DEF 14A 1 file1.htm DEF 14A

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

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[ ] Preliminary Proxy Statement
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
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GateHouse Media, Inc.
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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To Our Stockholders:

I am pleased to invite you to attend the annual meeting of stockholders of GateHouse Media, Inc. to be held on May 17, 2007 at 9:00 a.m., in the Erie Room at The Brookwood Inn, 800 Pittsford-Victor Road, Pittsford, New York 14534.

Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.

Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible. You may vote by telephone or by mailing a proxy or voting instruction card in the provided pre-addressed envelope. Voting by phone or by written proxy will ensure your representation at the annual meeting regardless of whether you attend in person. Please review the instructions on the proxy or voting instruction card regarding each of these voting options.

Thank you for your support and interest in GateHouse Media, Inc.

Sincerely,

Michael E. Reed
Chief Executive Officer




 2007 annual meeting of stockholders 

 notice of annual meeting and proxy statement 

 table of contents 


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GATEHOUSE MEDIA, INC.

350 WillowBrook Office Park
Fairport, New York 14450
(585) 598-0030

 notice of annual meeting of stockholders 


Time and Date 9:00 a.m. on May 17, 2007.
Place Erie Room at The Brookwood Inn, 800 Pittsford-Victor Road, Pittsford, New York 14534.
Items of Business (1) To elect two Class I directors
  (2) To consider and act upon a proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2007
  (3) To consider and act upon such other business as may properly come before the meeting
Adjournments and Postponements Any action on the items of business described above may be considered at the annual meeting at the time and date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.
Record Date You are entitled to vote only if you were a GateHouse Media stockholder as of the close of business on April 12, 2007.
Meeting Admission You are entitled to attend the annual meeting only if you were a GateHouse Media stockholder as of the close of business on April 12, 2007 or hold a valid proxy for the annual meeting. You should be prepared to present photo identification for admittance. In addition, if you are a stockholder of record or hold your shares through the GateHouse Media, Inc. Omnibus Stock Incentive Plan, your ownership as of the record date will be verified prior to being admitted to the meeting. If you are not a stockholder of record but hold shares through a broker, trustee or nominee (i.e., in street name), you must provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to April 12, 2007, a copy of the voting instruction card provided by your broker, trustee or nominee, or similar evidence of ownership. If you do not provide photo identification and comply with the other procedures outlined above, you will not be admitted to the annual meeting. The annual meeting will begin promptly at 9:00 a.m. Check-in will begin at 8:30 a.m. and you should allow ample time for the check-in procedures.
Voting Your vote is very important. Whether or not you plan to attend the annual meeting, we encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. You may submit your proxy or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided, or, in most cases, by using the telephone. For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers — Voting Information beginning on page 2 of this proxy statement and the instructions on the proxy or voting instruction card.
By order of the Board of Directors,
Polly Grunfeld Sack, Vice President,
General Counsel and Secretary

This notice of annual meeting and proxy statement and form of proxy are being distributed on or about April 18, 2007.

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questions and answers

Proxy Materials

1.  Why am I receiving these materials?

The Board of Directors (the ‘‘Board’’) of GateHouse Media, Inc., a Delaware corporation (‘‘GateHouse Media’’), is providing these proxy materials to you in connection with GateHouse Media’s annual meeting of stockholders, which will take place on May 17, 2007. As a stockholder, you are invited to attend the annual meeting and are entitled to and requested to vote on the items of business described in this proxy statement.

2.  What information is contained in the proxy statement?

The information in the proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, GateHouse Media’s Board and Board committees, the compensation of directors and executive officers for fiscal 2006, and other required information.

3.  How may I obtain GateHouse Media’s Form 10-K and other financial information?

A copy of our 2006 Annual Report, which includes our 2006 Form 10-K, is enclosed.

Stockholders may request another free copy of our 2006 Annual Report, which includes our 2006 Form 10-K, from:

GateHouse Media, Inc.
Attn: Investor Relations
350 WillowBrook Office Park
Fairport, New York 14450
(585) 598-0030

Alternatively, you can access our 2006 Annual Report, which includes our 2006 Form 10-K, on our website under the Investor Relations tab at:

www.gatehousemedia.com

4.  How may I request an electronic copy of the proxy materials?

If you wish to request electronic delivery of our proxy materials in the future, please sign up at:

www.investors.gatehousemedia.com/investorkit.cfm

5.  What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each GateHouse Media proxy card and voting instruction card that you receive or vote by using the telephone for each proxy card and voting instruction card you receive.

Voting Information

6.  What items of business will be voted on at the annual meeting?

The items of business scheduled to be voted on at the annual meeting are:

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  The election of two Class I directors; and
  To consider and act upon a proposal to ratify the appointment of Ernst & Young LLP as GateHouse Media’s independent registered public accounting firm for the 2007 fiscal year.

We also will consider any other business that is properly presented at the annual meeting.

7.  How does the Board recommend that I vote?

Our Board recommends that you vote your shares ‘‘FOR’’ each of the nominees to the Board, and ‘‘FOR’’ the ratification of Ernst & Young LLP as GateHouse Media’s independent registered public accounting firm for the 2007 fiscal year.

8.  What shares can I vote?

Each share of GateHouse Media common stock issued and outstanding as of the close of business on April 12, 2007, the Record Date, is entitled to one vote on all items being voted upon at the annual meeting. You may vote all shares owned by you as of the Record Date, including (1) shares held directly in your name as the stockholder of record and (2) shares held for you as the beneficial owner through a broker, trustee or other nominee such as a bank. On the Record Date, GateHouse Media had 39,158,324 shares of common stock issued and outstanding.

9.  How can I vote my shares in person at the annual meeting?

Shares held in your name as the stockholder of record may be voted in person at the annual meeting. Shares held beneficially in street name may be voted in person at the annual meeting only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting.

10.  How can I vote my shares without attending the annual meeting?

By Telephone   —   Stockholders of record of GateHouse Media common stock who live in the United States or Canada may submit proxies by following the ‘‘Vote by Telephone’’ instructions on the proxy cards. Most GateHouse Media stockholders who hold shares beneficially in street name and live in the United States or Canada may vote by phone by calling the number specified on the voting instruction cards provided by their brokers, trustees or nominees. Please check the voting instruction card for telephone voting availability.

By Mail   —   Stockholders of record of GateHouse Media common stock may submit proxies by completing, signing and dating their proxy cards and mailing them in the accompanying pre-addressed envelopes. GateHouse Media stockholders who hold shares beneficially in street name may vote by mail by completing, signing and dating the voting instruction cards provided and mailing them in the accompanying pre-addressed envelopes.

11.  What is the deadline for voting my shares?

If you hold shares as the stockholder of record, your vote by proxy must be received before the polls close at the annual meeting.

If you hold shares beneficially in street name, please follow the voting instructions provided by your broker, trustee or nominee.

12.  May I change my vote?

If you are the stockholder of record, you may revoke your proxy by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of revocation to the Corporate Secretary at the address noted below in response to Question 24 prior to

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the annual meeting, or by attending the annual meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically make that request at the annual meeting. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee in accordance with the instructions for the voting instruction card, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the meeting and voting in person.

13.  Is my vote confidential?

Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner designed to protect your voting privacy, and will not be disclosed, except as necessary to meet applicable legal requirements and under other limited circumstances.

14.  How are votes counted?

In the election of directors, you may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN’’ with respect to each of the nominees. If you elect to ‘‘ABSTAIN’’ in the election of directors, the abstention will not impact the election of directors. In tabulating the voting results for the election of directors, only ‘‘FOR’’ and ‘‘AGAINST’’ votes are counted.

For the other items of business, you may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ If you elect to ‘‘ABSTAIN,’’ the abstention has the same effect as a vote ‘‘AGAINST.’’

If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you sign your proxy card or voting instruction card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (‘‘FOR’’ all of GateHouse Media’s nominees to the Board, and ‘‘FOR’’ ratification of GateHouse Media’s independent registered public accounting firm).

15.  What is the voting requirement to approve each of the proposals?

In the election of directors, each director will be elected by a plurality of the votes cast with respect to that director nominee. A plurality of votes cast means that the number of votes cast ‘‘FOR’’ a nominee’s election must exceed the number of votes cast ‘‘AGAINST’’ such nominee’s election. Each nominee receiving more ‘‘FOR’’ votes than ‘‘AGAINST’’ votes will be elected. All other matters voted upon at the meeting will be decided by a majority of the votes cast.

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute ‘‘broker non-votes.’’ Generally, broker non-votes occur when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained. Abstentions have the same effect as votes against the matter except in the election of directors, as described above.

16.  What happens if additional matters are presented at the annual meeting?

Other than the two items of business described in this proxy statement, we are not aware of any other business to be acted upon at the annual meeting. If you grant a proxy pursuant to this proxy statement, the persons named as proxy holders, Mary Mastin and Monica Treviso, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.

17.  Who will serve as inspector of elections?

The inspectors of elections will be Elizabeth Lewis and Doreen Riales.

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18.  Who will bear the cost of soliciting votes for the annual meeting?

GateHouse Media is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees who will not receive any additional compensation for such solicitation activities. We also will reimburse brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy and solicitation materials to stockholders.

19.  Where can I find the voting results of the annual meeting?

We intend to announce preliminary voting results at the annual meeting and publish final results in our quarterly report on Form 10-Q for the second quarter of fiscal 2007.

Stock Ownership Information

20.  What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Most GateHouse Media stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you together with a voting instruction card on behalf of your broker, trustee or nominee. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and you also are invited to attend the annual meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares.

Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a ‘‘legal proxy’’ from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting.

21.  What if I have questions for GateHouse Media’s transfer agent?

Please contact GateHouse Media’s transfer agent, at the phone number listed below, with questions concerning stock certificates, dividend checks, transfer of ownership or other matters pertaining to your stock account.

American Stock Transfer & Trust Company: (800) 937-5449

Annual Meeting Information

22.  How can I attend the annual meeting?

You are entitled to attend the annual meeting only if you were a GateHouse Media stockholder as of the close of business on April 12, 2007 or you hold a valid proxy for the annual meeting. You should be prepared to present photo identification for admittance. If you are not a stockholder of record but hold shares through a broker, trustee or nominee (i.e., in street name), you must provide proof of beneficial ownership on the record date, such as your most recent account statement prior to April 12, 2007, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above, you will not be admitted to the annual meeting.

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The meeting will begin promptly at 9:00 a.m. Check-in will begin at 8:30 a.m., and you should allow ample time for the check-in procedures.

23.  How many shares must be present or represented to conduct business at the annual meeting?

Holders of a majority of shares of GateHouse Media common stock entitled to vote must be present in person or represented by proxy in order to conduct business and vote on matters raised at the meeting. Both abstentions and broker non-votes described previously in Question 15 are counted for the purposes of determining the presence of a quorum.

