher, Chicago Tribune until August 1990). JAMES J. O'CONNOR (57) ARNOLD R. WEBER (64) --DIRECTOR SINCE 1985. --DIRECTOR SINCE 1989. President, Northwestern Chairman and Chief Ex- University. Director of ecutive Officer and Di- Aon Corporation; Bur- rector, Commonwealth lington Northern Inc.; Edison Company. Direc- Inland Steel Indus- tor of Corning Incorpo- tries, Inc.; PepsiCo, rated; First Chicago Inc. Corporation; The First National Bank of Chica- go; UAL Corporation. - -------------------------------------------------------------------------------- THE FOLLOWING DIRECTORS CONTINUE IN OFFICE UNTIL THE 1996 ANNUAL MEETING: CHARLES T. BRUMBACK (65) KRISTIE MILLER (49) --DIRECTOR SINCE 1981. --DIRECTOR SINCE 1981. Author; Journalist, The Chairman since January Daily News-Tribune, 1993, President since Inc. of La Salle, Illi- January 1989 and Chief nois. Executive Officer since August 1990 (Chief Op- erating Officer from January 1989 to July 1990) of the Company. Director of QUNO Corpo- ration. NEWTON N. MINOW (68) DONALD H. RUMSFELD (61) --DIRECTOR SINCE 1991. --DIRECTOR SINCE 1992. Former Chairman of the Of Counsel (Partner un- Board of Directors, til March 1991), Sidley (President from April & Austin (law firm) and 1992) and Chief Execu- Professor, Northwestern tive Officer (from Oc- University. Director of tober 1990 until August Aon Corporation; Foote, 1993), General Instru- Cone & Belding Communi- ment Corporation. Se- cations, Inc.; Manpow- nior Advisor to William er, Inc.; Sara Lee Cor- Blair & Company until poration. October 1990. Director of The Allstate Corpo- ration; Amylin Pharma- ceuticals, Inc.; Gilead Sciences, Inc.; Kellogg Company; Metricom, Inc.; Sears, Roebuck and Co. - ------- * A subsidiary of the Company. 5 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors held seven meetings during 1993. Each incumbent member of the Board of Directors at- tended 75% or more of the meetings of the Board of Directors and all com- mittees of which they are members. Audit Committee The functions of the Audit Commit- tee, presently consisting of Messrs. Hernandez, La Blanc, Minow (Chairman) and Rumsfeld, include making recom- mendations concerning the appointment of independent accountants to audit the books of the Company, reviewing the financial statements examined by the independent accountants, and re- viewing recommendations made by the independent accountants with respect to the accounting methods used, the organization and operations of the Company and the system of internal control followed by the Company. The Audit Committee held two meetings during 1993. Governance and Compensation Committee The functions of the Governance and Compensation Committee, presently consisting of Messrs. McKenna (Chair- man), O'Connor and Weber, and Ms. Miller, include establishing the renumeration for the Chief Executive Officer of the Company, consulting with the Chief Executive Officer with respect to the compensation of other executives of the Company, and administering and determining awards under the Company's 1992 Long-Term Incentive Plan and certain other employee bene- fit plans. The Committee also identi- fies and proposes candidates for election to the Board of Directors of the Company. The Committee will con- sider, at its regularly scheduled meetings, nominees recommended by stockholders if submitted in writing. The Committee also accepts other re- sponsibilities relating to corporate governance assigned to it, including studying the size, composition, com- mittee structure and committee mem- bership of the Board of Directors. The Committee met six times during 1993. Other Standing Committees The Company has an Executive Com- mittee presently consisting of Messrs. Brumback (Chairman), Dowdle, Madigan, McKenna and Minow. The Com- mittee did not meet in 1993, but acted twice by unanimous written con- sent. The Company also has a Finance Com- mittee presently consisting of Messrs. Hernandez, La Blanc (Chair- man), Minow and Rumsfeld. The Commit- tee met one time during 1993. The Company also has a Technology Advisory Committee presently consist- ing of Messrs. Brumback (Chairman), Dowdle, Hernandez, La Blanc, Madigan, Minow and Rumsfeld as well as other executives of the Company. The Com- mittee met two times during 1993. COMPENSATION OF DIRECTORS Directors who are not employees of the Company receive annual stipends and meeting fees. The annual stipend for board membership is $24,000 and the fee for each board meeting attended is $1,500. Committee chairmen receive an annual stipend of $4,000 and each participant receives a fee of $1,000 for each committee meeting attended. The Company also reimburses directors for travel expenses incurred in attending meetings. Directors are eligible to elect to defer receipt of all or a portion of their cash stipend and fees. Directors who elect to defer amounts are credited with deemed income, net of applicable corporate income taxes, based on investments selected by the Directors. At the time of distribution, the amount paid to the Director is increased by an amount that approximates the tax saving to the Company resulting from the deduction allowed for the distribution of the deemed income amount included in the distribution. Payment of such amounts together with such credited income will be made over a series of years in the future. The Company has a Restricted Stock Plan for Outside Directors. Under the plan, each nonemployee director, upon each election or re-election to the Board, is awarded a block of restricted Common Stock equal to 300 shares for each year of the term of office for which the director is elected. The shares vest at the rate of 300 shares per year of service on the Board and are forfeited if service on the Board is terminated prior to vesting for reasons other than death or permanent disability. No portion of the stock may be sold or otherwise transferred until all shares of a particular award have vested. Awards of 900 shares each were made on April 20, 1993 to Ms. Miller, Mr. Minow and Mr. Rumsfeld. The closing price of the Common Stock on that date was $56.125. The Company paid Mr. Cook $375,000 for consulting services in 1993 relating to the Chicago Cubs and has agreed to continue this arrangement for 1994. The Company also provides Mr. Cook with the use of an office and secretarial and other appropriate assistance. Mr. Houghton serves as Chairman of the Board of QUNO Corporation, an affiliate of the Company, and was compensated by QUNO $38,800 for such services in 1993. 6 - -------------------------------------------------------------------------------- OTHER TRANSACTIONS Mr. Minow is of counsel to the law firm of Sidley & Austin, which was one of the primary outside law firms providing legal services to the Com- pany in 1993. This relationship is expected to continue in 1994 and fu- ture years. Tribune Properties, Inc. and Chi- cago Tribune Company lease office space and together with other subsidiaries of the Company provide services to the Robert R. McCormick Tribune Foundation. During 1993, the Foundation paid $274,577 to Company subsidiaries for the leased space and services. APPROVAL OF AMENDMENT TO THE 1992 LONG-TERM INCENTIVE PLAN (PROPOSAL 2) Stockholders are asked to approve an amendment to the Company's 1992 Long-Term Incentive Plan (the "Plan") which would place a limit on the num- ber of shares subject to stock op- tions, stock appreciation rights and other types of stock based award that can be granted to any participant during any year. The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue Code ("Code"). Section 162(m) generally limits the deduction that may be claimed for compensation paid to the Chief Execu- tive Officer and the four other high- est paid executive officers at the end of a given fiscal year to $1,000,000 per person, subject to certain exceptions. The rule applies to all types of compensation, includ- ing amounts realized on exercise of stock options and stock appreciation rights, unless the awards and plan under which they are made qualify as "performance based" under the terms of the Code and related regulations. The Company has been advised by coun- sel that approval of the proposed amendment will permit future grants of stock options and stock apprecia- tion rights under the Plan to meet the requirements for performance based compensation. The Plan was approved by stockhold- ers at the 1992 Annual Meeting. The Plan authorizes the grants of stock options, stock appreciation rights and other types of stock based long- term incentive awards. The Plan pro- vides a number of shares available for new awards equal to 0.9 percent of the adjusted average Common Stock outstanding used by the Company to calculate fully diluted earnings per share for the preceding year plus un- used shares from prior years. For 1994, 664,926 shares are available for new awards under the Plan. Addi- tional shares are available (2,001,527 shares as of March 3, 1994) but are limited in use to mak- ing Replacement Option (reload) awards. The Plan also imposes various limits on the number of shares that may be used for certain types of awards. The Board of Directors on February 15, 1994, adopted the following amendment to Section 4.1 of the Plan subject to stockholder approval: "Notwithstanding any provision in this Plan to the contrary, but subject to the adjustment provi- sions of Section 4.4 hereof, the maximum number of shares of Com- mon Stock available for Awards under this Plan to any Partici- pant in any fiscal year of the Company shall not exceed 500,000 shares." The proposed amendment is a further limitation on the current terms of the Plan, and does not add to bene- fits or compensation presently avail- able for award under the Plan. Ap- proval of the amendment will permit the Company to avoid the Section 162(m) limitation on the deductibil- ity of compensation relating to stock options and stock appreciation rights granted under the Plan in 1994 and subsequent years. Approval of the proposed amendment requires the affirmative vote of a majority of the votes of all shares present and entitled to vote on the matter. