THE WASHINGTON POST COMPANY
1150 15th Street, N.W., Washington, D. C. 20071
March 31, 1994
TO OUR STOCKHOLDERS:
You are cordially invited to the Company's 1994 Annual Meeting of
Stockholders, which will be held in the Ninth Floor Meeting Room, The Washington
Post Building, 1150 15th Street, N.W., Washington, D.C., on Thursday, May 12,
1994, at 9:00 o'clock in the morning.
At the meeting there will be a report on the Company's activities, and
Directors will be elected for the ensuing year.
It is important that your shares be represented at the meeting. Please sign
the accompanying Proxy and return it promptly in the envelope provided. If you
plan to attend, kindly so indicate in the space provided on the Proxy.
Sincerely yours,
/s/ ALAN G. SPOON /s/ DONALD E. GRAHAM
ALAN G. SPOON DONALD E. GRAHAM
President Chairman
THE WASHINGTON POST COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS/MAY 12, 1994
The Annual Meeting of Stockholders of The Washington Post Company will be
held in the Ninth Floor Meeting Room, The Washington Post Building, 1150 15th
Street, N.W., Washington, D.C., 20071 on Thursday, May 12, 1994, at 9:00 a.m.,
Eastern Daylight Saving Time, for the following purposes:
1. To elect Directors for the ensuing year, as more fully described in
the accompanying Proxy Statement.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 14, 1994,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
It is important that your shares be represented and voted at the meeting,
and you should therefore sign and return your Proxy at your earliest
convenience.
By Order of the Board of Directors,
DIANA M. DANIELS, Secretary
Washington, D. C., March 31, 1994
THE WASHINGTON POST COMPANY
1150 15th Street, N.W., Washington, D.C. 20071
PROXY STATEMENT
March 31, 1994
The accompanying Proxy is solicited by the Board of Directors of The
Washington Post Company (hereinafter called the "Company") for use at the Annual
Meeting of Stockholders to be held on Thursday, May 12, 1994, and at any
adjournment or adjournments thereof. A Proxy may be revoked at any time before
it is voted at the meeting. Solicitation of proxies will be made by the
Company's management through the mail, in person or by telegraph or telephone,
without additional compensation being paid to such members of the Company's
management, and the cost of such solicitation will be borne by the Company. In
addition, the Company will request brokers and other custodians, nominees and
fiduciaries to forward proxy cards and proxy soliciting material to the
beneficial owners of shares held of record by such persons, and the Company will
reimburse them for their expenses in so doing.
This Proxy Statement and the accompanying Proxy, together with a copy of
the Annual Report of the Company for the fiscal year ended January 2, 1994, are
being mailed to the stockholders on March 31, 1994. THE COMPANY HAS ALSO FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION A REPORT ON FORM 10-K FOR SUCH
FISCAL YEAR, A COPY OF WHICH WILL BE FURNISHED WITHOUT CHARGE (EXCEPT FOR
EXHIBITS) TO ANY STOCKHOLDER UPON HIS OR HER WRITTEN REQUEST ADDRESSED TO THE
TREASURER OF THE COMPANY AT THE ADDRESS SHOWN ABOVE. No material contained in
either of such reports is to be considered a part of the proxy soliciting
material.
As of the close of business on March 14, 1994, the record date for the
Annual Meeting, the Company had outstanding and entitled to vote 1,843,250
shares of Class A Common Stock (hereinafter called "Class A Stock") and
9,870,115 shares of Class B Common Stock (hereinafter called "Class B Stock"),
each of which is entitled to one vote upon all matters on which such class of
stock is entitled to vote. Only stockholders of record at the close of business
on March 14, 1994, are entitled to vote at the Annual Meeting or at any
adjournment thereof.
As of the date of this Proxy Statement the only matter that the Board of
Directors expects to present to the Annual Meeting is the election of Directors
for the ensuing year. Information with respect to the principal holders of the
Class A Stock and the Class B Stock is given below.
ELECTION OF DIRECTORS
A Board of twelve Directors is to be elected, eight by the holders of Class
A Stock voting separately as a class and four by the holders of Class B Stock
voting separately as a class. All Directors will hold office until the next
Annual Meeting of Stockholders and until their respective successors shall have
been elected and shall have qualified or as otherwise provided in the By-laws of
the Company.
Each Class A Stock Proxy and each Class B Stock Proxy executed and returned
by a stockholder will be voted for the election of the respective Directors
hereinafter shown as nominees for each respective class of stock, unless
otherwise indicated on such Proxy. In the event that any nominee withdraws or
for any reason is not able to serve as a Director, the persons named in the
accompanying Proxy will either vote for such other person as the Board of
Directors may nominate or will not vote for anyone to replace such nominee. The
Board of Directors knows of no reason which would cause any nominee to be unable
to act or to refuse to accept nomination or election. Directors will be elected
by a plurality of the votes cast. Any shares not voted (whether by abstention,
broker non-vote or otherwise) have no impact on the vote.