Stockholder Proposals, Director Nominations and Related Bylaw Provisions

24.  What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders?

You may submit proposals for consideration at future stockholder meetings. For a stockholder proposal to be considered for inclusion in GateHouse Media’s proxy statement for next year’s annual meeting, our Corporate Secretary must receive the written proposal at our principal executive offices no later than December 12, 2007. Such proposals also must comply with Rule 14a-8 promulgated by the Securities and Exchange Commission (‘‘SEC’’) regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:

Corporate Secretary
GateHouse Media, Inc.
350 WillowBrook Office Park
Fairport, New York 14450

For a stockholder proposal that is not intended to be included in GateHouse Media’s proxy statement under Rule 14a-8, the stockholder must provide the information required by GateHouse Media’s Bylaws and give timely notice to the Corporate Secretary in accordance with GateHouse Media’s Bylaws, which, in general, require that the notice be received by the Corporate Secretary:

  Not earlier than the close of business on January 17, 2008; and
  Not later than the close of business on February 18, 2008.

If the date of the stockholder meeting is moved to a date more than 25 days before or after the anniversary of the GateHouse Media annual meeting for the prior year, then notice of a stockholder proposal that is intended to be included in GateHouse Media’s proxy statement under Rule 14a-8 must be received not earlier than the close of business 120 days prior to the meeting and not later than the close of business on the later of the following two dates:

  90 days prior to the meeting; or
  10 days after public announcement of the meeting date.
25.  How may I recommend or nominate individuals to serve as directors?

You may propose director candidates for consideration by the Board’s Nominating and Corporate Governance Committee. Any such recommendations should include the nominee’s name and qualifications for Board membership and should be directed to the Corporate Secretary at the address of our principal executive offices set forth in response to Question 24 above.

In addition, GateHouse Media’s Bylaws permit stockholders to nominate directors for election at an annual stockholder meeting. To nominate a director, the stockholder must deliver the information required by GateHouse Media’s Bylaws and a statement by the nominee consenting to being named as a nominee and consenting to serve as a director if elected.

26.  What is the deadline to nominate individuals to serve as directors?

To nominate an individual for election at next year’s annual stockholder meeting, the stockholder must give timely notice to the Corporate Secretary in accordance with GateHouse Media’s Bylaws,

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which, in general, require that the notice be received by the Corporate Secretary between the close of business on January 17, 2008 and the close of business on February 18, 2008, unless the annual meeting is moved to a date more than 25 days before or after the anniversary of the prior year’s annual meeting, in which case the deadline will be as described in Question 24.

27.  How may I obtain a copy of GateHouse Media’s Bylaw provisions regarding stockholder proposals and director nominations?

You may contact the Corporate Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. GateHouse Media’s Bylaws also are available on our website at www.gatehousemedia.com.

Further Questions

28.  Who can help answer my questions?

If you have any questions about the annual meeting or how to vote or revoke your proxy, you should contact Francie Nagy:

(212) 515-4625

If you need additional copies of this proxy statement or voting materials, please contact Francie Nagy as described above or send an e-mail to fnagy@fortressinv.com.

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corporate governance principles and board matters

GateHouse Media is committed to maintaining high standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders well and maintaining our integrity in the marketplace. To that end, we have adopted a Code of Business Conduct and Ethics for our directors, officers and employees, including a separate Code of Ethics for our Chief Executive Officer and senior financial officers. In addition, we have adopted Corporate Governance Guidelines, which, in conjunction with our Amended and Restated Articles of Incorporation, Amended and Restated Bylaws and Board committee charters, form the framework for our corporate governance. All of our corporate governance materials, including board committee charters, are available on our website at www.gatehousemedia.com. These materials also are available in print to any stockholder upon request. The Board regularly reviews corporate governance developments and modifies its committee charters as warranted.

Board and Board Committee Independence

Our Corporate Governance Guidelines require that a majority of our Board will consist of independent directors. For a director to be considered independent, the Board must determine that the director does not have any material relationship with GateHouse Media (either directly or as a partner, stockholder or officer of an organization that has a relationship with GateHouse Media). The Board has established guidelines to assist it in determining director independence, which conform to the independence requirements of the New York Stock Exchange. The Board has determined that five out of our seven current directors are independent, including each of the two director nominees standing for election.

According to our Corporate Governance Guidelines, all members of the Audit, Compensation, and Nominating and Corporate Governance Committees must be independent directors. Members of the Audit Committee also must satisfy a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from GateHouse Media or any of its subsidiaries other than their directors’ compensation.

Board Structure and Committee Composition

As of the date of this proxy statement, our Board has seven directors and the following three standing committees: (1) Audit, (2) Compensation and (3) Nominating and Corporate Governance. The committee membership and function of each of these standing committees are described below. Each of the standing committees operates under a written charter adopted by the Board. All of the committee charters are available on our website at www.gatehousemedia.com. Except for Mr. Edens, our Chairman of the Board, all of our current directors (including the two nominees for election as Class I directors at this year’s annual meeting of stockholders, Messrs. Bandier and Friedman) joined our Board on October 24, 2006 in connection with the commencement of our initial public offering and the initial listing of our common stock on the New York Stock Exchange. Between such date and the end of fiscal year 2006, our Board held two meetings. Each director attended at least 75% of the Board meetings and commitee meetings on which he served. Prior to October 24, 2006 and since the beginning of fiscal year 2006, our previously constituted Board held no meetings, but took corporate action by written consents without a meeting. Each director is expected to attend, absent unusual circumstances, all annual and special meetings of stockholders.


Name of Director Audit Compensation Nominating and
Corporate Governance
Wesley R. Edens – Chairman of the Board      
Michael E. Reed      
Martin Bandier   Member Member
Richard L. Friedman     Member
Burl Osborne Member   Chair
Howard Rubin Member Chair  
Kevin M. Sheehan Chair Member  

Audit Committee   —   The Audit Committee was established under a written charter adopted in October 2006 and which became effective as of the time GateHouse Media was first listed on the New

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York Stock Exchange. Our Audit Committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements. In particular, our Audit Committee (i) assists the Board in monitoring the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence and the performance of our internal audit function and independent auditors; (ii) assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such accounting firm; (iii) provides a forum for consideration of matters relating to any audit issues; and (iv) prepares the audit committee report that SEC rules require be included in our annual proxy statement. The Audit Committee met once during fiscal year 2006 subsequent to its formation and all members attended, in addition to acting by written consent without a meeting. The members of our Audit Committee are Messrs. Sheehan, Osborne and Rubin. Mr. Sheehan is our Audit Committee chair and our Audit Committee financial expert under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act. Each member of our Audit Committee is ‘‘independent’’ as defined under the Exchange Act and New York Stock Exchange rules.

Compensation Committee   —   The Compensation Committee was established under a written charter adopted in October 2006 and which became effective as of the time GateHouse Media was first listed on the New York Stock Exchange. Our Compensation Committee reviews and recommends policy relating to the compensation and benefits of our officers and employees, including reviewing and approving the corporate goals and objectives relevant to the compensation of the Chief Executive Officer and other senior officers. This Committee then evaluates performance of these officers in light of those goals and objectives and recommends compensation of these officers based on such evaluations. The Compensation Committee also reviews the Compensation Discussion and Analysis (‘‘CD&A’’) for inclusion in our proxy statement. The Compensation Committee also produces a report on executive officer compensation as required by the SEC to be included in our annual proxy statement. The Compensation Committee reviews and evaluates, at least annually, the performance of the Compensation Committee and its members, including the Compensation Committee’s compliance with its own charter. The Compensation Committee met twice during fiscal year 2006 subsequent to its formation and all members attended, in addition to acting by written consent without a meeting. The members of our Compensation Committee are Messrs. Rubin, Bandier and Sheehan, each of whom is ‘‘independent’’ as defined by the New York Stock Exchange. Mr. Rubin is our Compensation Committee chair.

Nominating and Corporate Governance Committee   —   The members of our Nominating and Corporate Governance Committee are Messrs. Osborne, Bandier and Friedman, each of whom is ‘‘independent’’ as defined by the New York Stock Exchange. The primary function of the Nominating and Corporate Governance Committee, established under a written charter adopted in October 2006 and effective as of the time GateHouse Media was first listed on the New York Stock Exchange, is to oversee and assist our Board in identifying, reviewing and recommending nominees for election as directors; advise our Board with respect to Board composition, procedures and committees; recommend directors to serve on each committee; oversee the evaluation of our Board and our management; and develop, review and recommend corporate governance guidelines. The Nominating and Corporate Governance Committee did not meet during 2006 subsequent to its formation. Mr. Osborne is our Nominating and Corporate Governance Committee chair.

Compensation Committee Interlocks and Insider Participation

Messrs. Rubin, Bandier and Sheehan served on the Compensation Committee during 2006. No member of the Compensation Committee is now, or was during 2006 or at any time prior thereto, an officer or employee of GateHouse Media. No member of the Compensation Committee had any relationship with GateHouse Media during 2006 pursuant to which disclosure would be required under applicable SEC rules pertaining to the disclosure of transactions with related persons. None of our executive officers currently serves or ever has served as a member of the board of directors, the compensation committee, or any similar body, of any entity one of whose executive officers serves or served on our Board or the Compensation Committee.

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Director Nominees

Stockholder Recommendations

The Nominating and Corporate Governance Committee will consider properly submitted stockholder recommendations of candidates for membership on the Board according to the procedures described below under ‘‘Identifying and Evaluating Candidates for Directors.’’ In evaluating such recommendations, the Nominating and Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth below under ‘‘Director Qualifications.’’ Any stockholder recommendations proposed for consideration by the Nominating and Corporate Governance Committee must be in writing, include the candidate’s name and qualifications for Board membership and should be addressed to:

Corporate Secretary
GateHouse Media, Inc.
350 WillowBrook Office Park
Fairport, New York 14450
Fax: (585) 248-9562

Stockholder Nominations

In addition, our Bylaws permit stockholders to nominate directors for consideration at any annual stockholder meeting. For a description of the process for nominating directors at the annual meeting, see ‘‘Questions and Answers – Stockholder Proposals, Director Nominations and Related Bylaw Provisions – Question 25. How may I recommend or nominate individuals to serve as directors?’’ on page 6 of this proxy statement.

Director Qualifications

Our Corporate Governance Guidelines contain Board membership criteria that apply to nominees recommended for a position on our Board. At a minimum, the Nominating and Corporate Governance Committee shall consider (a) whether each such nominee has demonstrated, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of GateHouse Media and (b) the nominee’s reputation for honesty and ethical conduct in his or her personal and professional activities. Additional factors which the Nominating and Corporate Governance Committee may consider include a candidate’s specific experiences and skills, relevant industry background and knowledge, time availability in light of other commitments, potential conflicts of interest, material relationships with GateHouse Media and independence from management and GateHouse Media. The Nominating and Corporate Governance Committee also may seek to have the Board represent a diversity of backgrounds, experience, gender and race. Each candidate should be committed to enhancing stockholder value and should have sufficient time to carry out the required duties and to provide insight and practical wisdom based on experience. A candidate’s service on other boards of public companies should be limited to a number that permits the candidate to perform responsibly all director duties. Each director must represent the interest of all our stockholders.