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE 1992 LONG-TERM INCENTIVE PLAN (PROPOSAL 2). 7 RATIFICATION OF SELECTION OF AUDITORS (PROPOSAL 3) The Board of Directors has selected Price Waterhouse to serve as the Company's independent certified public accountants for 1994. Price Waterhouse has examined and rendered its opinion on the financial statements of the Company for many years. Although the Company is not required by either its Restated Certificate of Incorporation or Bylaws to do so, it has chosen to submit the selection of auditors to the stockholders for ratification. If the selection of Price Waterhouse as auditors for 1994 is not ratified, the Board will take under advisement the selection of other auditors. Representatives of Price Waterhouse will be present at the 1994 Annual Meeting and will be available to respond to appropriate questions and to make a statement if they desire to do so. Approval of this proposal requires the affirmative vote of a majority of the votes of all shares present and entitled to vote on the matter. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE AS THE COMPANY'S INDEPENDENT ACCOUNTANTS (PROPOSAL 3). STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING Stockholders may submit proposals appropriate for stockholder action at the Company's annual meetings consistent with regulations of the Securities and Exchange Commission. Under Commission rules, proposals to be considered for inclusion in the Proxy Statement for the 1995 Annual Meeting must be received by the Company no later than November 21, 1994. The Company's Bylaws set forth additional requirements and procedures regarding the submission by stockholders of matters for consideration at the annual meeting, including a 60-day notice requirement. Proposals should be directed to Tribune Company, 435 North Michigan Avenue, Chicago, Illinois 60611, Attention: Vice President and Secretary. The Company's Bylaws provide that notice of proposed stockholder nominations for election of directors must be given to the Secretary of the Company not less than 90 days prior to the meeting at which directors are to be elected. Such notice must contain certain information about each proposed nominee, including age, business and residence addresses, principal occupation, the number of shares of Common Stock beneficially owned by him or her and such other information as would be required to be included in a proxy statement soliciting proxies for the election of such proposed nominee, and a signed consent of the nominee to serve as a director of the Company if elected. Provision is also made for substitution of nominees by the nominating stockholder in the event that a designated nominee is unable to stand for election at the meeting. If the chairman of the meeting of stockholders determines that a nomination was not made in accordance with the foregoing procedures, such nomination is void. The advance notice requirement affords the Board of Directors the opportunity to consider the qualifications of all proposed nominees and, to the extent deemed necessary or desirable by the Board, inform stockholders about such qualifications. 8 EXECUTIVE COMPENSATION - -------------------------------------------------------------------------------- SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION ------------------------- ----------------------- SECURITIES UNDERLYING NAME AND PRINCIPAL OPTION LTIP ALL OTHER POSITION YEAR SALARY BONUS OTHER AWARDS(#)(1) PAYOUTS(2) COMPENSATION(3) - ------------------------------------- ---- -------- -------- ------- ------------ ---------- --------------- CHARLES T. BRUMBACK.................. 1993 $690,327 $485,000 $14,295 50,000 $ 0 $ 32,857 President and Chief Executive Officer 1992 668,000 308,000 8,111 131,907 240,692 28,354 1991 642,000 188,000 -- 102,802 120,346 -- JAMES C. DOWDLE...................... 1993 $444,807 $250,000 $ 5,786 43,202 $ 0 $ 32,857 Executive Vice President and 1992 420,000 215,000 3,774 93,518 417,293 28,354 President of Broadcast Group 1991 405,000 175,000 -- 81,409 326,746 -- DONALD C. GRENESKO................... 1993 $237,308 $115,000 $ 546 10,000 $ 0 $ 31,732 Senior Vice President/Chief Financial 1992 226,731 85,000 0 8,000 120,346 27,189 Officer 1991 196,731 75,000 -- 8,000 60,173 -- DAVID D. HILLER...................... 1993 $253,923 $145,000 $ 0 10,000 $ 0 $ 30,692 Senior Vice President/Development(4) 1992 266,500 75,000 0 5,000 0 26,314 1991 255,000 70,000 -- 5,000 0 -- JOHN W. MADIGAN...................... 1993 $527,404 $225,000 $11,180 58,148 $ 0 $ 30,608 Executive Vice President and 1992 515,000 160,000 8,575 91,943 417,293 26,172 President of Publishing Group 1991 500,000 190,000 -- 127,518 266,861 -- SCOTT C. SMITH....................... 1993 $311,414 $145,000 $ 2,739 12,000 $ 0 $282,738 Senior Vice President/Development(5) 1992 293,338 120,000 127 16,522 209,625 28,354 1991 280,959 115,000 -- 10,000 119,366 --
- ------- (1) Number of option shares. Includes replacement (reload) options, awarded on exercise of non-qualified options paid for with previously owned Common Stock, as follows:
1993 1992 1991 ------ ------ ------- Charles T. Brumback................................. 0 81,907 52,802 James C. Dowdle..................................... 18,202 68,518 56,409 John W. Madigan..................................... 33,148 66,943 102,518 Scott C. Smith...................................... 0 6,522 0
See Option Grants Table for additional information. (2) Represents payments of benefits (stock price appreciation and dividends subject to limits based on pre-tax income) accrued from 1980 to February 1988 based on phantom shares awarded under the 1980 Incentive Compensation Plan. A portion of the 1992 payouts resulted from action by the Board of Directors to accelerate vesting of the final payments due under the plan by approximately 6 weeks. No further payments are due under this plan. (3) Represents amounts allocated under the Employee Stock Ownership Plan (ESOP) and matching contributions under the Savings Incentive Plan (401(k)), and for Mr. Smith a special relocation allowance in lieu of reimbursement for certain costs associated with his transfer to Florida. The amounts for 1993 are:
ESOP 401(K) OTHER TOTAL ------- ------ -------- -------- Charles T. Brumback...................... $30,608 $2,249 $ 0 $ 32,857 James C. Dowdle.......................... 30,608 2,249 0 32,857 Donald C. Grenesko....................... 29,917 1,815 0 31,732 David D. Hiller.......................... 28,886 1,806 0 30,692 John W. Madigan.......................... 30,608 0 0 30,608 Scott C. Smith........................... 30,608 2,130 250,000 282,738
9 (4) Prior to November 1, 1993, Mr. Hiller served as Senior Vice President and General Counsel. (5) Until August 31, 1993. Beginning September 1, Mr. Smith served as President and Chief Executive Officer of Sun-Sentinel Company, a wholly-owned subsidiary. He is not considered an executive officer of the Company while serving in this capacity. The compensation amounts for 1993 reflect all compensation paid to Mr. Smith for the entire year for services in all capacities. - -------------------------------------------------------------------------------- OPTION GRANTS TABLE The following table presents information as to stock option awards during the year ended December 26, 1993. The three columns on the right project the amount that could be earned if the Common Stock price appreciates at the annual rates indicated and if the options are held until the expiration dates shown. There is no assurance that any particular level of potential realizable value will actually be earned. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION INDIVIDUAL GRANTS TERM ----------------------------------------------- ---------------------------------- % OF TOTAL NUMBER OF OPTIONS SECURITIES GRANTED TO UNDERLYING EMPLOYEES EXERCISE OPTIONS IN FISCAL PRICE NAME GRANTED(1) YEAR ($/SH) EXPIRATION DATE 0% 5% 10% - ------------------------ ---------- ---------- -------- --------------- --- ------------- ------------- Charles T. Brumback..... 50,000 5.62% $51.125 Aug. 27, 2003 $ 0 $ 1,624,902 $ 4,127,893 James C. Dowdle......... 25,000 2.81% 51.125 Aug. 27, 2003 0 812,451 2,063,946 16,228(2) 1.82% 54.375 Aug. 31, 2000 0 394,401 933,597 1,974(2) .22% 54.375 Mar. 20, 1995 0 11,700 24,041 Donald C. Grenesko...... 10,000 1.12% 51.125 Aug. 27, 2003 0 324,980 825,579 David D. Hiller......... 10,000 1.12% 51.125 Aug. 27, 2003 0 324,980 825,579 John W. Madigan......... 25,000 2.81% 51.125 Aug. 27, 2003 0 812,451 2,063,946 16,123(2) 1.81% 54.875 Aug. 31, 2000 0 395,624 936,562 3,729(2) .42% 54.875 Mar. 20, 1995 0 22,336 45,899 13,296(2) 1.50% 54.875 Mar. 16, 1996 0 119,761 252,213 Scott C. Smith.......... 12,000 1.35% 51.125 Aug. 27, 2003 0 389,976 990,694 All Common Stockholders. NA NA NA NA 0 2,154,236,315(3) 5,472,611,275(3)