NOMINEES FOR ELECTION BY CLASS A STOCKHOLDERS
MARTIN COHEN
Mr. Cohen, age 62, is a Vice President of the Company, having served as
Vice President--Finance and Treasurer from 1975 until July 1987, when he
was elected to the Board of Directors. He is a member of the Finance
Committee of the Board. He is also a director and President of Homer
News, Inc., which publishes a weekly newspaper in Homer, Alaska, and is
a member of the Finance Committee of Children's Hospital National
Medical Center. In addition, he is a member of the Board of National
Museum of Health and Medicine Foundation, and is a director and
treasurer of Alliance for the Mentally Ill of Montgomery County,
Maryland. He also serves as a trustee of the Philip L. Graham Fund.
GEORGE J. GILLESPIE, III
Mr. Gillespie, age 63, has since 1963 been a partner in Cravath, Swaine
& Moore, which is one of several law firms retained by the Company in
1992 and 1993 and which it proposes to retain in 1994. He has been a
Director of the Company since 1974 and serves as Chairman of the Finance
Committee of the Board. Mr. Gillespie is also a director of The Fund
American Enterprises Holdings, Inc., and the National Multiple Sclerosis
Society, a director and President of the Madison Square Boys & Girls
Club, a director
2
and Secretary-Treasurer of the John M. Olin Foundation, Inc., a director
and President of the Pinkerton Foundation. Mr. Gillespie also serves on
the boards of a number of other foundations, educational institutions,
and charitable organizations.
DONALD E. GRAHAM
Mr. Graham, age 48, has been Chairman of the Board of the Company since
September 1993 and Chief Executive Officer of the Company since May 9,
1991. Mr. Graham served as President of the Company between May 1991 and
September 1993. He is also Publisher of The Washington Post, a position
he has held since January 1979. Mr. Graham has been a Director of the
Company since 1974 and is a member of the Finance and Executive
Committees of the Board. He is the son of Katharine Graham, who is a
Director and Chairman of the Executive Committee of the Company. Mr.
Graham is a director of the Newspaper Association of America and is a
trustee of the Federal City Council and the Philip L. Graham Fund.
KATHARINE GRAHAM
Mrs. Graham, age 76, has been Chairman of the Executive Committee since
September 1993. On September 9, 1993, Mrs. Graham stepped down as
Chairman of the Board, a position she had held since 1973. By virtue of
her ownership of 29.1% of the outstanding Class A Stock of the Company,
her exclusive right to vote an additional 23.4% of such stock and her
position as Chairman of the Executive Committee of the Company, Mrs.
Graham is a "control person" of the Company as defined by the Securities
and Exchange Commission. Mrs. Graham has been a Director of the Company
since 1957 and is a member of the Finance and Executive Committees of
the Board. She is the mother of Donald E. Graham, who is a Director,
Chairman of the Board and Chief Executive Officer of the Company and
Publisher of The Washington Post and who succeeded her as Chief
Executive Officer in May 1991 and as Chairman of the Board in September
1993. Mrs. Graham is also a director of the Council for Aid to
Education, a trustee of the Federal City Council, the Philip L. Graham
Fund, the Reuters Founders Share Company Limited and the Urban
Institute, a Life Trustee of the University of Chicago and an Honorary
Trustee of the Committee for Economic Development and George Washington
University.
WILLIAM J. RUANE
Mr. Ruane, age 68, has for more than six years been Chairman of the
Board of Ruane, Cunniff & Co., Inc., an investment management firm, and
Sequoia Fund, Inc., a mutual fund. He was elected a Director of the
Company in September 1985 and is a member of
3
the Audit and Finance Committees of the Board of Directors. He is also a
director of GEICO Corporation and the New York Theatre Workshop and is a
trustee of the Y.W.C.A. of New York and The Carmel Hill Fund.
RICHARD D. SIMMONS
Mr. Simmons, age 59, has been retired since June 30, 1991; prior to his
retirement he had been President and Chief Operating Officer of the
Company for nearly ten years. Since September 1981, he has been a
Director of the Company and is a member of the Compensation Committee of
the Board of Directors. Mr. Simmons is President of International Herald
Tribune, S.A., French publishing company owned jointly by the Company
and The New York Times Company, a position he has held since 1989. Mr.