Identifying and Evaluating Candidates for Directors

The Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating nominees for director. The Nominating and Corporate Governance Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating and Corporate Governance Committee may consider several potential candidates. Candidates may come to the attention of the Nominating and Corporate Governance Committee through current Board members, professional search firms, stockholders or other persons. Identified candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year. As described above, the Nominating and Corporate Governance Committee considers properly submitted stockholder

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recommendations for candidates for the Board to be included in our proxy statement. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to the Nominating and Corporate Governance Committee.

Executive Sessions

The independent directors meet at least once each year in regularly scheduled executive sessions. Additional executive sessions may be scheduled by independent directors. The chairpersons of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee rotate presiding over these sessions.

Communications with Directors

The Board has adopted a process by which stockholders and other interested parties may communicate with the independent directors or the chairperson of any of the committees of the Board by regular mail. You may send communications by regular mail to the attention of the Chairperson, Audit Committee; Chairperson, Compensation Committee; or Chairperson, Nominating and Corporate Governance Committee; or to the independent directors as a group to the Independent Directors, each c/o Corporate Secretary, GateHouse Media, Inc., 350 WillowBrook Ofice Park, Fairport, New York 14450.

GateHouse Media’s management will review all communications received to determine whether the communication requires immediate action. Management will pass on all communications received, or a summary of such communications, to the appropriate director or directors.

Policy on Transactions with Related Persons

The Board recognizes the fact that transactions with related persons present a heightened risk of conflicts of interests and/or improper valuation (or the perception thereof). Any transaction with GateHouse Media in which a director, executive officer or beneficial holder of more than 5% of the outstanding shares of common stock, or any immediate family member of the foregoing (each, a ‘‘related person’’) has a direct or indirect material interest, and where the amount involved exceeds $120,000, must be specifically disclosed by GateHouse Media in its public filings. See the discussion on page 18 of this proxy statement under the heading ‘‘Related Person Transactions.’’

GateHouse Media’s Code of Business Conduct and Ethics applicable to employees, officers and directors discourages transactions where there is or could be an appearance of a conflict of interest. In addition, this Code requires specific approval by a designated member of management of transactions involving GateHouse Media and the employee, officer or director. GateHouse Media’s Amended and Restated Certificate of Incorporation also provides regulation, definition and guidance on related business activities, corporate opportunities and agreements with significant stockholders.

DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES

Each independent director is entitled to receive an annual retainer of $30,000, payable in two equal semi-annual installments. In addition, an annual fee of $5,000 is paid to the chairs of each of the Audit and Compensation Committees, which fee will also be paid in two equal semi-annual installments. Fees to independent directors may be paid by issuance of GateHouse Media common stock, based on the value of our common stock at the date of issuance, rather than in cash, unless the issuance would prevent such director from being determined to be independent. Such stock must be granted pursuant to a stockholder-approved plan or be otherwise exempt from any applicable New York Stock Exchange listing requirement. All members of our Board are reimbursed for reasonable expenses and expenses incurred in attending Board meetings.

Messrs. Bandier, Friedman, Osborne, Rubin and Sheehan were each granted a number of restricted shares of common stock in October 2006 equal in value to $300,000 based on the fair market value of GateHouse Media shares on the date of grant. These restricted shares will become vested in three equal portions on the last day of each fiscal years 2007, 2008 and 2009, provided the

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director is still serving as of the applicable vesting date. The independent directors holding these shares of restricted stock (whether or not such shares are vested) will be entitled to any dividends that become payable on such shares during the restricted period so long as such directors continue to serve as directors as of the applicable record dates.

Except as otherwise provided by the plan administrator of the GateHouse Media, Inc. Omnibus Stock Incentive Plan (along with any agreements issued in connection therewith, collectively, the ‘‘Incentive Plan’’), on the first business day after our annual meeting of stockholders and each such annual meeting thereafter during the term of the Incentive Plan, each of the independent directors who is serving following such annual meeting will automatically be granted under the Incentive Plan a number of unrestricted shares of GateHouse Media common stock having a fair market value of $15,000 as of the date of grant; however, Messrs. Bandier, Friedman, Osborne, Rubin and Sheehan, all of whom were granted the restricted shares of common stock described above, will not be eligible to receive these automatic annual grants.

DIRECTOR COMPENSATION TABLE

The following table provides information about the compensation earned by our non-employee directors during 2006.


Name Cash
Retainer(1)
($)
Equity
Retainer(2)
($)
Committee
Chair Fees(1)
Total
($)
Martin Bandier $ 5,583 $ 300,000   $ 305,583
Richard L. Friedman 5,583 300,000   305,583
Burl Osborne 5,583 300,000   305,583
Howard Rubin 5,583 300,000 $ 931 306,514
Kevin M. Sheehan 5,583 300,000 931 306,514
(1) Cash retainers and committee chair fees are paid in two equal semi-annual installments. The amounts shown include a prorated amount for October and complete months of November and December.
(2) The grant date fair value of such awards, as estimated for financial reporting purposes, is $300,000. These restricted shares will become vested in three equal portions on December 31, 2007, December 31, 2008 and December 31, 2009, provided the director is still serving as of the applicable vesting date, and thus are subject to forfeiture.

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ELECTION OF DIRECTORS

(PROPOSAL 1)

There are two nominees for election to GateHouse Media’s Board this year. In accordance with the terms of GateHouse Media’s Amended and Restated Certificate of Incorporation, the Board is divided into three classes of directors (designated Class I, Class II and Class III) of the same or nearly the same number. At each annual meeting of stockholders, one class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. As a result, a portion of the Board will be elected each year.

Our Amended and Restated Certificate of Incorporation authorizes a Board consisting of at least three, but no more than seven, members, with the exact number of directors to be fixed from time to time by a resolution of the majority of the Board (or by a duly adopted amendment to the Certificate of Incorporation). Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of the Board into three classes with staggered three-year terms may delay or prevent a change of management or a change in control.

If you sign your proxy or voting instruction card but do not give instruction with respect to voting for directors, your shares will be voted for the two persons recommended by the Board. If you wish to give specific instructions with respect to voting for directors, you may do so by indicating your instructions on your proxy or voting instruction card.

Both of our nominees have indicated to us that they will be available to serve as directors. The Nominating and Corporate Governance Committee has approved the nominees. In the event that any nominee should become unavailable, however, the proxy holders, Mary Mastin and Monica Treviso, will vote for such other nominee or nominees as designated by the Board.

The Board recommends a vote for FOR each of the following nominees.


Martin Bandier
Director since October 2006
Age 65
Mr. Bandier is currently the Chairman and Chief Executive Officer of Sony/ATV Music Publishing LLC. Previously, Mr. Bandier had served as the Chairman and Chief Executive Officer of EMI Music Publishing since 1991. Mr. Bandier co-founded SBK Entertainment World in 1984 which sold its music publishing interests to EMI Music Publishing in 1989. In 1975, Mr. Bandier co-founded The Entertainment Company. Mr. Bandier is a member of the boards of the United Jewish Appeal, City of Hope, BMI Foundation Inc. and the Songwriter’s Hall of Fame, and he serves as a trustee of the TJ Martell Foundation and Syracuse University. He is a director of The National Music Publishers Association and the Rock and Roll Hall of Fame, and is president of the International Music Publishers Association.

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Richard L. Friedman
Director since October 2006
Age 66
Mr. Friedman is the President and Chief Executive Officer of Carpenter & Company, Inc. of Cambridge, MA, a real estate ownership, development and management firm which operates nationally. Mr. Friedman founded Carpenter & Company, Inc. in 1968. Mr. Friedman has had substantial involvement with numerous business, civic and charitable entities including serving as a director (or member) of: The Steppingstone Foundation, Mt. Auburn Foundation, PNC Bank New England, Johnny Rockets, Inc., The Bridge Fund, and The Dartmouth College Real Estate Advisory Committee. Mr. Friedman received a B.A. from Dartmouth College. Mr. Friedman was appointed by President William J. Clinton as Chairman of the National Capital Planning Commission and continues to work with its Interagency Security Task Force.

The following directors are serving on the Board for a term that ends at the 2008 Annual Meeting:


Burl Osborne
Director since October 2006
Age 69
Mr. Osborne formerly held several positions in the Belo Corporation: President, Publishing Division from 1995 to 2001; Director from 1987 to 2002; and Publisher of The Dallas Morning News Co., from 1986 to 2001 with which he became associated in 1980. Mr. Osborne continues as Chairman of the Belo Foundation. In connection with The Associated Press, Mr. Osborne has served as Chairman of the Board since 2002, Director since 1993 and as a member of the Executive Committee. Mr. Osborne also has served as Director and Past Chairman of Southern Newspaper Publishers Association, and a Director of Newspaper Association of America. Currently, he serves as Director of the Committee to Protect Journalists; Director of the National Kidney Foundation; and Director of J.C. Penny Company, Inc. since April 1, 2003. Mr. Osborne earned a Bachelor of Arts degree from Marshall University in Huntington, West Virginia and a Master of Business Administration degree from Long Island University. He also participated in the Advanced Management Program at the Harvard Business School.

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Michael E. Reed
Director since October 2006
Age 40
Mr. Reed become GateHouse Media’s Chief Executive Officer in January 2006. He was formerly the President and Chief Executive Officer of Community Newspaper Holdings, Inc. (‘‘CNHI’’) and had served in that capacity since 1999. Mr. Reed served as CNHI’s Chief Financial Officer from 1997 to 1999. Prior to that, he worked for Park Communications, Inc., a multimedia company, located in Ithaca, New York. Mr. Reed currently serves on the board of directors for the Associated Press and he is also the Chairman of the Audit Committee for the Associated Press. He also serves on the board of directors for the Newspaper Association of America. Mr. Reed is currently a member of the Board of Visitors of the University of Alabama’s College of Communication and Information Sciences and is a member of the Grady College Journalism School’s Board of Advisors.

The following directors are serving on the Board for a term that ends at the 2009 Annual Meeting:


Wesley R. Edens
Chairman of the Board
since June 2005
Age 45
Mr. Edens is the Chairman of GateHouse Media’s Board and has served in this capacity since June 2005. Mr. Edens has been a principal and Chairman of the Management Committee of Fortress Investment Group LLC since co-founding the same in May 1998. Mr. Edens is responsible for Fortress’ private equity and publicly traded alternative investment businesses. He is Chairman of the board of directors of each of Aircastle Limited, Brookdale Senior Living Inc., Eurocastle Investment Limited, and Mapeley Limited and a director of Crown Castle International Corp. and GAGFAH S.A. Mr. Edens is the Chairman of the board of directors and Chief Executive Officer of Newcastle Investment Corp. Mr. Edens was Chief Executive Officer of Global Signal Inc. from February 2004 to April 2006 and Chairman of the board of directors of Global Signal from October 2002 to January 2007. Mr. Edens serves in various capacities in the following five registered investment companies: Chairman, Chief Executive Officer and Trustee of Fortress Registered Investment Trust and Fortress Investment Trust II; Chairman and Chief Executive Officer of Fortress Brookdale Investment Fund LLC and Fortress Pinnacle Investment Fund LLC and Chief Executive Officer of RIC Coinvestment Fund GP LLC. Prior to forming Fortress, Mr. Edens was a partner and managing director of BlackRock Financial Management Inc., where he headed BlackRock Asset Investors, a private equity fund. In addition, Mr. Edens was formerly a partner and managing director of Lehman Brothers. Mr. Edens received a B.S. in Finance from Oregon State University.