- ------- (1) All options permit the optionee to pay for exercise with Common Stock owned for six months and to pay withholding tax with shares acquired on exercise. The Company had a policy to award replacement options to executives who exercise options in this manner at a time when the stock price is at least 25% above the option price. This policy was suspended on October 26, 1993 pending action to qualify future grants as "performance based" under Sec. 162(m) of the Internal Revenue Code. New options are generally exercisable two years after award and replacement options one year after award but immediately upon a change in control. Options granted less than six months prior to a change in control to an executive officer are cancelled in exchange for a cash payment, effected six months and one day after the option grant date, equal to the difference between the fair market value and the option price on the date of payment. (2) Replacement (reload) option awarded on exercise of a non-qualified option with payment made with previously owned Common Stock. The replacement option has a term equal to the remaining term on the option exercised and is conditioned on the individual retaining ownership of the shares acquired on exercise of the option giving rise to the replacement award. (3) Based on shares outstanding on July 27, 1993, the closing stock price of $51.125 on that date, and a 121 month period, all of which conform to the regular stock option awards made to executives on that date. 10 - -------------------------------------------------------------------------------- OPTION EXERCISES AND VALUES TABLE AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN- UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FY- SHARES OPTIONS AT FY-END(#) END(1) ACQUIRED ON VALUE ------------------------- ------------------------- NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ------------------------ ----------- -------- ----------- ------------- ----------- ------------- Charles T. Brumback..... 0 $ 0 282,149 100,000 $ 3,266,130 $1,356,250 James C. Dowdle......... 22,360 294,640 187,967 68,202 2,518,397 775,961 Donald C. Grenesko...... 7,800 238,050 64,200 18,000 808,100 234,250 David D. Hiller......... 0 0 45,000 15,000 660,250 178,750 John W. Madigan......... 40,474 523,188 214,387 83,148 2,853,140 839,722 Scott C. Smith.......... 34,500 554,588 68,047 22,000 1,133,403 288,500
- ------- (1) Based on a closing stock price of $59.75 per share on December 23, 1993, the last business day of the Company's fiscal year. - -------------------------------------------------------------------------------- PENSION PLAN INFORMATION Pension benefits payable to the named executive officers may be estimated using the following tables: Mr. Brumback
YEARS OF SERVICE -------- REMUNERATION 35 ------------ -------- $600,000 $313,800 700,000 366,700 800,000 419,500 900,000 472,300
Mr. Dowdle
YEARS OF SERVICE --------------------------------------------------------------------- REMUNERATION 10 15 18 ------------ ------- -------- -------- $400,000 $63,100 $ 94,600 $113,600 450,000 71,100 106,600 128,000 500,000 79,100 118,600 142,400 550,000 87,100 130,600 156,800
Mr. Grenesko
YEARS OF SERVICE ------------------------------------------------------------------- REMUNERATION 10 15 19 ------------ ------- ------- ------- $225,000 $30,900 $48,400 $62,500 275,000 38,000 59,500 76,700 325,000 45,000 70,600 91,000 375,000 52,100 81,600 105,300
Mr. Hiller
YEARS OF SERVICE ------------------------------------------------------------------- REMUNERATION 5 10 ------------ ------- ------- $225,000 $17,300 $34,900 275,000 21,300 42,800 325,000 25,200 50,800 375,000 29,200 58,700
Mr. Madigan
YEARS OF SERVICE ------------------------------------------------------------------ REMUNERATION 15 20 24 ------------ -------- -------- -------- $500,000 $ 90,600 $130,200 $161,800 550,000 99,800 143,400 178,200 600,000 109,000 156,600 194,600 650,000 118,200 169,800 211,000
Mr. Smith
YEARS OF SERVICE ----------------------------------------------------------- REMUNERATION 15 20 ------------ ------- ------- $225,000 $42,600 $60,100 275,000 52,400 73,900 325,000 62,100 87,700 375,000 71,900 101,400 425,000 81,700 151,200
The foregoing tables reflect an annual pension benefit, estimated on the assumption that the participant will commence receiving benefits when he reaches age 65 and that he will receive his pension in the form of a life annuity with no survivor benefits. The estimated annual pension benefits shown in the preceding tables include the estimated benefits payable under the unfunded supplemental retirement plan maintained by the Company. Benefits are based on final five year average salary (see "Salary" column in the Summary Compensation Table that appears on page 9) and years of credited service up to a maximum of 35 years. The pension benefits are not subject to any deduction for social security or other offset amounts. The plan will also be frozen at December 31, 1998 so that participants' service and compensation after that date will not be counted in computing benefits. Salary as of December 26, 1993 that constitutes covered compensation and years of credited service as of that date for each executive officer named were as follows:
YEARS OF SALARY CREDITED SERVICE -------- ---------------- Charles T. Brumback................................ $695,000 35 James C. Dowdle.................................... 450,000 13 Donald C. Grenesko................................. 238,000 14 David D. Hiller.................................... 300,000 5 John W. Madigan.................................... 530,000 19 Scott C. Smith..................................... 325,000 16
11 - -------------------------------------------------------------------------------- EMPLOYMENT AGREEMENTS The Company has an employment agreement with Mr. Brumback that provides for his employment until December 31, 1994 at a salary of not less than $730,000 per year. See "Termination Arrangements" for additional information relating to the agreement with Mr. Brumback. - -------------------------------------------------------------------------------- TERMINATION ARRANGEMENTS The Company has an agreement with Mr. Brumback that provides for payment of deferred compensation to Mr. Brumback following his retirement for a period of 10 years at the rate of $125,000 per year. If Mr. Brumback becomes disabled or dies during the term of his employment or during his 10 year deferred compensation period, he or his beneficiary is entitled to receive such sum for the remainder of the 10 year period. Thereafter, he is entitled to receive $60,000 per year for life. If Mr. Brumback's spouse, Mary H. Brumback, survives him, she is entitled to receive $60,000 per year for life beginning the later of January 1, 2005 or the date of his death. Under the agreement, Mr. Brumback agrees to provide such consulting services to the Company as may be requested by the Board of Directors following his retirement. The Company is to compensate Mr. Brumback at the rate of $250 per hour for such services. The Company maintains a Transitional Compensation Plan For Executive Employees which provides termination benefits to key executives of the Company and its subsidiaries who are actually or constructively terminated, without cause, within 36 months following a change in control of the Company. Participants may elect to terminate their employment during the thirteenth month following a change in control and qualify to receive the benefits under the plan. Benefits include (a) payment in cash equal to two years' salary and automobile allowance, plus an additional two months' salary for each year by which the executive's age exceeds 55 (provided he or she has at least 10 years of service), (b) outplacement services and (c) continuation of life, health and disability insurance. In addition, the plan provides that the Company will reimburse the executive for any additional income taxes which result from payments upon termination being treated as excess parachute payments under federal income tax law. Certain executive officers of the Company, including Messrs. Dowdle, Grenesko, Hiller, Madigan and Smith, are covered by the plan. All stock options granted by the Company become immediately vested and exercisable upon a change-in-control of the Company as defined in the 1992 Long- Term Incentive Plan or in grant agreements evidencing awards under the 1984 Long-Term Performance Plan. 12 PERFORMANCE GRAPH The following graph compares the five year cumulative return on the Common Stock to the Standard and Poor's 500 Stock Index and to the Standard and Poor's Newspaper Publishing Group Index. The Company is included in both of these indexes.