Simmons is also a director of Morgan Guaranty Trust Company of New York,
J.P. Morgan & Co. Inc., and Union Pacific Corporation, a member of the
General Electric Investment Corporation Equity Advisory Board, a trustee
of The Phillips Collection and a member of the Council of the White
Burkett Miller Center of Public Affairs at the University of Virginia.
ALAN G. SPOON
Mr. Spoon, age 42, has been President since September 9, 1993 and Chief
Operating Officer of the Company and a Director of the Company since May
9, 1991 and is a member of the Executive and Finance Committees of the
Board. Mr. Spoon has served in various capacities with the Company since
joining in 1982 as Vice President for business development and planning.
He is Chairman of the Board of Trustees of the Norwood School and a
Director of the National Museum of Natural History.
GEORGE W. WILSON
Mr. Wilson, age 56, has for more than thirteen years been President and
Chief Executive Officer of Newspapers of New England, Inc., Newspapers
of New Hampshire, Inc., Newspapers of Massachusetts, Inc. and President
of the Concord Monitor, which is published in Concord, N.H. He was
elected a Director of the Company in September 1985 and is a member of
the Compensation Committee of the Board of Directors. Mr. Wilson is also
a director of New Directions for News, The Bakersfield (California)
Californian and The Associated Press.
4
NOMINEES FOR ELECTION BY CLASS B STOCKHOLDERS
JAMES E. BURKE
Mr. Burke, age 69, is Chairman of the Partnership for a Drug-Free
America. Prior to his retirement in April 1989 he had been Chairman of
the Board and Chief Executive Officer of Johnson & Johnson, a leading
manufacturer of health care and other products. He joined the Board of
Directors of the Company in November 1989 and is a member of the Finance
and Compensation Committees of the Board. He is also a director of IBM
Corporation and The Prudential Insurance Company of America. In addition
he serves as a trustee of the Robert Wood Johnson Foundation and the
Urban Institute and a director of the Associates of the Harvard Business
School. Mr. Burke also serves on the boards of a number of other
foundations, commissions and charitable organizations.
RALPH E. GOMORY
Mr. Gomory, age 64, has since 1989 been President of the Alfred P. Sloan
Foundation, a charitable foundation. Before assuming his present
position he had served for thirty years with IBM Corporation, where he
was Senior Vice President for Science and Technology from 1986 to 1989
after having been Senior Vice President and Director of Research since
1970. He became a Director of the Company in July 1989 and is a member
of the Audit Committee of the Board. In addition he is a director of
Ashland Oil, Inc., Lexmark International, Inc., Polaroid Corporation and
The Bank of New York. He is also a member of the National Academy of
Sciences and the National Academy of Engineering.
DONALD R. KEOUGH
Mr. Keough, age 67, has been Chairman of Allen & Company Incorporated
since April 1993 following his retirement as President, Chief Operating
Officer and a director of The Coca-Cola Company, a major international
beverage company. He has been a Director of the Company since 1989 and
is a member of the Audit Committee of the Board. He is also a director
of National Services Industries, Inc., The Home Depot, Inc., McDonald's
Corporation and H.J. Heinz Company. Mr. Keough is also a trustee of the
University of Notre Dame and serves on the boards of a number of other
educational institutions and charitable organizations.
5
BARBARA SCOTT PREISKEL
Mrs. Preiskel, age 69, has been an attorney in private practice since
March 1983, when she retired as Senior Vice President and General
Counsel of the Motion Picture Association of America, Inc., a position
she had held since December 1977. She was elected a Director of the
Company in September 1985 and is Chairman of the Audit Committee of the
Board of Directors. Mrs. Preiskel is also a director of American Stores
Company, General Electric Company, Massachusetts Mutual Life Insurance
Co. and Textron Inc., serves as a trustee of the Ford Foundation,
Tougaloo College and Wellesley College, is Chairman of the Distribution
Committee of the New York Community Trust and is a director of the
American Museum of the Moving Image, the American Women's Economic
Development Corp. and the New York Philharmonic Society.
The standing committees of the Board include an Audit Committee, a
Compensation Committee, an Executive Committee and a Finance Committee. The
Board does not have a nominating committee.
The Audit Committee recommends the independent accountants appointed by the
Board to audit the consolidated financial statements of the Company, which
includes an inspection of the books and accounts of the Company, and reviews
with such accountants the scope of their audit and their report thereon,
including any questions and recommendations that may arise relating to such
audit and report or the Company's internal accounting and auditing procedures.
The Audit Committee met twice in 1993.
The Compensation Committee considers and approves the Company's incentive
compensation and bonus programs, and specifically approves all salaries of
$150,000 or more per year, all incentive compensation awards and all other
bonuses (other than sales bonuses) of $5,000 or more, and also awards stock
options. During 1993 the Committee held two meetings.