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Howard Rubin
Director since October 2006
Age 52
Mr. Rubin is a director of Capstead Mortgage Corporation. Mr. Rubin is also a director of Deerfield Triarc Capital Corp. In addition, he has served as a director of Global Signal Inc. since February 2004. He has over twenty years of experience trading mortgage-backed securities. From 1987 to his retirement in 1999, Mr. Rubin was a Senior Managing Director at Bear Stearns, where he ran the Collateralized Mortgage Obligations desk. Mr. Rubin received a Masters of Business Administration from Harvard Business School and a B.S.E. in Chemical Engineering from Lafayette College. Prior to June 2003, Fortress Investment Group LLC held a one-third interest in Capstead Mortgage Corporation and Wesley R. Edens served as Capstead’s Chief Executive Officer. Fortress sold its interest in Capstead and Mr. Edens resigned from his post as Chief Executive Officer in June 2003. Fortress Investment Group LLC owns a substantial amount of Global Signal common stock and Wesley R. Edens has served as Global Signal’s Chief Executive Officer, President and Chairman of the board of directors. Mr. Edens resigned from his post as Chief Executive Officer and President of Global Signal in April 2006 and resigned from his post as Chairman of the board of directors of Global Signal in January 2007.
Kevin Sheehan
Director since October 2006
Age 53
Mr. Sheehan currently provides consulting services to Cerebrus Capital Management LP (2006-present) and provided consulting services to Clayton Dubilier & Rice from 2005 until 2006. Mr. Sheehan was Chairman and Chief Executive Officer of Cendant Corporation’s Vehicle Services Division (included responsibility for Avis Rent A Car, Budget Rent A Car, Budget Truck, PHH Fleet Management and Wright Express) from March 2003 until May 2005. From March 2001 until May 2003, Mr. Sheehan served as Chief Financial Officer of Cendant Corporation. From August 1999 to February 2001, Mr. Sheehan was President-Corporate and Business Affairs and Chief Financial Officer of Avis Group Holdings, Inc. and a Director of that company from June 1999 until February 2001. Since August 2005, Mr. Sheehan has been on the faculty of Adelphi University, serving as a Distinguished Visiting Professor – Accounting, Finance and Economics.

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COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding ownership of our common stock on March 31, 2007 by (i) each of our directors and named executive officers, (ii) each person or group known to us holding more than 5% of our common stock, and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, each owner has sole voting and investment powers with respect to the securities listed. The information provided in the table is based on GateHouse Media’s records, information filed with the SEC and information provided to GateHouse Media, except where otherwise noted.


Name and Address of Beneficial Owner Number of
Shares Beneficially
Owned(2)
Percent of
Class
Executive Officers and Directors(1)    
Michael E. Reed 342,253.00 * 
Scott T. Champion 215,453.00 * 
Randall W. Cope 135,453.00 * 
Mark R. Thompson 35,342.00 * 
Polly G. Sack 34,342.00 * 
Daniel D. Lewis 0.00 * 
Wesley R. Edens(3) 22,725,640.00 58.0 % 
Martin Bandier 41,666.67 * 
Richard L. Friedman 46,666.67 * 
Burl Osborne 28,666.67 * 
Howard Rubin 166,666.67 * 
Kevin M. Sheehan 33,666.67 * 
All directors and executive officers as a group (15 persons) 24,040,638.00 61.4 % 
5% Stockholders    
Fortress Investment Holdings LLC(3)(4) 22,650,000.00 57.8 % 
GPS Partners LLC(5) 2,116,650.00 5.4 % 
* Less than one percent
(1) The address of each officer or director listed in the table above is: c/o GateHouse Media, Inc., 350 WillowBrook Office Park, Fairport, New York 14450.
(2) Consists of shares held, including shares of restricted stock subject to vesting.
(3) Includes 22,650,000 shares held by certain affiliates of Fortress Investment Group LLC (‘‘FIG’’). FIF III Liberty Holdings LLC (‘‘FIF Liberty Holdings’’) directly owns 22,050,000 of such shares. The members of FIF Liberty Holdings are Fortress Investment Fund III LP, Fortress Investment Fund III (Fund B) LP, Fortress Investment Fund III (Fund C) LP, Fortress Investment Fund III (Fund D) LP, Fortress Investment Fund III (Fund E) LP, Fortress Investment Fund III (Coinvestment Fund A) LP, Fortress Investment Fund III (Coinvestment Fund B) LP, Fortress Investment Fund III (Coinvestment Fund C) LP, Fortress Investment Fund III (Coinvestment Fund D) LP (collectively, the ‘‘Fund III Funds’’). Fortress Fund III GP LLC is the general partner of each of the Fund III Funds and its sole member is Fortress Investment Fund GP (Holdings) LLC. The sole member of Fortress Investment Fund GP (Holdings) LLC is Fortress Operating Entity II LP (‘‘FOE II’’). Fortress Partners Fund LP (‘‘FPF’’), Drawbridge Global Macro Master Fund Ltd. (‘‘Macro Master’’), Drawbridge DSO Securities LLC (‘‘DSO’’) and Drawbridge OSO Securities LLC (‘‘OSO’’) directly own 100,000, 250,000, 212,500 and 37,500 shares, respectively. DSO is wholly owned by Drawbridge Special Opportunities Fund LP (‘‘DBSO LP’’) and OSO is wholly owned by Drawbridge Special Opportunities Fund Ltd. (‘‘DBSO Ltd’’). Drawbridge Special Opportunities Advisors LLC is the investment advisor of each of DBSO LP and DBSO Ltd. (collectively, the ‘‘DBSO Funds’’). Fortress Partners Advisors LLC is the investment advisor of FPF. Drawbridge Global Macro Advisors LLC is the investment advisor of Macro Master. Fortress Operating Entity I wholly owns the investment advisors of each of FPF, Macro Master

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and the DBSO Funds. Both FOE I and FOE II are wholly owned by FIG Corp. FIG Corp. is wholly owned by FIG. Mr. Edens may be deemed to beneficially own the shares listed as beneficially owned by FIG. Mr. Edens disclaims beneficial ownership of all such shares except to the extent of his pecuniary interest therein and the inclusion of the shares herein shall not be deemed an admission of beneficial ownership of the reported shares for purposes of Section 16 or otherwise. Similarly, each of the affiliates of FIG listed above disclaims beneficial ownership of all reported shares except to the extent of its pecuniary interest therein and the inclusion of the shares in this report shall not be deemed an admission of beneficial ownership of the reported shares for purposes of Section 16 or otherwise.
(4) The address of Fortress Investment Holdings LLC is 1345 Avenue of the Americas, 46th Floor, New York, New York 10105.
(5) The address of GPS Partners LLC is 100 Wilshire Boulevard, Suite 900, Santa Monica, California 90401.

Related Person Transactions

As of March 31, 2007, Fortress Investment Group LLC and certain of its affiliates, including certain funds managed by it or its affiliates (‘‘Fortress’’) beneficially owned 57.8% of GateHouse Media’s outstanding common stock.

In addition, GateHouse Media’s Chairman, Wesley Edens, is the Chairman of the Management Committee of Fortress. GateHouse Media does not pay Mr. Edens a salary or any other form of compensation.

Indebtedness

First Lien Credit Agreement.    GateHouse Media Operating, Inc. (‘‘Operating’’), an indirectly wholly owned subsidiary of GateHouse Media, GateHouse Media Holdco, Inc. (‘‘Holdco’’), a wholly owned subsidiary of GateHouse Media, and certain of their subsidiaries are party to a first lien credit agreement, dated as of June 6, 2006, as amended on June 21, 2006 and October 11, 2006, with a syndicate of financial institutions with Wachovia Bank, National Association as administrative agent. The first lien credit facility provided for a $570.0 million term loan facility and a revolving credit facility with a $40.0 million aggregate loan commitment amount available, including a $15.0 million sub-facility for letters of credit and a $10.0 million swingline facility. The first lien credit facility is secured by a first priority security interest in (i) all present and future capital stock or other membership, equity, ownership or profits interest of Operating and all of its direct and indirect domestic restricted subsidiaries, (ii) 66% of the voting stock (and 100% of the nonvoting stock) of all present and future first-tier foreign subsidiaries and (iii) substantially all of the tangible and intangible assets of Holdco, Operating and their present and future direct and indirect domestic restricted subsidiaries. In addition, the loans and other obligations of the borrowers under the first lien credit facility were guaranteed, subject to specified limitations, by Holdco, Operating and their present and future direct and indirect domestic restricted subsidiaries.

Borrowings under the first lien credit facility bore interest, at the borrower’s option, equal to the LIBOR Rate for a LIBOR Rate Loan (as defined in the facility), or the Alternate Base Rate for an Alternate Base Rate Loan ( as defined in the facility), plus an applicable margin. The applicable margin was fixed at 2.25% (LIBOR Rate) and 1.25% (Alternate Base Rate). The applicable margin for revolving loans was adjusted quarterly and ranged from 1.5% to 2.0% (LIBOR Rate) and 0.5% to 1.0 (Alternate Base Rate).

The first lien credit facility contains financial covenants that require Holdco to satisfy specified quarterly financial tests, consisting of a total leverage ratio, an interest coverage ratio and a fixed charge coverage ratio. The first lien credit facility also contain affirmative and negative covenants customarily found in loan agreements for similar transactions, including restrictions on our ability to incur indebtedness, create liens on assets, engage in certain lines of business, engage in mergers or consolidations, dispose of assets, make investments or acquisitions, engage in transactions with

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affiliates, enter into sale leaseback transactions, enter into negative pledges or pay dividends or make other restricted payments (except that after the second lien credit facility has been paid in full and terminated, Holdco is permitted to pay quarterly dividends so long as, after giving effect to any such dividend payment, Holdco and its subsidiaries are in pro forma compliance with each of the financial covenants, including the total leverage ratio). The first lien credit facility contained customary events of default, including defaults based on a failure to pay principal, reimbursement obligations, interest, fees or other obligations, subject to specified grace periods; a material inaccuracy of representations and warranties; breach of covenants; failure to pay other indebtedness and cross-defaults; a Change of Control (as defined in the first lien credit facility); events of bankruptcy and insolvency; material judgments; failure to meet certain requirements with respect to ERISA; and impairment of collateral.