1988 1989 1990 1991 1992 1993 ------- ------- ------- ------- ------- ------- Tribune Company.......... $100.00 $124.05 $ 94.59 $112.57 $134.64 $171.60 S&P 500.................. 100.00 131.59 127.49 166.17 178.81 196.75 S&P Newspaper Publishing Group................... 100.00 118.86 95.28 115.37 129.08 149.51
Based on $100 invested on December 30, 1988 in Tribune Company Common Stock, the Standard and Poor's 500 Stock Index and the Standard and Poor's Newspaper Publishing Group Index. Total return assumes reinvestment of dividends quarterly. 2/24/8712/23/8812/29/8912/28/9012/27/9112/24/92 13 GOVERNANCE AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION OVERVIEW The compensation package paid to executive officers and other manage- ment personnel of Tribune Company consists of four elements: (1) sala- ry, (2) annual incentive bonus, (3) stock options, and (4) retirement and other benefits. The compensation package is de- signed to attract and retain top quality management employees. It re- flects competitive conditions in the lines of business in which the Com- pany is engaged and in the geographic areas where the services are to be performed. To the extent feasible, elements of compensation are designed to vary so as to reflect the perfor- mance of the Company. Through its compensation programs, the Company also seeks to provide an opportunity for employees and execu- tives to acquire and hold stock in the Company. Stock ownership is an effective way to align the interests of employees and shareholders. SALARIES Salary levels for executive officer positions are set so as to reflect the duties and level of responsibili- ties inherent in the position. Com- parative salaries paid by other com- panies in the industries and loca- tions where the Company does business are considered in establishing the salary level for a given position. The Committee does not, however, tar- get a specific percentile range within the comparative group in set- ting salaries of the Company's execu- tive officers. The particular quali- fications of the individual holding the position and his or her level of experience are also considered in es- tablishing a salary level when the individual is first appointed to a given position. Salary levels of executive officers are reviewed annually. The perfor- mance and contribution of the indi- vidual to the Company is the primary criterion influencing salary adjust- ments. Salary levels reflect the per- formance of the Company only to the extent that the performance of the Company is considered in establishing the salary guidelines applicable for all salaried employees during the current year. The Committee also re- views comparative surveys of salary information for comparable positions in connection with the annual salary review. The sources of the data used varies from executive to executive based on the availability of compara- ble information relative to each po- sition. In 1993, salaries of all ex- ecutive officers were reviewed early in the year and changes were made ef- fective as of the beginning of March. In a few cases, subsequent changes were made based on promotions and transfers. The salary paid to Charles T. Brum- back, Chairman and Chief Executive Officer of the Company, was increased by $27,000 to $695,000 effective as of March 1, 1993. This represented a 4.0 percent increase in Mr. Brumback's salary. The rate of in- crease was consistent with the Company's overall merit increase guidelines for salaried employees for 1993. ANNUAL INCENTIVE BONUS The Company maintains a plan that provides executive officers the op- portunity to earn an annual incentive bonus based on performance of the Company, performance of their indi- vidual business unit, if applicable, their contribution toward achievement of certain company-wide objectives and an evaluation of the executive's individual performance. A target bonus level, stated as a percent of year-end salary, is estab- lished for each executive officer based on his or her level of respon- sibility. Mr. Brumback's target bonus is 60 percent of year-end salary. Op- portunities are provided to earn up to 160 percent of target bonuses for outstanding performance, and thresh- old standards to earn certain por- tions of the target bonus are also established. Achievements against pre-estab- lished measures of financial perfor- mance account for 60 percent of the target bonus. The performance mea- sures are established by the Commit- tee in February and are based on the Company's operating plan that is ap- proved by the Board at the beginning of the year. In the case of Mr. Brum- back, the applicable 1993 performance measures were primary net income per share (40 percent of target bonus), return on equity (10 percent of tar- get bonus) and corporate office oper- ating expenses (10 percent of target bonus). The first measure was ex- ceeded and the other two measures were achieved. The 1993 performance measures applicable to other execu- tive officers named in the summary compensation table were primary net income per share, return on equity, corporate office operating expenses, Broadcasting Group pretax profit, TV broadcast rights expense, other Broadcasting Group operating ex- penses, TV broadcast rights cash pay- ments, Publishing Group pretax profit and Publishing Group operating ex- penses excluding newsprint. Seven of the performance measures were met or exceeded, one was partially achieved and one was not met. Another 20 percent of the target bonus may be awarded based on a sub- jective evaluation of each execu- tive's contribution toward achieve- ment of four company- wide objectives: business develop- ment, overall effective- 14 ness and efficiency, managing diversity and professional management. The final 20 percent of the target bonus is based on an evaluation of the individual's specific performance and achievements during the year. The Committee may award amounts up to 160 percent of the target for these two portions of the bonus. The Committee also retains the right to adjust the overall bonus to better reflect its evaluation of the Company's overall performance, but did not do so for 1993. In considering bonuses for executives other than Mr. Brumback, the Committee considers bonus recommendations submitted by the Chief Executive Officer. The Committee also receives an assessment of the performance of each executive from Mr. Brumback and discusses the assessments with him. In assessing the performance of Mr. Brumback, the Committee meets privately with the Company's other outside directors for that purpose. The Committee awarded Mr. Brumback a bonus of $485,000 for 1993 which is approximately 116 percent of the target bonus under the plan. The bonus earned reflects achievement of 112 percent of the target amount based on the financial performance factors. The Committee also considered the progress toward achievement of the company-wide objectives and awarded a bonus amount based on 127 percent of target. Finally, the portion of the bonus based on the outside director's evaluation of Mr. Brumback's individual performance and achievements in 1993 was set at 120 percent of the target amount. STOCK OPTIONS The Company for many years has used stock options as its long-term incentive program for executives. Stock options are used because they directly relate the amounts earned by the executives to the amount of appreciation realized by the Company's stockholders over comparable periods. Stock options also provide executives with the opportunity to acquire and build a meaningful ownership interest in the Company. While the Company encourages stock ownership by executives, it has not established any target levels for executive stock holdings. The Committee considers stock option awards on an annual basis. These are normally awarded in July. In determining the amount of options awarded, the Committee generally establishes a level of award based on the position held by the individual and his or her level of responsibility, both of which reflect the executive's ability to influence the Company's long-term performance. The number of options previously awarded to and held by executives are also reviewed but are not an important factor in determining the size of the current award. The number of options actually awarded in any year may be increased or decreased from the target level based on an evaluation of the individual's performance. In July, 1993 the Committee awarded Mr. Brumback a nonqualified stock option to purchase 50,000 shares at the current fair market value of the stock which was then $51.125. The 1993 award was for the same number of shares that had been awarded to Mr. Brumback in the previous year. The Company maintained a program of granting replacement options based on exercise of previously awarded stock options which were paid for with previously acquired Common Stock as an inducement for executives to exercise their stock options at an early date and to retain the shares acquired upon exercise. This program was suspended on October 26, 1993 pending clarification of the federal tax code provisions dealing with deductibility of executive compensation. BENEFIT PROGRAMS The executive officers participate in various health, life, disability and retirement benefit programs that are generally made available to all salaried employees. Certain programs such as the Savings Incentive Plan and the Employee Stock Purchase Plan provide employees with the opportunity to acquire Common Stock. In addition, the executive officers participate in the Employee Stock Ownership Plan on a consistent basis with other employees in 1993 except that the level of executive officer participation is limited based on salary limits imposed under federal tax laws. This program, which is intended to become the principal retirement plan for the Company, relates the amount of retirement benefits that will ultimately be received to the value of the Common Stock. Executive officers also receive certain traditional perquisites that are customary for their positions. TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION The 1993 federal tax code amendments impose a limit on the tax deduction for certain executive compensation payments beginning in 1994. The cash salary and bonus programs will not qualify for the exception to this limit for "performance based" compensation. However, only one executive of the Company currently receives cash compensation in excess of the $1 million limit. The Committee may require deferral of a portion of the bonus in such a case to a time following termination of employment when payment may be deductible by the Company. The Company is proposing that shareholders approve an amendment to the 1992 Long-Term Incentive Plan. If approved, compensation in the form of stock options and stock appreciation rights granted under the Plan should continue to be eligible for a full tax deduction. The Committee recommends approval of the amendment. Andrew J. McKenna, Chairman Kristie Miller James J. O'Connor Arnold R. Weber 15 OTHER MATTERS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Andrew J. McKenna, Kristie Miller, James J. O'Connor and Arnold R. Weber served as members of the Governance and Compensation Committee during the fiscal year ended December 26, 1993. Andrew J. McKenna, Chairman of the Governance and Compensation Commit- tee, served as an officer and part- time employee of Chicago National League Ball Club, Inc., a subsidiary of the Company, from August 1981 to December 1984. This was not Mr. McKenna's principal occupation or source of income during this period. Subsequent to 1984, Mr. McKenna's sole position with the Company has been that of an outside director. As of the date of this Proxy State- ment, the Board of Directors does not know if any matters will be presented to the meeting other than those de- scribed above. If other matters prop- erly come before the meeting, the persons named in the accompanying proxy will vote said proxy in accor- dance with their best judgment. Expenses incurred in connection with the solicitation of proxies will be paid by the Company. Following the initial solicitation of proxies by mail, directors, officers and regular employees of the Company may solicit proxies in person, by telephone or telegraph, but without extra compen- sation. In addition, the Company has retained Kissel-Blake, Inc. to assist in the solicitation of proxies at an estimated cost to the Company of $10,000 plus out of pocket expenses. Such solicitation may be made by mail, telephone, telegraph or in per- son. The Company will, upon request, reimburse the reasonable charges and expenses of brokerage houses or other nominees or fiduciaries for forward- ing proxy materials to, and obtaining authority to execute proxies from, beneficial owners for whose account they hold Common Stock. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 26, 1993 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS, WILL BE PROVIDED WITHOUT CHARGE TO ANY SHAREHOLDER SUBMITTING A RE- QUEST THEREFOR TO THE DIRECTOR/ COMMUNICATIONS, TRIBUNE COMPANY, 6TH FLOOR, 435 NORTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60611, TELEPHONE 312/222-3238. By Order of the Board of Directors Stanley J. Gradowski Vice President and Secretary Dated: March 21, 1994 16 [MAP OF TRIBUNE ANNUAL MEETING LOCATION] GRAPHICS APPENDIX 1. Page 13 of the Proxy Statement contains a graph comparing the cumulative shareholder return on the Common Stock of the Company for the last five years with the cumulative total return on the S&P 500 Index and the S&P Publishing/Newspapers Index. 2. Page 4 of the Proxy Statement contains photographs of each of the five nominees for election as directors at the Company's 1994 Annual Meeting of Stockholders, and page 5 contains photographs of each of the other eight directors of the Company. 3. The inside back cover of the Proxy Statement contains a map showing the location where the 1994 Annual Meeting is being held. [TRIBUNE LOGO] PLEASE RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE [ART LOGO] - ------------------------------------------------------------------------------- 3074 ---- [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. - -------------------------------------------------------------------------------- 1. Election of directors. FOR* [_] NOT FOR [_] *For, except vote withheld from the following nominee(s): 2. Approval of plan amendment. FOR [_] AGAINST [_] ABSTAIN [_] 3. Ratification of auditors. FOR [_] AGAINST [_] ABSTAIN [_] 4. With discretionary power in the transaction of such other business as may properly come before the meeting. - -------------------------------------------------------------------------------- [_] Please check this box if you plan to attend the Annual Meeting. Note: Please sign exactly as name appears above. Joint owners should each sign. When signing as at- torney, executor, adminis- trator, trustee or guard- ian etc., please give full title. --------------------------- --------------------------- SIGNATURE(S) DATE TRIBUNE COMPANY PROXY CARD - -------------------------------------------------------------------------------- PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 19, 1994 Charles T. Brumback and Stanton R. Cook, or either of them, are designated as proxies to vote all the shares of Common Stock of Tribune Company which the undersigned may be entitled to vote at the Annual Meeting of Stockholders to be held on April 19, 1994, or at any adjournment thereof, as specified on the reverse side of this card with respect to: 1. the election of directors--the nominees are James C. Dowdle, Diego E. Hernandez, Robert E. LaBlanc, John W. Madigan, and Andrew J. McKenna (to withhold authority to vote for any individual nominee, write his name in the space provided on the reverse side of this card); 2. approval of an amendment to the 1992 Long-Term Incentive Plan; 3. ratification of the selection of Price Waterhouse as auditors; and 4. with discretionary power in the transaction of such other business as may properly come before the meeting. Enter your vote by marking the appropriate boxes on the reverse side. The Company's directors recommend a vote FOR the election of the nominees listed and FOR proposals 2 and 3. The proxies shall vote as specified, but if no choice is specified the proxies shall vote in accordance with the recommendations of the Company's directors. [TRIBUNE LOGO] Dear Benefit Plan Participant: You own Tribune Company stock as a participant in the Employee Stock Ownership Plan, Savings Incentive Plan and/or Employee Stock Purchase Plan. One of the privileges of stock ownership is the right to vote on certain matters at the annual meeting. This year they involve the election of directors, an amendment to the 1992 Long-Term Incentive Plan and the appointment of auditors. These matters are described in detail in the notice of annual meeting and proxy statement that is a part of this mailing. You may indicate your vote by completing the perforated voting instruction card that appears directly below. Employee involvement is one of Tribune's core values, so I encourage you to participate in this important process. Please carefully consider the issues and use your voting rights by marking, signing and dating the instruction card, and returning it to First Chicago Trust Company in the enclosed envelope. YOUR VOTE IS CONFIDENTIAL AND WILL ONLY BE SEEN BY FIRST CHICAGO TRUST AS TABULATING AGENT FOR THE PLAN TRUSTEE AND ADMINISTRATOR. Sincerely, /s/ Charles T. Brumback - -------------------------------------------------------------------------------- 5745 ---- [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. - -------------------------------------------------------------------------------- 1. Election of directors. FOR* [_] NOT FOR [_] *For, except vote withheld from the following nominee(s): 2. Approval of plan amendment. FOR [_] AGAINST [_] ABSTAIN [_] 3. Ratification of auditors. FOR [_] AGAINST [_] ABSTAIN [_] 4. With discretionary power in the transaction of such other business as may properly come before the meeting. - -------------------------------------------------------------------------------- [_] Please check this box if you plan to attend the Annual Meeting. Note: Please sign exactly as name appears above. Joint owners should each sign. When signing as at- torney, executor, adminis- trator, trustee or guard- ian etc., please give full title. ------------------------------ ------------------------------ SIGNATURE(S) DATE TRIBUNE COMPANY VOTING INSTRUCTION CARD - -------------------------------------------------------------------------------- FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 19, 1994 The Northern Trust Company, as Trustee for the Tribune Company Employee Stock Ownership Plan and the Tribune Company Savings Incentive Plan, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as nominee under the Tribune Company Employee Stock Purchase Plan, are instructed to vote the Tribune Company Common Stock and Preferred Stock allocated and held in my respective plan accounts at the Annual Meeting of Stockholders of the Company to be held on April 19, 1994, or at any adjournment thereof, as specified on the reverse side of this card with respect to: 1. the election of directors--the nominees are James C. Dowdle, Diego E. Hernandez, Robert E. LaBlanc, John W. Madigan, and Andrew J. McKenna (to withhold authority to vote for any individual nominee, write his name in the space provided on the reverse side of this card); 2. approval of an amendment to the 1992 Long-Term Incentive Plan; 3. ratification of the selection of Price Waterhouse as auditors; and 4. with discretionary power in the transaction of such other business as may properly come before the meeting. Enter your voting instructions on the reverse side. The Company's directors recommend a vote FOR the election of the nominees listed and FOR proposals 2 and 3. The trustee and nominee shall vote as specified, but if you return this card and no choice is specified you will be deemed to have instructed the trustee and nominee to vote in accordance with the recommendations of the Company's directors. EX-99 2 1992 L-T INCENTIVE PLAN TRIBUNE COMPANY --------------- 1992 LONG-TERM INCENTIVE PLAN (As Amended and In Effect on 4-19-94) ------------------ ARTICLE I Purpose The purpose of the 1992 Long-Term Incentive Plan (this "Plan") is to enable Tribune Company (the "Company") to offer key management employees of the Company and Subsidiaries (defined below) performance-based stock incentives and other equity interests in the Company and other incentive awards, thereby attracting, retaining and rewarding such employees, and strengthening the mutuality of interests between the employees and the Company's stockholders. ARTICLE II Definitions For purposes of this Plan, the following terms shall have the following meanings: 2.1 "Award" shall mean any form of Stock Option, Stock Appreciation Right, Stock Award, Performance Shares, Performance Units or Other Stock-Based Award granted under this Plan, whether singly, in combination, or in tandem, to a Participant by the Committee pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee may establish by the Award Notice or otherwise. 2.2 "Award Notice" shall mean a written notice from the Company to a Participant that establishes the terms, conditions, restrictions, and/or limitations applicable to an Award. 2.3 "Beneficiary" shall mean a person or persons designated by a Participant to succeed to, in the event of death, any outstanding Award held by the Participant. Any Participant may, subject to such limitations as may be prescribed by the Committee, designate one or more persons primarily or contingently as beneficiaries in writing by notice delivered to the Company, and may revoke such designations in writing. If a Participant fails effectively to designate a beneficiary, then the Participant's estate shall be the Participant's beneficiary. 2.4 "Board" shall mean the Board of Directors of the Company. 2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor legislation. 2.6 "Committee" shall mean the Governance and Compensation Committee or such other committee of the Board appointed from time to time by the Board consisting of two or more Directors, none of whom can participate in this Plan. Members of the Committee must qualify as disinterested persons within the meaning of Securities and Exchange Commission Regulation [S] 240.16b-3 or any successor regulation. 2.7 "Common Stock" shall mean the common stock (without par value) of the Company. 2.8 "Disability" shall mean a disability qualifying the Participant to receive benefits under the Company's or a Subsidiary's long-term disability plan. Disability shall be deemed to occur on the date eligibility for such benefit payments begins. 2.9 "Fair Market Value" unless otherwise required by any applicable provision of the Code or any regulations issued thereunder shall mean, as of any date, the closing price of the applicable security as reported on the New York Stock Exchange Composite Transactions list (or such other consolidated transaction reporting system on which the applicable security is primarily traded) for such day, or if the applicable security was not traded on such day, then the next preceding day on which the security was traded, all as reported by such source as the Committee may select. If the applicable security is not readily tradeable on a national securities exchange or other market system, its Fair Market Value shall be set under procedures established by the Committee on the advice of an investment advisor. 2.10 "Incentive Stock Option" shall mean any Stock Option awarded under Article VI of this Plan intended to be and designated as an "Incentive Stock Option" within the meaning of Section 422 of the Code or any successor provision. 2.11 "Non-Qualified Stock Option" shall mean any Stock Option awarded under Article VI of this Plan that is not an Incentive Stock Option. 2.12 "Officer" shall mean an employee of the Company or a Subsidiary who is considered to be an officer under Securities and Exchange Commission Regulation [S] 240.16a-1(f) or any successor regulation. 2.13 "Participant" shall mean an Eligible Employee (as defined in Section 5.1) to whom an Award has been made pursuant to this Plan. 2.14 "Replacement Option" shall mean a Non-Qualified Stock Option granted pursuant to Section 6.3, upon the exercise of a Stock Option granted pursuant to this Plan or the Company's 1984 Long-Term Performance Plan (the "1984 Plan") where the option price is paid with previously owned shares of Common Stock. 2.15 "Retirement" shall mean any termination of employment by an employee (other than by death or Disability) who is at least 55 years of age after at least 10 years of employment by the Company and/or a Subsidiary. 