The Executive Committee has and may exercise all of the powers of the Board
delegable by law in the management of the business and affairs of the Company.
During 1993 the Executive Committee met twice.
The Finance Committee considers and makes recommendations to the Board
relating to dividend policy, major acquisitions and dispositions of businesses,
incurrence of indebtedness, selection of managers of defined benefit plan
assets, stock repurchase programs and certain other financial matters. The
Finance Committee met once in 1993.
During 1993 the Board held six regular bi-monthly meetings. Each of the
persons nominated by the Board for election as a Director attended at least 75%
of the aggregate of the total number of meetings held during 1993 of the Board
and of the committees on which he or she served.
COMPENSATION OF DIRECTORS
The only Directors of the Company who are compensated for serving in that
capacity are those who are not employees of the Company or its subsidiaries.
Each such person receives an
6
annual fee of $30,000 for service as a Director and an additional $5,000 for
service as chairman of a committee of the Board. The Company reimburses all such
Directors for their expenses incurred in attending Board and committee meetings.
In May 1991, the Company entered into a three-year agreement with Mr.
Richard D. Simmons, a Director of the Company, for a term commencing July 1,
1991, following termination of his employment with the Company (see page 24).
Pursuant to this agreement, Mr. Simmons provides consulting and other services
to the Company.
STOCKHOLDER PROPOSALS
The Securities and Exchange Commission requires the Company to submit to a
vote at its annual meetings, and to include in its proxy materials for such
meetings, stockholder proposals meeting the requirements of the Commission's
proxy rules if such proposals are submitted in a timely fashion by stockholders
entitled to vote thereon. Eligible proposals intended to be submitted to the
Company's annual meeting to be held in 1995 must be received by the Secretary of
the Company at its offices in Washington, D.C., no later than November 30, 1994.
Holders of Class B Stock are entitled to vote only for the election of 30%
of the members of the Board of Directors (and, if required by the rules of the
New York Stock Exchange, on management proposals to reserve shares for stock
options or to acquire the stock or assets of other companies under certain
circumstances). In accordance with the rules of the Securities and Exchange
Commission, proposals submitted on other matters by holders of Class B Stock
have not been and will not be included in the Company's proxy materials for
annual meetings.
STOCK HOLDINGS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in the following two tables relates to each person who on
February 1, 1994, was a "beneficial owner" (as defined under the proxy rules of
the Securities and Exchange Commission) of more than 5% of the Company's Class A
or Class B Stock. Under the proxy rules a person is deemed to be the "beneficial
owner" of stock if such person has (or shares) either investment power or voting
power over such stock, or has (or shares) the right to acquire such stock within
60 days by any of a number of means, including the conversion of another
security which is convertible into such stock. A substantial number of shares of
the Company's Class A and Class B Stock is held in trusts or subject to other
agreements which provide for the sharing of investment power, voting power or
both among several persons, each of whom is deemed by the Securities and
Exchange Commission to be a "beneficial owner" of the shares so held.
Furthermore, in many cases such persons do not include the beneficiary of the
trust who, although not deemed to be a "beneficial owner" in the absence of
voting or investment power over the shares, is nevertheless shown below as a
beneficial owner because of the beneficiary's economic interest in the shares.
In addition, since all the shares of Class A Stock are convertible at the option
of the holder into Class B Stock on a share-for-share basis, each "beneficial
owner" of shares of Class A Stock is deemed by the Securities and Exchange
Commission to be a "beneficial owner" of the
7
same number of shares of Class B Stock; in indicating below a person's
"beneficial ownership" of shares of Class B Stock it has been assumed that such
person has converted into Class B Stock all shares of Class A Stock of which
such person is a "beneficial owner". For these reasons there is very substantial
duplication in the numbers of shares and percentages shown in the following
table.
PRINCIPAL HOLDERS OF STOCK
SHARES (%)
NAME AND ADDRESS OF ----------------------------------------
BENEFICIAL OWNER CLASS A STOCK CLASS B STOCK*
- -------------------------------------------------------------- ------------------ --------------------
Katharine Graham(a)(i)........................................ 966,580(52.4%) 1,476,011(12.6%)
2920 R Street, N.W.
Washington, D.C.
Donald E. Graham(b)(i)........................................ 754,745(41.0%) 3,258,548(27.8%)
3110 Newark Street, N.W.
Washington, D.C.
William W. Graham(c)(i)....................................... 317,627(17.2%) **
Suite 401
11661 San Vincente Blvd.
Los Angeles, California
Stephen M. Graham(d).......................................... 323,889(17.6%) **
18 E. 78th Street
New York, N.Y.