In October 2006, GateHouse Media used a portion of the net proceeds from its initial public offering to pay down $12.0 million of the first lien credit facility, and to repay in full the outstanding balance of $21.3 million under the $40.0 million revolving credit facility. As of December 31, 2006, $558.0 million was outstanding under the first lien credit facility. For fiscal 2006, GateHouse Media paid $23.1 million in interest under the first lien credit facility.

Fortress purchased $87 million of the $610 million first lien credit facility on arms’ length terms in a secondary market transaction. As of December 31, 2006, Fortress continues to hold $85.8 million of the first lien credit facility.

The first lien credit facility was amended and restated on February 27, 2007.

Second Lien Credit Agreement.    Holdco, Operating and certain of their subsidiaries were party to a secured bridge credit agreement, dated as of June 6, 2006, as amended on June 21, 2006, with a syndicate of financial institutions with Wachovia Bank, National Association as administrative agent. This second lien credit facility provided for a $152.0 million term facility that matured on June 6, 2014, subject to earlier maturity upon the occurrence of certain events. The second lien credit facility was secured by a second priority security interest in (i) all present and future capital stock or other membership, equity, ownership or profits interest of Operating and all of its direct and indirect domestic restricted subsidiaries, (ii) 66% of the voting stock (and 100% of the nonvoting stock) of all present and future first-tier foreign subsidiaries and (iii) substantially all of the tangible and intangible assets of Holdco, Operating and their present and future direct and indirect domestic restricted subsidiaries. In addition, the loans and other obligations of the borrowers under the second lien credit facility are guaranteed, subject to specified limitations, by Holdco, Operating and their present and future direct and indirect domestic restricted subsidiaries.

Borrowings under the second lien credit facility bore interest, at the borrower’s option, equal to the LIBOR Rate for a LIBOR Rate Loan (as defined in the facility) or the Alternate Base Rate for an Alternate Base Rate Loan (as defined in the facility), plus an applicable margin. The applicable margin was fixed at 1.5% (LIBOR Rate) and 0.5% (Alternate Base Rate). For fiscal 2006, GateHouse Media paid $4.2 million in interest under the second lien facility.

Fortress purchased $37.0 million of the $152.0 million second lien credit facility on arms’ length terms in a secondary market transaction.

In October 2006, GateHouse Media used a portion of the net proceeds from its initial public offering to repay in full and terminate the $152.0 million second lien credit facility.

Investor Rights Agreement

On October 24, 2006, GateHouse Media entered into an Investor Rights Agreement with Fortress. The Investor Rights Agreement provides Fortress with certain rights with respect to the nomination of directors to GateHouse Media’s Board as well as registration rights for securities owned by Fortress.

The Investor Rights Agreement requires GateHouse Media to take all necessary or desirable action within its control to elect to its Board so long as Fortress beneficially owns (i) more than 50% of the voting power, four directors nominated by FIG Advisors LLC, an affiliate of Fortress (‘‘FIG

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Advisors’’), or such other party nominated by Fortress; (ii) between 25% and 50% of the voting power, three directors nominated by FIG Advisors; (iii) between 10% and 25% of the voting power, two directors nominated by FIG Advisors; and (iv) between 5% and 10% of the voting power, one director nominated by FIG Advisors. In the event that any designee of FIG Advisors shall for any reason cease to serve as a member of the Board during his term of office, FIG Advisors will be entitled to nominate an individual to fill the resulting vacancy on the Board.

Pursuant to the Investor Rights Agreement, GateHouse Media grants Fortress, for so long as it beneficially owns at least 5% of its issued and outstanding common stock, ‘‘demand’’ registration rights. Fortress is entitled to an aggregate of four demand registrations. GateHouse Media is not required to maintain the effectiveness of the registration statement for more than 60 days. GateHouse Media is also not required to effect any demand registration within six months of a ‘‘firm commitment’’ underwritten offering to which the requestor held ‘‘piggyback’’ rights and which included at least 50% of the securities requested by the requestor to be included. GateHouse Media is not obligated to grant a request for a demand registration within four months of any other demand registration and may refuse a request for demand registration if, in its reasonable judgment, it is not feasible to proceed with the registration because of the unavailability of audited financial statements.

For as long as Fortress beneficially owns an amount of at least equal to 1% of GateHouse Media’s issued and outstanding common stock, Fortress also has ‘‘piggyback’’ registration rights that allow Fortress to include the shares of common stock that Fortress owns in any public offering of equity securities initiated by GateHouse Media (other than those public offerings pursuant to registration statements on Forms S-4 or S-8) or by any of GateHouse Media’s other stockholders that may have registration rights in the future. The ‘‘piggyback’’ registration rights of Fortress are subject to proportional cutbacks based on the manner of the offering and the identity of the party initiating such offering.

GateHouse Media grants Fortress, for as long as Fortress beneficially owns at least 5% or more of GateHouse Media’s common stock, the right to request shelf registrations on Form S-3, providing for an offering to be made on a continuous basis, subject to a time limit on GateHouse Media’s efforts to keep the shelf registration statement continuously effective and GateHouse Media’s right to suspend the use of a shelf registration prospectus for a reasonable period of time (not exceeding 60 days in succession or 90 days in the aggregate in any 12-month period) if it determines that certain disclosures required by the shelf registration statement would be detrimental to it or its stockholders.

GateHouse Media agrees to indemnify Fortress against any losses or damages resulting from any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which Fortress sells shares of GateHouse Media’s common stock, unless such liability arose from Fortress’ misstatement or omission, and Fortress has agreed to indemnify GateHouse Media against all losses caused by its misstatements or omissions. GateHouse Media will pay all expenses incident to registration and Fortress will pay its respective portions of all underwriting discounts, commissions and transfer taxes relating to the sale of its shares under such a registration statement.

EXECUTIVE OFFICERS

Michael E. Reed (40) became our Chief Executive Officer in January 2006 and became a director in October 2006. He was formerly the President and Chief Executive Officer of Community Newspaper Holdings, Inc. (‘‘CNHI’’) and had served in that capacity since 1999. Mr. Reed served as CNHI’s Chief Financial Officer from 1997 to 1999. Prior to that, he worked for Park Communications, Inc., a multimedia company, located in Ithaca, New York. Mr. Reed currently serves on the board of directors for the Associated Press and he is also the Chairman of the Audit Committee for the Associated Press. He also serves on the board of directors for the Newspaper Association of America. Mr. Reed is currently a member of the Board of Visitors of the University of Alabama’s Collage of Communication and Information Sciences and is a member of the Grady Collage Journalism School’s Board of Advisors.

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Mark R. Thompson (45) became our Chief Financial Officer in May 2006. He was formerly Chief Financial Officer of eToys Direct, Inc., an internet retailer and distributor of toys and gifts, from 2005 to 2006. From 1999 to 2005, Mr. Thompson served as Vice President and Senior Vice President – Finance and IT with Crown Media Holdings, Inc., a public cable programming company with more than 100 million customers. Prior to that, Mr. Thompson was the Controller of Hallmark Cards North America from 1995 to 1999. From 1992 to 1995, Mr. Thompson served as the Corporate Controller of Crown Cable, a cable multiple system operator. From 1990 to 1992, Mr. Thompson served in various positions at Hallmark Cards. Inc. in corporate financial reporting and internal audit. From 1986 to 1990, Mr. Thompson was a CPA with the accounting firm KPMG. Mr. Thompson holds master’s and bachelor’s degrees in accounting. Mr. Thompson serves on the board of the Inland Press Association.

Scott T. Champion (47) is our Co-President and Co-Chief Operating Officer responsible for our Western Region. He served as Regional Executive Vice President from 1999 until he was named our Co-President and Co-Chief Operating Officer in June 2005. He was also a director from January 2000 until June 2005. In 1998, he served as our Senior Vice President. Prior to 1998, he served as Senior Vice President, regional manager and district manager of American Publishing Company (‘‘APC’’) and had been employed at APC since 1988. Prior to his employment at APC, Mr. Champion served as the publisher of a group of privately owned publications. Mr. Champion has more than 25 years of experience in the newspaper industry.

Randall W. Cope (46) is our Co-President and Co-Chief Operating Officer responsible for our Southern Midwest Region. Mr. Cope held the position of Executive Vice President from April 2002 until he was named our Co-President and Co-Chief Operating Officer in June 2005. Mr. Cope served as Vice President from December 1998 until he was named our Executive Vice President in April 2002. Mr. Cope also oversees our Specialty Publications Division and national classified advertising network. From 1995 to 1998, Mr. Cope was regional manager and publisher of the Northwest Arkansas Times in Fayetteville, Arkansas, which was owned by APC. Mr. Cope has over 20 years of experience covering all areas of newspaper operations.

Gene A. Hall (55) is an Executive Vice President and has primary responsibility for our Northern Midwest Region. He was appointed our Senior Vice President in January 1998. Prior to his employment with us, he served as a Senior Vice President of APC from 1992 to 1998. Prior to 1992, he served as a regional manager and had been employed at APC since 1988. Prior to his employment at APC, Mr. Hall was the owner and publisher of the Charles City Press Six County Shopper and The Extra in Charles City, Iowa, which GateHouse Media currently owns. Mr. Hall has more than 36 years of experience in the newspaper industry.

Kelly M. Luvison (47) is an Executive Vice President and has primary responsibility for our Atlantic Region. Mr. Luvison served as a regional manager since January 1998, was appointed a Vice President in January 2000 and Executive Vice President in April 2002. Prior to January 1998, Mr. Luvison was a regional manager for APC. Since 1996, Mr. Luvison has been publisher of The Evening Tribune in Hornell, New York, a newspaper GateHouse Media currently owns, in addition to his duties as a regional manager and Vice President.

Polly G. Sack (47) became our Vice President, General Counsel and Secretary in May 2006. She was formerly Senior Vice President and Director of Mergers and Acquisitions of IMG Worldwide, Inc. (‘‘IMG’’), a global sports, media and entertainment company, and had served in that capacity since 2001. Ms. Sack also served as IMG’s associate counsel and a vice president from 1992 to 2001. Prior to that, she worked in private practice for a major international law firm. Ms. Sack holds bachelor’s degrees in civil engineering and mathematics and a master’s degree in civil engineering, in addition to a law degree.

COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis describes the material elements of compensation for those executive officers identified in the Summary Compensation Table (the ‘‘Named Executive Officers’’). GateHouse Media’s Compensation Committee was formed in October 2006 and is empowered to review and approve, or in some cases recommend for the approval of the full Board, the annual compensation and compensation procedures for the executive officers of

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GateHouse Media, including the Named Executive Officers. Notwithstanding our use of the term Named Executive Officers, this discussion does not apply to Daniel D. Lewis who resigned as our Chief Financial Officer, effective June 30, 2006 and prior to the formation of the Compensation Committee.

Objectives of Our Compensation Program

The primary objective of GateHouse Media’s executive compensation program is to attract and retain executives with the requisite skills and experience to help us achieve our business mission and develop, expand and execute business opportunities.

The Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals. The Compensation Committee seeks to align the executives’ interests with those of our stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. The Compensation Committee evaluates both performance and compensation to ensure that GateHouse Media maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of peer companies. To that end, the Compensation Committee believes executive compensation packages provided by GateHouse Media to its executives, including the Named Executive Officers, should include both cash and stock-based compensation that reward performance as measured against established goals. Based on the foregoing objectives, the Compensation Committee has structured GateHouse Media’s annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by GateHouse Media and reward the executives for achieving such goals.

GateHouse Media seeks to achieve these objectives through three key compensation elements:

  a base salary;
  a performance-based annual bonus (i.e., short-term incentives), which may be paid in cash, shares of stock or a combination of both; and
  periodic grants of long-term, equity-based compensation (i.e., longer-term incentives), such as restricted stock units and/or restricted stock, which may be subject to performance based and/or time-based vesting requirements.

Executive Compensation Practices

GateHouse Media’s practices with respect to each of the three key compensation elements identified above, as well as other elements of compensation, are set forth below.

Base Salary

Executive officer base salaries are based on job responsibilities, the individual’s value to GateHouse Media and individual performance with respect to market competitiveness. The salaries of the Named Executive Officers named in the Summary Compensation Table are determined by employment agreements for those officers. The agreements are described under ‘‘Employment Agreements’’ below.

Annual Bonus Incentives for Named Executive Officers

Each of the Named Executive Officers with an employment agreement has either an annual target or non-target bonus that is performance-linked and based upon the achievement of certain performance goals as agreed to by the Named Executive Officer and the Board. The bonus is payable in GateHouse Media’s common stock or cash or a combination thereof. Any bonus that is payable in common stock (a ‘‘Restricted Stock Bonus’’) vests ratably over a specified multi-year period.

The annual bonus process for the Named Executive Officers involves four basic steps:

  At the start of the fiscal year:
(1)  GateHouse Media-wide annual performance goals are established;

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(2)  Individual performance measures are established; and
(3)  The Compensation Committee establishes a target bonus for certain Named Executive Officers.
  After the end of the fiscal year:
(4)  The Compensation Committee measures actual performance (individual and GateHouse Media-wide) against the predetermined performance goals and measures to determine the appropriate adjustment to the target bonus (if applicable), as well as other performance considerations related to unforeseen events during the year.

These four steps are described in more detail below:

(1)    Setting GateHouse Media-wide performance goals.    Early in each fiscal year, the Compensation Committee working with senior management and the Board sets overall performance goals for GateHouse Media.

In determining the extent to which the pre-set performance goals are met for a given period, the Committee exercises its judgment whether to reflect or exclude the impact of changes in accounting principles and extraordinary, unusual or infrequently occurring events.

(2)    Setting individual performance measures.    As it sets GateHouse Media-wide performance goals, the Committee also sets individual performance measures for each Named Executive Officer. These measures allow the Committee to play a more proactive role in identifying performance objectives beyond purely financial measures, including, for example, exceptional performance of each individual’s functional responsibilities as well as leadership, creativity and innovation, collaboration, development and implementation of growth initiatives and other activities that are critical to driving long-term value for stockholders.

(3)    Setting a target bonus.    The Committee establishes a target bonus amount for that particular Named Executive Officer. The target bonus takes into account all factors that the Committee deems relevant, including the Committee’s assessment of the aggressiveness of the level of growth reflected in GateHouse Media’s annual operating plan.

(4)    Measuring performance.    After the end of the fiscal year, the Committee reviews GateHouse Media’s actual performance against each of the performance goals established at the outset of the year. The Committee makes an assessment of performance against the individual goals set at the outset of the year as well as the Named Executive Officer’s performance in relation to any extraordinary events or transactions. This assessment allows bonus decisions to take into account each Named Executive Officer’s personal performance and contribution during the year. The amount of the bonus may be adjusted up or down depending on the level of performance against the individual goals. The Named Executive Officer’s employment agreement permits the Board to determine whether annual bonuses will be paid in a Restricted Stock Bonus or cash or a combination thereof.

Long-term Incentive Compensation

Purpose.    The long-term incentive program provides a periodic award (typically annual) that is performance-based. The objective of the program is to directly align compensation for Named Executive Officers over a multi-year period with the interests of stockholders of GateHouse Media by motivating and rewarding creation and preservation of long-term stockholder value. The level of long-term incentive compensation is determined based on an evaluation of competitive factors in conjunction with total compensation provided to Named Executive Officers and the goals of the compensation program described above.

Restricted Share Grants

Each of the Named Executive Officers has entered into a management stockholder agreement (the ‘‘Management Stockholder Agreements’’) pursuant to which they were awarded restricted share grants. Under the Management Stockholder Agreements, the restricted share grants are subject to a five-year vesting schedule, with one-third of the shares vesting on each of the third, fourth and fifth

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anniversaries from the grant date. In addition Messrs. Reed, Champion and Cope also purchased additional restricted shares of GateHouse Media common stock which are also subject to the Management Stockholder Agreements. These agreements were filed with the SEC as Exhibits 10.13, 10.14, 10.15, 10.17, 10.19 and 10.21 to GateHouse Media’s Registration Statement on Form S-1 dated July 21, 2006.

Additional restricted share grants were awarded to Mr. Thompson and Ms. Sack, two of the Named Executive Officers, following the adoption of the Incentive Plan in October 2006. The majority of the restricted share grants granted under the Incentive Plan vest in one-third increments on each of the first, second and third anniversaries of the grant date.

During the applicable vesting period, the Named Executive Officers have all the rights of a stockholder, including, without limitation, the right to vote and the right to receive all dividends or other distributions (at the same rate and on the same terms as all other stockholders). During 2006, Mr. Reed received $120,000 in dividends, Mr. Champion received $64,000 in dividends, Mr. Cope received $40,000 in dividends, Mr. Thompson received $6,000 in dividends and Ms. Sack received $6,000 in dividends.

Deferred Compensation Programs

GateHouse Media maintains the Liberty Group Publishing, Inc. Executive Benefit Plan (‘‘Executive Benefit Plan’’), a nonqualified deferred compensation plan for the benefit of certain key employees. Under the Executive Benefit Plan, GateHouse Media credits an amount, determined at GateHouse Media’s sole discretion, to a bookkeeping account established for each participating key employee. The bookkeeping account is credited with earnings and losses based upon the investment choices selected by the participant. The amounts credited to the bookkeeping account on behalf of each participating key employee vest on an installment basis over a period of five years. A participating key employee forfeits all amounts under the Executive Benefit Plan in the event that his or her employment is terminated for ‘‘cause’’ as defined in the Executive Benefit Plan. Amounts credited to a participating key employee’s bookkeeping account are distributable upon termination of the key employee’s employment, and will be made in a lump sum or installments as elected by the key employee. The Executive Benefit Plan was frozen effective as of December 31, 2006, and all accrued benefits of participants under the terms of the Executive Benefit Plan became 100% vested.

GateHouse Media also maintains the Liberty Group Publishing, Inc. Executive Deferral Plan (‘‘Executive Deferral Plan’’), a nonqualified deferred compensation plan for the benefit of certain key employees. Under the Executive Deferral Plan, eligible key employees may elect to defer a portion of their compensation for payment at a later date. Currently, the Executive Deferral Plan allows a participant to defer up to 100% of his or her annual compensation until termination of employment or such earlier period as elected by the participant. Amounts deferred are credited to a bookkeeping account established for this purpose. The bookkeeping account is credited with earnings and losses based upon the investment choices selected by the participant. Amounts deferred under the Executive Deferral Plan are fully vested and non-forfeitable. The amounts in the bookkeeping account are payable to the participant at the time and in the manner elected by the participant.

Benefits and perquisites

The Compensation Committee supports providing benefits and perquisites to our Named Executive Officers that are substantially the same as those offered to other officers of GateHouse Media at the executive’s level, including vacation, sick time, participation in GateHouse Media’s medical, dental and insurance programs, all in accordance with the terms of such plans and programs in effect from time to time.

Policy with respect to the $1 Million Deduction Limit

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s chief executive officer and four other most highly compensated executive officers as of the end of the fiscal

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year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.

The Compensation Committee designs certain components of Named Executive Officer compensation to permit full deductibility. The Compensation Committee believes, however, that our stockholder interests are best served by not restricting the Compensation Committee’s discretion and flexibility in crafting compensation programs, even though such programs may result in certain non-deductible compensation expenses.

Compensation Committee Report

The Compensation Committee evaluates and establishes compensation for GateHouse Media’s executive officers and oversees other management incentive, benefit and perquisite programs. Management has the primary responsibility for GateHouse Media’s financial statements and reporting process, including the disclosure of executive compensation. With this in mind, the Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis found on pages 21-25 of this proxy statement. The Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly represents the philosophy, intent and actions of the Compensation Committee with regard to executive compensation, and on that basis, recommend to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION COMMITTEE
Howard Rubin, Chairman
Martin Bandier
Kevin M. Sheehan

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COMPENSATION OF EXECUTIVE OFFICERS

 summary compensation table 

The following table provides information concerning total compensation earned or paid to the Chief Executive Officer, the Chief Financial Officers and the three other most highly-compensated executive officers of the Company who served in such capacities for the fiscal year ended December 31, 2006 (with the exception of Daniel D. Lewis as explained in the footnotes to the table). These six officers are referred to as the Named Executive Officers in this proxy statement.


Name and Principal Position Year Salary
($)
Bonus
($)(2)
Restricted
Stock Units
($)(3)
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
All Other
Compensation
($)(4)
Total
Compensation
($)
Michael E. Reed
Chief Executive Officer
2006 442,308 200,000 4,299,000 1,516,560 6,457,868
Scott T. Champion
Co-President and
Co-Chief Operating Officer
2006 200,000 200,000 143,300 543,300
Randall W. Cope
Co-President and
Co-Chief Operating Officer
2006 200,000 200,000 143,300 543,300
Mark R. Thompson
Chief Financial Officer
2006 152,384 200,000 413,979 766,363
Polly G. Sack
Vice President,
General Counsel and Secretary
2006 133,345 200,000 413,979 37,225 784,549
Daniel D. Lewis
Chief Financial Officer(1)
2006 139,000 32,720 0 65,847 237,567
1. Mr. Lewis voluntarily resigned as Chief Financial Officer effective June 30, 2006.
2. See the ‘‘Compensation Discussion and Analysis’’ section for a discussion of how the bonus amounts were determined. Of the amounts shown, 50% was paid in GateHouse Media stock in the form of a Restricted Stock Bonus with a 1/2/07 grant date. Such Restricted Stock Bonus is not included in this table under the heading ‘‘Restricted Stock Units.’’
3. The dollar value of restricted stock set forth in this column is equal to the compensation cost recognized during 2006 for financial statement purposes in accordance with FAS 123R. This valuation method values restricted stock granted during 2006 and previous years. A discussion of the assumptions used in calculating the compensation cost is set forth in Note (2)(a) of the Notes to Consolidated Financial Statements of our 2006 Annual Report to Stockholders. Information regarding the shares of restricted stock granted to certain of our Named Executive Officers during 2006 is set forth in the Grants of Plan-Based Awards Table. The Grants of Plan-Based Awards Table also sets forth the weighted-average grant date fair value of the restricted stock granted during 2006 computed in accordance with FAS 123R.
4. All Other Compensation for Mr. Reed includes: (i) a one-time sign-on bonus of $1,500,000 and (ii) relocation benefits of $16,560. All Other Compensation for Ms. Sack includes: (i) relocation benefits of $33,475 and (ii) GateHouse Media-paid life insurance premiums of $3,750. All Other Compensation for Mr. Lewis includes: (i) severance payment of $58,475, (ii) GateHouse Media contribution to a defined contribution plan of $5,500 and (iii) unused vacation payment of $1,872.