2.16 "Stock Option" or "Option" shall mean any right to purchase shares of Common Stock (including a Replacement Option) granted pursuant to Article VI of this Plan. 2.17 "Subsidiary" shall mean any corporation (or partnership, joint venture, or other enterprise) (i) of which the Company owns or controls, directly or indirectly, 50.1% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power) or (ii) which the Company otherwise controls (by contract or any other means). "Control" means the power to direct or cause the direction of the management and policies of a corporation, partnership, joint venture, or other enterprise. 2.18 "Termination of Employment" shall mean the termination of a Participant's employment with the Company and any Subsidiary. A Participant employed by a Subsidiary shall also be deemed to incur a Termination of Employment if the Subsidiary ceases to be a Subsidiary and the Participant does not immediately thereafter become an employee of the Company or another Subsidiary. 2.19 "Transfer" shall mean anticipation, alienation, attachment, sale, assignment, pledge, encumbrance, charge or other disposition; and the terms "Transferred" or "Transferable" shall have corresponding meanings. -2- ARTICLE III Administration 3.1 The Committee. This Plan shall be administered and interpreted by the Committee. 3.2 Awards. The Committee shall have full authority to grant, pursuant to the terms of this Plan, to Eligible Employees: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Stock Awards, (iv) Performance Shares, (v) Performance Units, and (vi) Other Stock-Based Awards. In particular, and without limitation, the Committee shall have the authority: (a) to select the Eligible Employees to whom Awards may from time to time be granted hereunder; (b) to determine the types of Awards, and combinations thereof, to be granted hereunder to Eligible Employees and whether such Awards are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of this Plan; (c) to determine the number of shares of Common Stock or monetary units to be covered by each such Award granted hereunder; (d) to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder (including, but not limited to, any restriction or limitation on transfer, any vesting schedule or acceleration thereof, or any forfeiture provisions or waiver thereof, regarding any Award and the shares of Common Stock relating thereto, based on such factors as the Committee shall determine, in its sole discretion); (e) to determine whether Stock and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant; and (f) to modify or waive any restrictions or limitations contained in, and grant extensions to or accelerate the vestings of, any outstanding Awards as long as such modifications, waivers, extensions or accelerations are consistent with the terms of this Plan; but no such changes shall impair the rights of any Participant without his or her consent. 3.3 Guidelines. The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan and perform all acts, including the delegation of its administrative responsibilities, as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of this Plan and any Award issued under this Plan (and any Award Notices or agreements relating thereto); and to otherwise supervise the administration of this Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in this Plan or in any Award Notices or agreement relating thereto in the manner and to the extent it shall deem necessary to carry this Plan into effect. 3.4 Decisions Final. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board, or the Committee (or any of its members) arising out of or in connection with this Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective Beneficiaries, heirs, executors, administrators, successors and assigns. -3- ARTICLE IV Shares Available 4.1 Shares. For each fiscal year of the Company from and including the year ending December 27, 1992, the number of shares of Common Stock available for Awards under this Plan shall be the sum of the following amounts: (a) For Awards generally: a number of shares equal to (i) nine-tenths of one percent (0.9%) of the adjusted average Common Stock outstanding used by the Company to calculate fully diluted earnings per share for the preceding year, plus (ii) any shares of Common Stock available for Awards under this subsection in previous years but not actually awarded, plus (iii) any shares of Common Stock subject to an Award hereunder (other than Replacement Options) if there is a lapse, forfeiture, expiration or termination of any such Award; (b) For Replacement Options: a number of shares equal to (i) four-tenths of one percent (0.4%) of the adjusted average Common Stock outstanding used by the Company to calculate fully diluted earnings per share for the preceding year, plus (ii) any shares of Common Stock which as of the effective date of this Plan are authorized for awards under the 1984 Plan and which have not been awarded, plus (iii) any shares of Common Stock available for Awards under this subsection in previous years but not actually awarded, plus (iv) any shares of Common Stock subject to an Award hereunder of Replacement Options granted to persons who are Officers if there is a lapse, forfeiture, expiration or termination of any such Award; and (c) For Replacement Options for Non-Officers: the number of shares of Common Stock (i) exchanged by a Participant as full or partial payment to the Company of the exercise price, or withheld to pay taxes in connection with the exercise of, a Stock Option awarded under this Plan or the 1984 Plan, plus (ii) any shares of Common Stock available for Awards under this subsection in previous years but not actually awarded, plus (iii) any shares of Common Stock subject to an Award of a Replacement Option granted to a person who is not an Officer if there is a lapse, forfeiture, expiration or termination of any such Award. The shares authorized under subsection (a) above shall be available for any Awards made under this Plan; the shares authorized under subsection (b) above shall be available only for Awards of Replacement Options; and the shares authorized under subsection (c) above shall be available only for Awards of Replacement Options to persons who are not Officers on the date of the Award. Any shares of Common Stock delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued shares or treasury shares. No more than three million (3,000,000) shares of Common Stock shall be cumulatively available for issuance under this Plan for Awards made pursuant to Articles VIII and XI. Notwithstanding any provision in this Plan to the contrary, but subject to the adjustment provisions of Section 4.4 hereof, the maximum number of shares of Common Stock available for Awards under this Plan to any Participant in any fiscal year of the Company shall not exceed 500,000 shares. 4.2 Use of Authorized Shares. The shares covered by any Award made under this Plan shall be charged against the applicable pool of shares authorized by Section 4.1 by first charging them, to the extent permitted in the next to last paragraph of Section 4.1, against any shares available under Subsection 4.1(c), next against any shares available under Subsection 4.1(b), and last against any shares available under Subsection 4.1(a). -4- For purposes of this Article IV, if an Award is denominated in shares of Common Stock, the number of shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of shares available for granting Awards under this Plan; provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or are substituted for, other Awards granted under the 1984 Plan or this Plan may be counted or not counted under procedures adopted by the Committee in order to avoid double counting. 4.3 Compliance with Rule 16b-3. To the extent that the provisions above on the number of shares of Common Stock that can be issued under this Plan do not conform with Securities and Exchange Commission Regulation [S] 240.16b-3, the Committee may make such modification in the determination of share usage and issuance so as to conform this Plan and any Awards granted hereunder to the Rule's requirements. 4.4 Adjustment Provisions. (a) If the Company shall at any time change the number of issued shares of Common Stock without new consideration to the Company (such as by stock dividend, stock split, recapitalization, reorganization, exchange of shares, liquidation, combination or other change in corporate structure affecting the Common Stock) or make a distribution of cash or property which has a substantial impact on the value of issued Common Stock, the total number of shares available for Awards under this Plan shall be appropriately adjusted and the number of shares covered by each outstanding Award and the reference price or Fair Market Value for each outstanding Award shall be adjusted so that the net value of such Award shall not be changed. (b) In the case of any sale of assets, merger, consolidation, combination or other corporate reorganization or restructuring of the Company with or into another corporation which results in the outstanding Common Stock being converted into or exchanged for different securities, cash or other property, or any combination thereof (an "Acquisition"), subject to the provisions of this Plan and any limitation applicable to the Award: (i) any Participant to whom an Option has been granted shall have the right thereafter and during the term of the Option, to receive upon exercise thereof the Acquisition Consideration (as defined below) receivable upon the Acquisition by a holder of the number of shares of Common Stock which might have been obtained upon exercise of the Option or portion thereof, as the case may be, immediately prior to the Acquisition; (ii) any Participant to whom a Stock Appreciation Right has been granted shall have the right thereafter and during the term of such right to receive upon exercise thereof the difference on the exercise date between the aggregate Fair Market Value of the Acquisition Consideration receivable upon such acquisition by a holder of the number of shares of Common Stock which are covered by such right and the aggregate reference price of such right; (iii) any Participant to whom Performance Shares or Performance Units have been awarded shall have the right thereafter and during the term of the Award, upon fulfillment of the terms of the Award, to receive on the date or dates set forth in the Award, the Acquisition Consideration receivable upon the Acquisition by a holder of the number of shares of Common Stock which are covered by the Award; and (iv) any Participant to whom Other Stock-Based Awards have been awarded shall have the right thereafter and during the term of the Award to substitute the Acquisition Consideration for the Common Stock upon which the Award is valued or in which the Award is payable. -5- The term "Acquisition Consideration" shall mean the kind and amount of securities, cash or other property or any combination thereof receivable in respect of one share of Common Stock upon consummation of an Acquisition. (c) Notwithstanding any other provision of this Plan, the Committee may authorize the issuance, continuation or assumption of Awards or provide for other equitable adjustments after changes in the Common Stock resulting from any other merger, consolidation, sale of assets, acquisition of property or stock, recapitalization, reorganization or similar occurrence upon such terms and conditions as it may deem equitable and appropriate. (d) In the event that another corporation or business entity is being acquired by the Company, and the Company assumes outstanding employee stock options and/or stock appreciation rights and/or the obligation to make future grants of options or rights to employees of the acquired entity, the aggregate number of shares of Common Stock available for Awards under this Plan shall be increased accordingly. 