Elizabeth G. Weymouth(e)(i)................................... 404,874(22.0%) **
21 East 79 Street
New York, N.Y.
George J. Gillespie, III(f)(i)................................ 455,523(24.7%) 1,481,167(12.6%)
Sterling Road
Harrison, N.Y.
Berkshire Hathaway Inc.(g).................................... ** 1,727,765(14.8%)
1440 Kiewit Plaza
Omaha, Nebraska
Morgan Guaranty Trust Company................................. ** 719,141(6.1%)
of New York(h)
9 West 57th Street
New York, N.Y.
- ---------------
* The calculations set forth in this table relating to percentage ownership of Class B Stock include
1,843,250 shares of Class B Stock issuable upon conversion of shares of Class A Stock beneficially
owned.
** Less than five percent.
(Footnotes continued on following page)
8
(Footnotes continued from preceding page)
(a) According to information as of February 1, 1994, and available to the Company, Mrs. Graham has voting
and investment power with respect to shares of Class A Stock as follows: sole voting power, 966,580
(52.4%) shares, and sole investment power, 785,089 (42.6%) shares. Mrs. Graham also has voting and
investment power with respect to shares of Class B Stock as follows: sole voting power, 135,168 (1.2%)
shares, sole investment power, 135,168 (1.2%) shares, shared voting power, 233,370 (2.0%) shares, and
shared investment power, 233,370 (2.0%) shares. In addition Mrs. Graham, as the beneficiary of a
revocable trust, is deemed the beneficial owner of 140,893 (1.2%) shares of Class B Stock. She is also
deemed the beneficial owner of 966,580 (8.3%) shares of Class B Stock issuable upon conversion of
shares of Class A beneficially owned by Mrs. Graham.
(b) According to information as of February 1, 1994, and available to the Company, Mr. Donald Graham has
voting and investment power with respect to shares of Class A Stock as follows: sole voting power,
262,314 (14.2%) shares, sole investment power, 262,314 (14.2%) shares, share voting power, 248,832
(13.5%) shares, and shared investment power, 430,323 (23.3%) shares. In addition Mr. Graham, as the
beneficiary of a trust even though he has no voting or investment power with respect thereto, is deemed
to be the beneficial owner of 62,208 (3.4%) shares of Class A Stock. Mr. Graham also has voting and
investment power with respect to shares of Class B Stock as follows: sole voting power, 1,956,891
(16.8%) shares, sole investment power 229,126 (2.0%) shares, shared voting power 478,020 (4.1%) shares,
and shared investment power, 478,020 (4.1%) shares. The holdings of Class B Stock recorded for Mr.
Graham includes 35,000 shares held by Mr. Graham's wife, in which he disclaims beneficial ownership,
33,792 shares (<1%) as to which Mr. Graham is the beneficiary of a trust even though he has no voting
or investment powers, and 754,845 (6.4%) shares issuable upon conversion of shares of Class A Stock
beneficially owned by Mr. Graham. The holdings of Class B Stock recorded for Mr. Graham also include
shares of Class B Stock owned by subsidiaries of Berkshire Hathaway, Inc., which have the sole
investment power of the shares; sole voting power is held by Mr. Donald Graham under an agreement date,
as of February 25, 1977, and amended and extended on September 13, 1985, which has a termination date
(which may be extended) of February 24, 1997.
(c) According to information as of February 1, 1994, and available to the Company, Mr. William Graham has
voting and investment power with respect to shares of Class A Stock as follows: sole voting power,
107,514 (5.8%) shares, sole investment power, 107,514 (5.8%), shared voting power, 25,200 (1.4%)
shares, and shared investment power, 25,200 (1.4%) shares. In addition, Mr. William Graham, as the
beneficiary of trusts even though he has no voting or investment power with respect thereto, is deemed
to be the beneficial owner of 184,913 (10%) shares of Class A Stock. The holdings of Class B Stock
recorded for Mr. Graham, including shares issuable upon conversion of shares of Class A Stock
beneficially owned by Mr. Graham, are less than five percent.
(d) According to information as of February 1, 1994, and available to the Company, Mr. Stephen Graham has
voting and investment power with respect to shares of Class A Stock as follows: sole voting power,
138,976 (7.5%) shares, and sole investment power, 138,976 (7.5%) shares. In addition, Mr. Stephen
Graham, as the beneficiary of trusts even though he has no voting or investment power with respect
thereto, is deemed to be the beneficial owner of 184,913 (10%) shares of Class A Stock. The holdings of
Class B Stock recorded for Mr. Graham, including shares issuable upon conversion of shares of Class A
Stock beneficially owned by Mr. Graham, are less than five percent.