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Grants of Plan-Based Awards

We have provided the following Grants of Plan Based Awards table to provide additional information about annual cash incentive compensation, stock options and restricted share awards granted to our Named Executive Officers during the year ended December 31, 2006.


    Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards
Estimated Future Payouts Under Equity
Incentive Plan Awards
       
Name Grant
Date
Threshold Target Maximum Threshold (#) Target (#) Maximum (#) All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(1)
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
Exercise or
Base Price
of Option
Awards ($)
Grant Date
Fair Value
of Stock and
Option
Awards ($)(2)
Michael E. Reed 1/3/06             300,000     4,299,000
Scott T. Champion 3/1/06             10,000     143,300
Randall W. Cope 3/1/06             10,000     143,300
Mark R. Thompson 5/10/06             15,000     214,950
  10/26/06             13,889     199,029
Polly G. Sack 5/17/06             15,000     214,950
  10/26/06             13,889     199,029
Daniel D. Lewis             0     0
1. The amounts set forth in this column reflect the number of restricted share grants granted under the Management Stockholder Agreements (which have a five-year vesting schedule, with one-third of the shares vesting on each of the third, fourth and fifth anniversaries from the grant date) and granted under the Incentive Plan (which have a three-year vesting schedule, with one-third of the shares vesting on each of the first, second and third anniversaries from the grant date).
2. The dollar values of restricted shares disclosed in this column are equal to the weighted-average grant date fair value computed in accordance with FAS 123R. A discussion of the assumptions used in calculating the compensation cost is set forth in Note 2(a) of the Notes to Consolidated Financial Statements of our 2006 Annual Report to Stockholders.

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Outstanding Equity Awards at Fiscal Year-End

In addition, we have provided the following Outstanding Equity Awards at Fiscal Year-End table to summarize the equity awards we have made to our Named Executive Officers which are outstanding as of December 31, 2006.


  Option Awards Stock Awards
Name Number of
Securities
Underlying
Unexercised
Options
Exercisable
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
Option
Exercise
Price
Option
Expiration
Date
Number of
Shares or Units
of Stock that
have not Vested
(#)
Market Value
of Shares or
Units of Stock
that have not
Vested($)(1)
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
other Rights
that have not
Vested (#)
Equity
Incentive Plan
Awards: Market
or Payout Value
of Unearned
Shares, Units or
Other Rights
that have not
Vested ($)
Michael E. Reed 100,000 (2)  1,856,000
          100,000 (3)  1,856,000    
          100,000 (4)  1,856,000    
Scott T. Champion 50,000 (5)  928,000
          50,000 (6)  928,000    
          50,000 (7)  928,000    
          3,333.33 (8)  61,867    
          3,333.33 (9)  61,867    
          3,333.33 (10)  61,867    
Randall W. Cope 30,000 (5)  556,800
          30,000 (6)  556,800    
          30,000 (7)  556,800    
          3,333.33 (8)  61,867    
          3,333.33 (9)  61,867    
          3,333.33 (10)  61,867    
Mark R. Thompson 5,000 (11)  92,800
          5,000 (12)  92,800    
          5,000 (13)  92,800    
          4,630 (14)  85,933    
          4,630 (15)  85,933    
          4,630 (16)  85,933    
Polly G. Sack 5,000 (17)  92,800
          5,000 (18)  92,800    
          5,000 (19)  92,800    
          4,630 (14)  85,933    
          4,630 (15)  85,933    
          4,630 (16)  85,993    
Daniel D. Lewis

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1. The amounts set forth in this column equal the number of shares of restricted stock indicated multiplied by the closing price of our common stock ($18.56) on December 29, 2006, the last trading day of 2006. There can be no assurance that the amounts shown in the table will ever be realized by the Named Executive Officer.
2. Shares of restricted stock vest on January 30, 2009.
3. Shares of restricted stock vest on January 30, 2010.
4. Shares of restricted stock vest on January 30, 2011.
5. Shares of restricted stock vest on June 6, 2008.
6. Shares of restricted stock vest on June 6, 2009.
7. Shares of restricted stock vest on June 6, 2010.
8. Shares of restricted stock vest on March 1, 2009.
9. Shares of restricted stock vest on March 1, 2010.
10. Shares of restricted stock vest on March 1, 2011.
11. Shares of restricted stock vest on May 10, 2009.
12. Shares of restricted stock vest on May 10, 2010.
13. Shares of restricted stock vest on May 10, 2011.
14. Shares of restricted stock vest on October 26, 2007.
15. Shares of restricted stock vest on October 26, 2008.
16. Shares of restricted stock vest on October 26, 2009.
17. Shares of restricted stock vest on May 17, 2009.
18. Shares of restricted stock vest on May 17, 2010.
19. Shares of restricted stock vest on May 17, 2011.

Option Exercises and Stock Vested

We have provided the following Option Exercises and Stock Vested table to provide additional information about the value realized by our Named Executive Officers on option award exercises and stock award vesting during the year ended December 31, 2006.


  Option Awards Stock Awards
Name Number of
Shares
Acquired
on Exercise
Value
Realized
on Exercise
Number of
Shares
Acquired
on Vesting (#)
Value Realized
on Vesting ($)
Daniel D. Lewis 3,000 30,000

Pension Benefits

GateHouse Media does not offer retirement benefits to any of its employees.


Name Plan Name Number of Years
Credited Service
Present Value of
Accumulated Benefit
Payments
During 2006
Michael E. Reed
Scott T. Champion
Randall W. Cope
Mark R. Thompson
Polly G. Sack
Daniel D. Lewis

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Nonqualified Deferred Compensation

The following table sets forth information with respect to contributions to and withdrawals from the Liberty Group Publishing, Inc. Executive Deferral Plan and/or the Liberty Group Publishing, Inc. Executive Benefit Plan to our Named Executive Officer’s during fiscal year ended December 31, 2006.


Name Executive
Contributions
in 2006 ($)(1)
Registrant
Contributions
in 2006 ($)
Aggregate
Earnings
in 2006 ($)(1)
Aggregate
Withdrawals
/Distributions ($)
Aggregate
Balance
at 12/31/06 ($)
Michael E. Reed -0- -0- -0- -0- -0-
Scott T. Champion 28,462 5,500 37,986 -0- 305,512
Randall W. Cope -0- 5,500 4,892 -0- 46,597
Mark R. Thompson -0- -0- -0- -0- -0-
Polly G. Sack -0- -0- -0- -0- -0-
Daniel D. Lewis 1,694 5,500 1,621 37,582 -0-
1. No amounts reported in these columns are reported as compensation in the 2006 Summary Compensation Table.

Employment Agreements

Michael E. Reed

Mr. Reed is employed as Chief Executive Officer of GateHouse Media pursuant to an employment agreement effective as of January 30, 2006. Under this agreement, he has the duties and responsibilities customarily exercised by the person serving as chief executive officer of a company the size and nature of GateHouse Media.

Pursuant to his employment agreement, which has an initial three-year term with an automatic one-year renewal unless GateHouse Media or Mr. Reed gives notice of non-renewal within ninety days prior to the end of the term, Mr. Reed receives an annual base salary of $500,000. Mr. Reed also is eligible for an annual, performance-based bonus. The agreement provides that Mr. Reed is eligible to receive an annual target bonus of $200,000 upon the achievement of certain performance goals agreed to by Mr. Reed and GateHouse Media’s Board. The bonus is payable in either GateHouse Media’s common stock or cash in the discretion of the Board, provided that no more than 50% of the bonus shall be payable in GateHouse Media’s common stock without Mr. Reed’s approval. Any Restricted Stock Bonus will vest ratably on the third, fourth and fifth anniversaries of the grant date. For fiscal year 2006 only, Mr. Reed received a ‘‘sign-on’’ cash bonus of $1,500,000. Mr. Reed’s employment agreement also provided for the reimbursement of his reasonable relocation expenses.

Pursuant to his employment agreement, Mr. Reed also received a one-time grant of 300,000 shares of restricted common stock (the ‘‘Initial Stock Grant’’) which vests ratably on January 30, 2009, January 30, 2010 and January 30, 2011 (the third, fourth and fifth anniversaries of his employment agreement’s effective date).

Scott T. Champion

Mr. Champion is employed as Co-President and Co-Chief Operating Officer of GateHouse Media pursuant to an employment agreement effective as of June 6, 2005. Under this agreement, he has the duties and responsibilities customarily exercised by the person serving as president and chief operating officer of a company of the size and nature of GateHouse Media.

Pursuant to his employment agreement, which has an initial three-year term with an automatic one-year renewal unless GateHouse Media or Mr. Champion gives notice of non-renewal within ninety days prior to the end of the term, Mr. Champion receives an annual base salary of $200,000. Mr. Champion also is eligible for an annual, performance-based target bonus of $200,000 based upon the achievement of certain performance goals agreed to by Mr. Champion and GateHouse Media’s Board. The bonus may be a Restricted Stock Bonus. Mr. Champion has the right to receive the lesser of: (x) 50% of the annual target bonus paid in GateHouse Media’s common stock or (y) $100,000 of such bonus payable in cash.

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Pursuant to his employment agreement, Mr. Champion received an Initial Stock Grant of 150,000 shares which vests ratably on June 6, 2008, June 6, 2009 and June 6, 2010 (the third, fourth and fifth anniversaries of his employment agreement’s effective date).

Randall W. Cope

Mr. Cope is employed as Co-President and Co-Chief Operating Officer of GateHouse Media pursuant to an employment agreement effective as of June 6, 2005. Under the agreement, he has the duties and responsibilities customarily exercised by the person serving as president and chief operating officer of a company the size and nature of GateHouse Media.

Pursuant to his employment agreement, which has an initial three-year term with an automatic one-year renewal unless GateHouse Media or Mr. Cope gives notice of non-renewal within ninety days prior to the end of the term, Mr. Cope receives an annual base salary of $200,000. Mr. Cope also is eligible for an annual, performance-based target bonus of $200,000 based upon the achievement of certain performance goals agreed to by Mr. Cope and GateHouse Media’s Board. The bonus may be a Restricted Stock Bonus. Mr. Cope has the right to receive the lesser of: (x) 50% of the annual target bonus paid in the GateHouse Media’s common stock or (y) $100,000 of such bonus payable in cash.