4.5 Purchase Price. Notwithstanding any provision of this Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued for purchase under this Plan, such shares shall be issued for a consideration which shall not be less than $1 per share. ARTICLE V Eligibility 5.1 Officers and key management employees of the Company and its Subsidiaries ("Eligible Employees") are eligible to be granted Awards under this Plan. Directors who are not full-time employees of the Company or a Subsidiary shall not be eligible to be granted Awards under this Plan. Eligibility under this Plan shall be determined by the Committee. ARTICLE VI Stock Options 6.1 Grants. Stock Options may be granted alone or in addition to other Awards granted under this Plan. Each Stock Option granted under this Plan shall be of one of two types: (i) an Incentive Stock Option or (ii) a Non-Qualified Stock Option. The Committee shall have the authority to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in each case with or without Stock Appreciation Rights). 6.2 Incentive Stock Options. Anything in this Plan to the contrary notwithstanding, no term of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under this Plan be so exercised, so as to disqualify this Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under Section 422 of the Code. No Incentive Stock Options may be awarded after the tenth anniversary of the date this Plan is adopted by the Board, and no more than three million (3,000,000) shares of Common Stock shall be cumulatively available under this Plan for issuance upon exercise of Incentive Stock Options. 6.3 Replacement Options. The Committee may provide either at the time of grant or subsequently that an Option include the right to acquire a Replacement Option upon exercise of such Option (in whole or in part) prior to termination of employment of the Participant and through payment of the exercise price in shares of Common Stock. In addition to any other terms and conditions the Committee deems appropriate, the Replacement Option -6- shall be subject to the following terms: (i) the number of shares of Common Stock subject to the Replacement Option shall not exceed the number of whole shares used to satisfy the exercise price of the original Option and the number of whole shares, if any, withheld by the Company as payment for withholding taxes in accordance with Section 14.4 hereof, (ii) the option grant date will be the date of the exercise of the original Option, (iii) the exercise price per share shall be the Fair Market Value on the option grant date, (iv) the Replacement Option shall be exercisable no earlier than twelve (12) months after the option grant date, (v) the Option term will not extend beyond the term of the original Option, and (vi) the Replacement Option shall be a Non-Qualified Stock Option and shall otherwise meet all conditions of this Article VI. A Replacement Option may also be granted with respect to any option granted under the 1984 Plan. The Committee may without the consent of the Participant rescind the right to receive a Replacement Option grant at any time prior to an Option being exercised. 6.4 Terms of Options. Options granted under this Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem desirable: (a) Exercise Price. The exercise price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant but shall be not less than 100% of the Fair Market Value of the Common Stock at the option grant date. In lieu of a fixed exercise price, the Committee may establish an exercise price that increases automatically on the anniversary of the Option grant date or that adjusts periodically based on the relative performance of the Company or its stock price as compared with the performance or stock prices of a group of comparable companies selected by the Committee for comparison purposes at the time of the Option grant date. (b) Option Term. The term of each Stock Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable more than ten (10) years after the date the Option is granted, and no Non-Qualified Stock Option shall be exercisable more than eleven (11) years after the date the Option is granted. (c) Exercisability. Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant; provided, however, that, unless otherwise determined by the Committee at grant, no Stock Option shall be exercisable prior to six months after the option grant date. (d) Method of Exercise. Stock Options may be exercised in whole or in part at any time during the option term, by giving written notice of exercise to the Company specifying the number of shares to be purchased. Such notice shall be accompanied by payment in full of the exercise price in such form as the Committee may accept. If and to the extent determined by the Committee at or after grant, payment in full or in part may also be made in the form of Common Stock owned by the Participant for at least six months prior to exercise (or by certification of such ownership) or by reduction in the number of shares issuable upon such exercise based, in each case, on the Fair Market Value of the Common Stock on the payment date . In the discretion of the Committee, payment may also be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. (e) Non-Transferability of Options. No Stock Option shall be Transferable by the Participant otherwise than by a qualified domestic relations order as defined in the Code (but only with respect to Non- -7- Qualified Stock Options) or by will or the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participant's lifetime, only by the Participant or his or her guardian, conservator or other legal representative. (f) Termination of Employment by Death, Disability or Retirement. If a Participant's employment by the Company or a Subsidiary terminates by reason of death, Disability or Retirement, any Stock Option held by such Participant, unless otherwise determined by the Committee at or after grant, shall be fully vested and may thereafter be exercised by the Participant or by the Beneficiary or legal representative of the estate of a disabled or deceased Participant, for a period of five years (or such shorter period as the Committee may specify at grant) from the date of such death, Disability or Retirement or until the expiration of the stated term of such Stock Option, whichever period is the shorter. (g) Other Termination of Employment. Unless otherwise determined by the Committee at or after grant, if a Participant's employment by the Company or a Subsidiary terminates for any reason other than death, Disability or Retirement, the Stock Option shall terminate at such time as provided in the Award, but in no event more than one year after termination. (h) Buyout and Settlement Provisions. The Committee may at any time offer to buy out an Option previously granted, based on such terms and conditions as the Committee shall establish and communicate to the Participant at the time that such offer is made. ARTICLE VII Stock Appreciation Rights 7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option (a "Reference Stock Option") granted under this Plan ("Tandem Stock Appreciation Rights"). In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the option grant date of such Reference Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the option grant date of such Reference Stock Option. Tandem Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of this Plan, as shall be determined from time to time by the Committee, including the following: (a) Term. A Tandem Stock Appreciation Right granted with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option. (b) Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Reference Stock Options to which they relate shall be exercisable. (c) Method of Exercise. A Tandem Stock Appreciation Right may be exercised by an optionee by surrendering the applicable portion of the Reference Stock Option. (d) Payment. Upon the exercise of a Tandem Stock Appreciation Right a Participant shall be entitled to receive an amount in cash and/or shares of Common Stock equal in value to the excess of the Fair Market Value of one share of Common Stock over the exercise price per share specified in the Reference Stock Option multiplied by the number of shares in respect of which the Tandem Stock -8- Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment. (e) Non-Transferability and Termination. Tandem Stock Appreciation Rights shall be Transferable only to the extent provided in Subsection 6.4(e) of this Plan and shall terminate in accordance with Subsections 6.4(f) or (g) of this Plan. 7.2 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may also be granted without reference to any Stock Options granted under this Plan. Non-Tandem Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of this Plan, as shall be determined from time to time by the Committee, including the following: (a) Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the Committee, but shall not be greater than eleven (11) years after the date the right is granted. (b) Exercisability. Non-Tandem Stock Appreciation Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at or after grant. (c) Method of Exercise. A Non-Tandem Stock Appreciation Right may be exercised in whole or in part at any time during its term, by giving written notice of exercise to the Company specifying the number of rights to be exercised. (d) Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, an amount in cash and/or shares of Common Stock equal in value to the excess of the Fair Market Value of one share of Common Stock on the date the Right is exercised over the Fair Market Value of one share of Common Stock on the date the Right was awarded to the Participant, with the Committee having the right to determine the form of payment. (e) Non-Transferability and Termination. Non-Tandem Stock Appreciation Rights shall be Transferable only to the extent provided in Subsection 6.4(e) of this Plan and shall terminate in accordance with Subsections 6.4(f) or (g) of this Plan. ARTICLE VIII Stock Awards 8.1 Grants. Restricted or unrestricted shares of Common Stock may be granted either alone or in addition to other Awards granted under this Plan. The Committee may grant Awards of Common Stock subject to the attainment of specified performance goals, continued employment and such other limitations or restrictions as the Committee may determine. 8.2 Awards and Certificates. Stock Awards shall be subject to the following provisions: (a) Stock Powers and Custody. The Committee may require the Participant to deliver a duly signed stock power, endorsed in blank, relating to the Common Stock covered by such an Award. The Committee may also require that the stock certificates evidencing such shares be held in custody by the Company until any restrictions thereon shall have lapsed. -9- (b) Rights as Stockholder. The Participant shall have, with respect to the shares of Common Stock, all of the rights of a holder of shares of Common Stock of the Company including the right to receive any dividends and to vote the Common Stock. ARTICLE IX Performance Shares 9.1 Award of Performance Shares. Performance Shares may be awarded either alone or in addition to other Awards granted under this Plan and shall consist of the right to receive Common Stock or cash of an equivalent value at the end of a specified Performance Period (defined below). The Committee shall determine the Eligible Employees to whom and the time or times at which Performance Shares shall be awarded, the number of Performance Shares to be awarded to any person, the duration of the period (the "Performance Period") during which, and the conditions under which, receipt of the Shares will be deferred, and the other terms and conditions of the Award in addition to those set forth in Section 9.2. The Committee may condition the grant of Performance Shares upon the attainment of specified performance goals or such other factors or criteria as the Committee shall determine. 