(Footnotes continued on following page)
9
(Footnotes continued from preceding page)
(e) According to information as of February 1, 1994, and available to the Company, Mrs. Weymouth has voting
and investment power with respect to shares of Class A Stock as follows: sole voting power, 93,834
(5.1%) shares, sole investment power, 93,834 (5.1%) shares, shared voting power, 248,832 (13.5%)
shares, and shared investment power, 248,832 (13.5%) shares. In addition Mrs. Weymouth, as the
beneficiary of a trust even though she has no voting or investment power with respect thereto, is
deemed the beneficial owner of 62,208 (3.4%) shares of Class A Stock. The holdings of Class B Stock
recorded for Mrs. Weymouth, including shares issuable upon conversion of shares of Class A Stock
beneficially owned by Mrs. Weymonth, are less than five percent.
(f) According to information as of February 1, 1994, and available to the Company, Mr. Gillespie, as
trustee of various trusts, has voting and investment power with respect to shares of Class A Stock as
follows: shared voting power, 274,032 (14.9%) shares, and shared investment power, 455,523 (24.8%)
shares. In addition, Mr. Gillespie has voting and investment power with respect to shares of Class B
Stock as follows: sole voting power, 766,994 (6.5%) shares, sole investment power, 146,893 (1.3%)
shares, shared voting power, 254,650 (2.2%) shares, and shared investment power, 874,751 (7.5%) shares.
The holdings of Class B Stock recorded for Mr. Gillespie include 4,000 shares held in trust for the
benefit of Mr. Gillespie's wife, in which shares he disclaims any beneficial interest, and 455,523
(3.9%) shares issuable upon conversion of shares of Class A Stock deemed to be beneficially owned by
Mr. Gillespie, as trustee of various trusts.
(g) According to information as of February 1, 1994, and available to the Company, Berkshire Hathaway, Inc.
("Berkshire") was the beneficial owner of 1,727,765 (14.8%) shares of Class B Stock. The ownership of
these shares is through several subsidiaries of Berkshire. Mr. Warren E. Buffett is Chairman of the
Board of Berkshire. Mr. Buffett, his wife and a trust of which Mr. Buffett is a trustee, but in which
he has no economic interest, own approximately 43.8% of the outstanding shares of Berkshire and Mr.
Buffett may be deemed to be in control of Berkshire under Federal securities laws. With respect to
shares of Class B Stock owned by subsidiaries of Berkshire, Mr. Buffett, Berkshire and such
subsidiaries may be considered to share investment power. Pursuant to an agreement dated as of February
25, 1977 and amended and extended on September 13, 1985 (which has a termination date (which may be
extended) of February 24, 1997), Mr. Buffett, Berkshire and such subsidiaries have granted Mr. Donald
Graham a proxy to vote such shares in his discretion.
(h) According to information as of February 1, 1994, and available to the Company, Morgan Guaranty Trust
Company of New York ("Morgan"), was the beneficial owner of 719,141 (6.1%) shares of Class B Stock.
This number includes shares of Class B Stock as to which Morgan has or shares voting and investment
power as follows: sole voting power, 46,000 (<1%) shares, sole investment power 63,600 (<1%) shares,
shared voting power, 28,440 (<1%) shares, and shared investment power, 654,041 (5.6%) shares.
(i) According to information as of February 1, 1994, and available to the Company, Mr. Donald Graham, Mrs.
Weymouth, and Mr. Gillespie share voting and investment power over 248,832 (13.5%) shares of Class A
Stock; Mr. Gillespie and Mr. William Graham share voting and investment power over 25,200 (1.4%) shares
of Class A Stock; Mr. Donald Graham and Mr. Gillespie share investment power over 181,491 (9.9%) shares
of Class A Stock; Mr. Donald Graham and Mr. Gillespie share voting and investment power over 244,650
(2.1%) shares of Class B Stock; Mr. Donald Graham, Mrs. Graham and Mr. Gillespie share voting and
investment power of 2,600 (<1%) shares of Class B Stock; Mr. Donald Graham and Mrs. Graham share voting
and investment power over 230,770 (2.0%) shares of Class B Stock held by the Philip L. Graham Trust;
and Mr. Gillespie and Morgan share investment powers over 623,001 (5.1%) shares of Class B Stock.
10
The table below, which is based upon information furnished to the Company
by its Directors and officers, shows as of February 1, 1994, for each person
nominated for election as a Director, and for all Directors and executive
officers of the Company as a group, the number of shares of each class of Common
Stock "beneficially owned" (as defined in the Securities and Exchange
Commission's proxy rules) and, in the case of each nominee for election as a
Director, the nature of such "beneficial ownership". For the reasons set forth
in the first paragraph of this section of the Proxy Statement, there is very
substantial duplication in the numbers of shares and percentages shown in the
following table.