Pursuant to his employment agreement, Mr. Cope received an Initial Stock Grant of 90,000 shares which vests ratably on June 6, 2008, June 6, 2009 and June 6, 2010 (the third, fourth and fifth anniversaries of his employment agreement’s effective date).

Mark R. Thompson

Mr. Thompson is employed as the Chief Financial Officer of GateHouse Media pursuant to an employment agreement effective as of May 10, 2006. Under this agreement, he has the duties and responsibilities customarily exercised by the person serving as chief financial officer of a company of the size and nature of GateHouse Media.

Pursuant to his employment agreement, which has no guaranteed term of employment or renewal provision, Mr. Thompson receives an annual base salary of $250,000. Mr. Thompson also is eligible for an annual, performance-based bonus, without a target level, based upon the achievement of certain performance goals agreed to by Mr. Thompson and GateHouse Media’s Board. Such bonus may be a Restricted Stock Bonus as determined by the Board and without restriction as to the relative proportions of common stock or cash comprising such bonus. For fiscal year 2006 only, the agreement initially provided that Mr. Thompson would receive a cash bonus of not less than $125,000. Mr. Thompson’s employment agreement was subsequently amended to provide that the bonus may be paid in any combination of cash and/or securities. Mr. Thompson received a bonus of $200,000. Mr Thompson’s employment agreement also provided for the reimbursement of his reasonable relocation expenses.

Pursuant to his employment agreement, Mr. Thompson received an Initial Stock Grant of 15,000 shares which vests ratably on May 10, 2009, May 10, 2010 and May 10, 2011 (the third, fourth and fifth anniversaries of his employment agreement’s effective date).

Polly G. Sack

Ms. Sack is employed as the Vice President, General Counsel and Secretary of GateHouse Media pursuant to an employment agreement effective as of May 17, 2006. Under this agreement, she has the duties and responsibilities customarily exercised by the person serving as chief legal officer of a company of the size and nature of GateHouse Media.

Pursuant to her employment agreement, which has no guaranteed term of employment or renewal provision, Ms. Sack receives an annual base salary of $225,000. Ms. Sack also is eligible for an annual, performance-based bonus, without a target level, based upon the achievement of certain performance goals agreed to by Ms. Sack and GateHouse Media’s Board. Such bonus may be a Restricted Stock Bonus as determined by the Board and without restriction as to the relative

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proportions of common stock or cash comprising such bonus. For fiscal year 2006 only, the agreement provided that Ms. Sack would receive a cash bonus of not less than $85,000. Ms. Sack received a bonus of $200,000. Ms. Sack’s employment agreement also provided for the reimbursement of her reasonable relocation expenses.

Pursuant to her employment agreement, Ms. Sack received an Initial Stock Grant of 15,000 shares which vests ratably on May 17, 2009, May 17, 2010 and May 17, 2011 (the third, fourth and fifth anniversaries of her employment agreement’s effective date).

Daniel D. Lewis

Mr. Lewis was employed as the Chief Financial Officer of GateHouse Media until his resignation on June 30, 2006. Pursuant to an Employment Termination Agreement dated as of June 2, 2006, Mr. Lewis was entitled to receive five months of his current base salary as the severance payment. Mr. Lewis also received the continuation of his health insurance coverage during the five month severance period.

The Employment Termination Agreement also provided for immediate vesting of 3,000 shares of restricted GateHouse common stock granted to Mr. Lewis pursuant to his Management Stockholder Agreement. Finally, the Employment Termination Agreement provided that GateHouse Media would pay to Mr. Lewis the then-current balance in his executive deferred compensation account and any accrued and unused vacation pay.

All of the Named Executive Officers have restrictive covenants for the benefit of GateHouse Media relating to non-competition during the term of employment and for the one year period following termination of their employment for any reason. Also in their employment agreements are restrictive covenants relating to non-solicitation of GateHouse Media employees, directors, agents, clients, customers, vendors, suppliers or consultants during the term of employment and for the one year period following termination of their employment for any reason.

Potential Payments Upon Termination or Change of Control

The table on page 35 of this proxy statement estimates the amount of compensation payable to each of the Named Executive Officers of GateHouse Media in the event of termination of such executives’ employment upon voluntary termination, termination for cause, death, disability, retirement, involuntary not for cause termination, and termination following a change of control. The amounts shown assume that such termination was effective as of December 31, 2006. The actual amounts to be paid out can only be determined at the time of such executive’s separation from GateHouse Media. A Named Executive Officer is entitled to receive amounts earned during his or her term of employment regardless of the manner in which the Named Executive Officer’s employment is terminated. These amounts include accrued but unpaid base salary and accrued and unused vacation pay through the date of such termination (the ‘‘Accrued Benefits’’). These amounts are not shown in the table. The termination provisions in each of the Named Executive Officer’s employment agreements are substantially identical and are summarized below.

The Management Stockholder Agreements contain a call option exercisable at GateHouse Media’s discretion pursuant to which GateHouse Media may purchase the Named Executive Officer’s nonforfeited common stock, which are subject to the Management Stockholder Agreements, upon termination of the Named Executive Officer’s employment for any reason (the ‘‘Call Option’’). GateHouse Media shall pay the Named Executive Officer: (i) in the case of a termination for cause, the lower of the purchase price of $1,000 per share or the fair market value (as determined by the Board) or (ii) in the case of a termination for any reason other than cause, the fair market value (as determined by the Board).

Additionally, under the Incentive Plan, if the Named Executive Officer’s employment is terminated for any reason, any remaining unvested restricted shares shall immediately be repurchased by GateHouse Media at a price equal to the par value ($.01) per share (the ‘‘Repurchase Obligation’’).

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Payments Made Upon Voluntary Termination and Termination for Cause

Under the employment agreements, if a Named Executive Officer’s employment is voluntarily terminated or terminated by GateHouse Media for cause, that Named Executive Officer is not entitled to any further compensation or benefits other than Accrued Benefits. Messrs. Champion and Cope would forfeit all restricted shares subject to the Initial Restricted Stock Grant and any additional Restricted Stock Bonuses. Messrs. Reed and Thompson and Ms. Sack would forfeit all unvested shares subject to the Initial Stock Grant and any Restricted Stock Bonuses and, in the case of termination due to an act of dishonesty committed in connection with GateHouse Media business, Messrs. Reed and Thompson and Ms. Sack would forfeit all shares subject to the Initial Stock Grant and any Restricted Stock Bonuses.

Under the Management Stockholder Agreements, GateHouse Media may exercise its Call Option.

Under the Incentive Plan, GateHouse Media shall purchase any remaining unvested restricted shares pursuant to its Repurchase Obligation.

Payments Made Upon Death, Disability or Retirement

Under the employment agreements, if the Named Executive Officer’s employment is terminated by reason of death, the Named Executive Officer shall not be entitled to receive any further compensation or benefits other than the Accrued Benefits and any benefits under a life insurance policy paid for by the Named Executive Officer. If the Named Executive Officer’s employment is terminated by reason of disability or retirement, the Named Executive Officer shall not be entitled to receive any further compensation or benefits other than the Accrued Benefits. If the Named Executive Officer fails to perform his or her duties as a result of disability or incapacity, the Named Executive Officer shall continue to receive his base salary and all other benefits and all other compensation unless and until his or her employment is terminated.

Under the Management Stockholder Agreements, if the Named Executive Officer’s employment is terminated by reason of death or disability, the Named Executive Officer shall be entitled to the restricted shares that would have vested on the next anniversary date following the date of such termination, but in no event less than one-third ( 1/3) of the restricted shares. In addition, GateHouse Media may exercise its Call Option.

Under the Incentive Plan, if the Named Executive Officer’s employment is terminated by reason of death or disability, the Named Executive Officer shall be entitled to the restricted shares that would have vested on the next vesting date following the date of such termination. In addition, GateHouse Media shall purchase any remaining unvested restricted shares pursuant to its Repurchase Obligation.

Payments Made Upon Involuntary not for Cause Termination, or Change in Control with Termination

Under the employment agreements, if the Named Executive Officer’s employment is terminated by GateHouse Media other than for cause, the Named Executive Officer shall be entitled to:

(i)  the Accrued Benefits;
(ii)  an amount equal to twelve (12) months’ current base salary;
(iii)  the annual bonus including any declared bonus not yet paid;
(iv)  continuation of the Named Executive Officer’s health benefits at the same levels until the earlier of (a) the time it takes the Named Executive Officer to become eligible for benefits from a new employer or (b) twelve (12) months from the date of termination;
(v)  the shares subject to the Initial Stock Grant and any additional Restricted Stock Bonuses that would have vested on the next anniversary date following the date of such termination, but in no event less than one-third (1/3) each of the shares subject to the Initial Stock Grant and any additional Restricted Stock Bonuses; and

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(vi)  if within twelve (12) months of a change in control, 100% of the remaining unvested shares subject to the Initial Stock Grant and an additional Restricted Stock Bonuses, which shall automatically vest.

Under the Management Stockholder Agreements, GateHouse Media may exercise its Call Option.

Under the Incentive Plan, if the Named Executive Officer’s employment is terminated without cause, the Named Executive Officer shall be entitled to the restricted shares that would have vested on the next vesting date following the date of such termination. In addition, GateHouse Media shall purchase any remaining unvested restricted shares pursuant to its Repurchase Obligation. If the termination is within twelve (12) months of a change in control, 100% of the remaining unvested shares shall automatically vest.

The employment agreements reference the definition of change in control in the Incentive Plan. The Incentive Plan defines a change in control as:

(i)  if any person acquires 50.1% or more of GateHouse Media’s voting securities (other than securities acquired directly from GateHouse Media or its affiliates); or
(ii)  upon the consummation of a merger or consolidation of GateHouse Media or any subsidiary of GateHouse Media other than a merger or consolidation where at least a majority of the Board immediately following the merger or consolidation shall be at least a majority of the board of the surviving entity or its ultimate parent; or
(iii)  upon the approval by the stockholders of a complete liquidation or dissolution of GateHouse Media of all or substantially all of GateHouse Media’s assets, other than (i) a sale or disposition by GateHouse Media of GateHouse Media’s assets to an entity of which at least 50.1% of the voting power is owned by the stockholders of GateHouse Media or (ii) a sale or disposition of all or substantially all of GateHouse Media’s assets immediately following which the board members immediately prior thereto constitute at least a majority of the board members of the entity who bought the assets or if the buyer is a subsidiary, the buyer’s ultimate parent.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL


Event M. E. Reed S. T. Champion R. W. Cope M. R. Thompson P.G. Sack D. D. Lewis
Voluntary Termination and Termination for Cause
Call Option(1)
$ 464,000 $ 928,000 $ 556,800 $ -0- $ -0- $ -0-
Repurchase Obligation(3) -0- -0- -0- 139 </