9.2 Terms and Conditions. Performance Shares awarded pursuant to this Article IX shall be subject to the following terms and conditions: (a) Non-Transferability. Performance Share Awards shall be Transferable only in accordance with the provisions of Section 6.4(e) of this Plan. (b) Dividends. Unless otherwise determined by the Committee at the time of the grant of the Award, amounts equal to any dividends declared during the Performance Period with respect to the number of shares of Common Stock covered by a Performance Share Award will not be paid to the Participant. (c) Payment. Subject to the provisions of the Award Notice and this Plan, at the expiration of the Performance Period, share certificates and/or cash of an equivalent value (as the Committee may determine) shall be delivered to the Participant, or his or her legal representative, in a number equal to the vested shares covered by the Performance Share Award. (d) Termination of Employment. Subject to the applicable provisions of the Award Notice and this Plan, upon termination of a Participant's employment with the Company or a Subsidiary for any reason during the Performance Period for a given Award, the Performance Shares in question will vest or be forfeited in accordance with the terms and conditions established by the Committee. ARTICLE X Performance Units 10.1 Award of Performance Units. Performance Units may be awarded either alone or in addition to other Awards granted under this Plan and shall consist of the right to receive a fixed dollar amount, payable in cash or Common Stock or a combination of both. The Committee shall determine the Eligible Employees to whom and the time or times at which Performance Units shall be awarded, the number of Performance Units to be awarded to any person, the duration of the period (the "Performance Cycle") during which, and the conditions under which, a Participant's right -10- to Performance Units will be vested, the ability of Participants to defer the receipt of payment of such Units, and the other terms and conditions of the Award in addition to those set forth in Section 10.2. The Committee may condition the vesting of Performance Units upon the attainment of specified performance goals or such other factors or criteria as the Committee shall determine. 10.2. Terms and Conditions. The Performance Units awarded pursuant to this Article X shall be subject to the following terms and conditions: (a) Non-Transferability. Performance Unit Awards shall be Transferable only in accordance with the provision of Section 6.4(e) of this Plan. (b) Vesting. At the expiration of the Performance Cycle, the Committee shall determine the extent to which the performance goals have been achieved, and the percentage of the Performance Units of each Participant that have vested. (c) Payment. Subject to the applicable provisions of the Award Notice and this Plan, at the expiration of the Performance Cycle, cash and/or share certificates of an equivalent value (as the Committee may determine) shall be delivered to the Participant, or his or her legal representative, in payment of the vested Performance Units covered by the Performance Unit Award. (d) Termination of Employment. Subject to the applicable provisions of the Award Notice and this Plan, upon termination of a Participant's employment with the Company or a Subsidiary for any reason during the Performance Cycle for a given Award, the Performance Units in question will vest or be forfeited in accordance with the terms and conditions established by the Committee. ARTICLE XI Other Stock-Based Awards 11.1 Other Awards. Other Awards of Common Stock and cash Awards that are valued in whole or in part by reference to, or are payable in or otherwise based on, Common Stock ("Other Stock-Based Awards") including, without limitation, Awards valued by reference to performance concepts may be granted either alone or in addition to or in tandem with Stock Options, Stock Appreciation Rights, Stock Awards, Performance Shares or Performance Units. Subject to the provisions of this Plan, the Committee shall have authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions of the Awards. 11.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this Article XI shall be subject to the following terms and conditions: (a) Non-Transferability. Other Stock-Based Awards shall be Transferable only in accordance with the provisions of Section 6.4(e) of this Plan. (b) Dividends. Unless otherwise determined by the Committee at the time of the grant of the Award, amounts equal to any dividends declared during the Performance Period with respect to the number of shares of Common Stock covered by such Award will not be paid to the Participant. -11- (c) Vesting. Any Award under this Article XI and any Common Stock covered by any such Award shall vest or be forfeited to the extent so provided in the Award Notice, as determined by the Committee. (d) Price. Common Stock issued on a bonus basis under this Article XI may be issued for no cash consideration; Common Stock purchased pursuant to a purchase right awarded under this Article XI shall be priced as determined by the Committee subject to the provisions of Section 4.5. ARTICLE XII Change in Control Provisions 12.1 Benefits. In the event of a Change in Control of the Company (as defined below), and except as otherwise provided by the Committee upon the grant of an Award: (a) All outstanding Stock Options granted prior to the Change in Control shall be fully vested and immediately exercisable in their entirety. The Committee may provide for the purchase of any such Stock Options by the Company or Subsidiary for an amount of cash equal to the excess of the Change in Control price (as defined below) of the shares of Common Stock covered by such Stock Options, over the aggregate exercise price of such Stock Options. (b) All outstanding Stock Appreciation Rights granted prior to the Change in Control shall be fully vested and immediately exercisable in their entirety. The Fair Market Value of the Common Stock on the date of exercise shall be determined by the Committee and may be the Change in Control price of the shares of Common Stock covered by such rights. (c) All outstanding Stock Awards granted prior to the Change in Control shall be fully vested and certificates shall be immediately delivered to the Participants. (d) All Performance Share and Performance Unit Awards granted prior to the Change in Control shall vest as if (i) the applicable Performance Period had ended upon such Change in Control, and (ii) the determination of the extent to which any specified performance goals or targets had been achieved will be made at such time. (e) Any Other Stock-Based Awards granted prior to the Change in Control shall be fully vested and payable, deliverable or exercisable, as applicable, in accordance with the terms of the Award at the time of its grant. For purposes of this Section 12.1, Change in Control price shall mean the higher of (i) the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company, or (ii) the highest Fair Market Value per share of Common Stock at any time during the 60-day period preceding a Change in Control. Notwithstanding any other provision hereof, if a Change in Control occurs within six months of the date of grant of an Award to an Officer, such an Award shall be cancelled in exchange for a cash payment to the Officer, effected on the day which is six months and one day after the date of grant of such Award (the "valuation date"), equal to the difference between the Fair Market Value of the Award on the valuation date and the exercise price (if any) of the Award. -12- Any determination by the Committee made pursuant to this Section 12.1 may be made as to all outstanding Awards, and any such determination may be made prior to or after a Change in Control. 12.2 Change in Control. For the purposes of this Plan, a "Change in Control" of the Company shall mean: (a) The acquisition, other than from the Company, by any person, entity or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")), excluding for this purpose the Company, the Robert R. McCormick Tribune Foundation, the Cantigny Foundation and any employee benefit plan (or related trust) sponsored or maintained by the Company or its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors; or (b) Individuals who, as of April 28, 1992, constitute the Board of Directors of the Company (as of April 28, 1992 the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election, by the stockholders of the Company was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the members of the Board, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be considered as though such person were a member of the Incumbent Board; or (c) Approval by the stockholders of the Company of a reorganization, merger, or consolidation, in each case, with respect to which persons who were the stockholders of the Company immediately prior to such approval do not, immediately after such reorganization, merger or consolidation, own, directly or indirectly, more than 60% of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the reorganized, merged or consolidated company, or a liquidation or dissolution of the Company, or the sale of all or substantially all of the assets of the Company. 12.3 Taxes. If, for any reason, any part or all of the amounts payable to a Participant pursuant to this Plan (or otherwise, if such amounts are paid by the Company or any of its subsidiaries after there has been a Change in Control) are deemed to be "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code, the Committee may provide in the Award that the Company shall pay to such Participant, in addition to any other amounts that he or she may be entitled to receive pursuant to this Plan, an amount which, after all Federal, state, and local taxes (of whatever kind) imposed on the Participant with respect to such amount are subtracted therefrom, is equal to the excise taxes imposed on such excess parachute payments pursuant to Section 4999 of the Code. ARTICLE XIII Termination or Amendment of this Plan 13.1 Termination or Amendment. Notwithstanding any other provision of this Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of this Plan, or suspend or terminate it entirely; provided, however, that, unless otherwise required by law, the rights of a Participant with respect to any Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant; and, provided further, no amendment may be made which would cause this Plan to lose its exemption -13- under Securities and Exchange Commission Regulation [S] 240.16b-3 or which would increase the percentages set forth in Section 4.1 without shareholder approval. ARTICLE XIV General Provisions 14.1 Unfunded Status of Plan. This Plan is intended to be unfunded. With respect to any payments as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. 14.2 No Right to Employment. Neither this Plan nor the grant of any Award hereunder shall give any Participant or other employee any right with respect to continuance of employment by the Company or any Subsidiary, nor shall they be a limitation in any way on the right of the Company or any Subsidiary by which an employee is employed to terminate his or her employment at any time. 14.3 Other Plans. In no event shall the value of, or income arising from, any Awards under this Plan be treated as compensation for purposes of any pension, profit sharing, life insurance, disability or any other retirement or welfare benefit plan now maintained or hereafter adopted by the Company or any Subsidiary, unless such plan specifically provides to the contrary. 14.4 Withholding of Taxes. The Company shall have the right to deduct from any payment to be made pursuant to this Plan, or to otherwise require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash hereunder, payment by the Participant of any Federal, state or local taxes required by law to be withheld. The Committee may permit any such withholding obligation to be satisfied by reducing the number of shares of Common Stock otherwise deliverable or by accepting the delivery of previously owned shares of Common Stock. Any fraction of a share of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant. 14.5 No Assignment of Benefits. No Award or other benefit payable under this Plan shall, except as otherwise specifically provided by law, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person. 14.6 Governing Law. This Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (without regard to applicable Delaware principles of conflict of laws). 14.7 Construction. Wherever any words are used in this Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. 14.8 Liability. No member of the Board, no member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder, by any other member or employee or by any agent to whom duties -14- in connection with the administration of this Plan have been delegated or, except in circumstances involving his bad faith, gross negligence or fraud, for any act or failure to act by the member or employee. ARTICLE XV Effective Date of Plan This Plan was adopted by the Board on February 18, 1992 and shall become effective on the date it is approved by the stockholders of the Company. This Plan shall continue in effect until terminated by the Board pursuant to Article XIII. 2/21/94 -15- -----END PRIVACY-ENHANCED MESSAGE-----