HOLDINGS OF DIRECTORS AND OFFICERS***
SHARES (%)
--------------------------------------------
CLASS A CLASS B(G)
--------------------- ---------------------
James E. Burke......................................... -- 400*
Martin Cohen(a)(f)..................................... -- 255,907(2.2%)
George J. Gillespie, III**............................. 455,523(24.7%) 1,481,167(12.6%)
Ralph E. Gomory........................................ -- 1,000*
Donald E. Graham**(f).................................. 754,845(41.0%) 3,258,548(27.8%)
Katharine Graham**(f).................................. 966,580(52.4%) 1,476,011(12.6%)
Donald R. Keough....................................... -- 500*
Barbara Scott Preiskel................................. -- 300*
William J. Ruane(b).................................... -- 3,482*
Richard D. Simmons(c).................................. -- 17,825*
Alan G. Spoon(d)....................................... -- 17,127*
George W. Wilson....................................... -- 200*
All Directors and executive officers as a group,
eliminating duplications............................... 1,502,926(81.5%) 4,990,018(42.2%)(e)
- ---------------
* Less than one percent.
** See Table of "Principal Holders of Stock" on page 8.
*** Unless otherwise indicated, the Directors and officers listed below have sole voting and investment
power with respect to such securities.
(a) According to information as of February 1, 1994, and available to the Company, this number includes
shares of Class B Stock as to which Mr. Cohen has voting and investment powers as follows: sole voting
power, 25,137 (<1%) shares, sole investment power, 25,137 (<1%) shares, shared voting power, 230,770
(2.0%) shares, and shared investment power, 230,770 (2.0%) shares.
(Footnotes continued on following page)
11
(Footnotes continued from preceding page)
(b) According to information as of February 1, 1994, and available to the Company, this number includes
shares of Class B Stock as to which Mr. Ruane has voting and investment power as follows: sole voting
power, 3,182 (<1%) shares, and sole investment power, 3,482 (<1%) shares. In addition this number
includes 20 shares owned by Mr. Ruane's daughter and 8 shares held by Mr. Ruane's wife, in which shares
he disclaims any beneficial interest.
(c) This number includes 10,000 shares of Class B Stock as to which Mr. Simmons has a right to acquire on
or before April 1, 1994, by exercise of stock options.
(d) This number includes 13,000 shares of Class B Stock as to which Mr. Spoon has a right to acquire on or
before April 1, 1994, by exercise of stock option.
(e) This number includes 1,502,926 shares of Class B Stock issuable upon conversion of shares of Class A
Stock "beneficially owned" by Directors and officers and 45,000 shares of Class B Stock which Directors
and officers have the right to purchase on or before April 1, 1994 pursuant to stock options; it does
not include 205,234 shares of Class B Stock held as of February 1, 1994 by the trustee of various
savings plans maintained by the Company and its business units over which the trustee has voting and
investment powers.
(f) In addition to the information set forth in footnote (i) in the Table of "Principal Holders of Stock",
Mr. Cohen also shares with Mr. Donald Graham and Mrs. Graham voting and investment power over 230,770
(2%) shares of Class B in connection with the Philip L. Graham Fund.
(g) This number includes 1,843,250 shares of Class B Stock issuable upon conversion of shares of Class A
Stock beneficially owned.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of Class B Common Stock.
To the Company's knowledge, based solely on a review of such reports and on
information furnished to the Company and written representations that no other
reports were required, during the fiscal year ended January 2, 1994, all
applicable Section 16(a) filing requirements were complied with.
12
EXECUTIVE COMPENSATION
The following table shows the compensation paid by the Company and its
subsidiaries during 1993, 1992 and 1991 to each of the chief executive officer
and the four most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
LONG TERM COMPENSATION
ANNUAL COMPENSATION
OTHER AWARDS
ANNUAL RESTRICTED SECURITIES PAYOUTS ALL OTHER
NAME AND COMPENSA- STOCK UNDERLYING LTIP COMPENSA-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) TION ($) AWARD(S) ($)2 OPTIONS (#) PAYOUTS ($) TION ($)3
- --------------------- --------- ----------- ----------- ----------- ------------- ----------------- ----------- -----------
Donald E. Graham..... 1993 $ 399,996 -- -- $ 125,966 -- $ 79,642 $ 11,792
Chief Executive 1992 399,996 -- -- -- -- 178,658 11,443
Officer 1991 374,996 -- -- 102,900 -- -- 11,111
Alan G. Spoon........ 1993 380,004 $ 237,500 103,626 -- 52,503 19,263
President and Chief 1992 360,004 282,960 -- -- -- 117,777 18,000
Operating Officer 1991 323,336 70,325 -- 87,220 60,000 -- 16,167
Howard E. Wall....... 1993 298,750 300,000 28,111(1) 85,822 -- 79,642 18,192
Vice President 1992 285,000 162,735 -- -- -- 178,658 17,578
1991 250,000 166,375 -- 74,088 -- -- 17,208
Richard M. Smith..... 1993 298,808 130,000 85,822 -- 47,397 16,434
Vice President 1992 295,808 200,000 -- -- -- 106,323 16,269
1991 269,750 100,000 -- 70,952 2,000 -- 14,836
G. William Ryan...... 1993 298,750 239,000 -- 85,822 -- 79,642 11,950
Vice President 1992 285,000 228,000 -- -- 2,000 178,658 11,400
1991 271,250 -- -- 74,088 -- -- 8,138
- ---------------
(1) In 1993, the Company reimbursed Mr. Wall $28,111 for taxes incurred in
conjunction with moving expenses paid by the Company, which expenses fell below
the reporting threshold.
(2) The numbers in this column represent the dollar value of the restricted
stock awarded to the named executive in the relevant fiscal year. As of the end
of fiscal 1993, the Chief Executive Officer and the other named executives had
the following aggregate restricted stock holdings: Mr. Graham--1,076 shares,
$274,716; Mr. Spoon--899 shares, $229,526; Mr. Wall--754 shares, $192,506; Mr.
Smith--738 shares, $188,421; Mr. Ryan--754 shares, $192,506. Dividends are paid
on restricted stock and are the same as dividends on non-restricted stock.
(3) Contributions to 401(k) savings plans and the Supplemental Executive
Retirement Plan ("SERP") constitute "all other compensation" for 1993 as
follows: Mr. Graham--$11,792 in Company contribution to 401(k) plan; Mr.
Spoon--$11,792 in Company contributions to 401(k) plan and $7,471 in Company
credits to SERP account; Mr. Wall--$11,792 in Company contributions to 401(k)
plan and $6,400 in Company credits to SERP account; Mr. Smith--$12,971 in
Company contributions to 401(k) plan and $3,463 in Company credits to SERP
account; Mr. Ryan--$7,075 in Company contributions to 401(k) plan and $4,875 in
Company credits to SERP account.
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
- --------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END
SHARES (#) ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------- --------------- ----------- ------------------ --------------------
Donald E. Graham...................... -- -- -- --
Alan G. Spoon......................... -- -- 13,000/55,000(1) $446,255/$166,565
Howard E. Wall........................ 500 $ 59,875 3,500/0 $111,876/$0
Richard M. Smith...................... -- -- 6,000/1,000 $223,533/$33,313
G. William Ryan....................... -- -- 5,500/1,500 $126,408/$43,594
- ---------------
(1) Of Mr. Spoon's unexercised options, one option is for 50,000 shares of
Class B Stock at a price of $318.50 (compared to a mean market price of
$178.1875 on December 19, 1991, the date on which the option was granted), which
does not become exercisable until June 30, 1999.
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR(1)
- --------------------------------------------------------------------------------
PERFORMANCE
OR OTHER
PERIOD
UNTIL ESTIMATED FUTURE PAYOUTS UNDER
NUMBER MATURATION OR NON-STOCK PRICE-BASED PLANS(2)
NAME OF UNITS PAYOUT THRESHOLD TARGET MAXIMUM
- ---------------------------------------- ----------- -------------- ----------- ----------- -------------
Donald E. Graham........................ 5,928 12/29/96 $ 148,200 $ 592,800 $ 1,025,544
Alan G. Spoon........................... 4,890 12/29/96 122,250 489,000 845,970
Howard E. Wall.......................... 4,044 12/29/96 202,200 404,400 707,700
Richard M. Smith........................ 4,044 12/29/96 202,200 404,400 606,600
G. William Ryan......................... 4,044 12/29/96 202,200 404,400 707,700
- ---------------
(1) On December 16, 1992, the Compensation Committee of the Board of
Directors approved grants of Performance Units, effective January 4, 1993, for
the 1993-1996 Award Cycle to various key employees of the Company, including the
Chief Executive Officer and the four most highly compensated executive officers
as set forth in the table. The payout opportunities will be based on the
financial performance of the participant's operating division as compared to
that of a peer group of businesses in the case of Messrs. Wall, Smith and Ryan.
The payout opportunities for Messrs. Graham and Spoon are based on a weighted
average of the earned payouts for the major operating divisions of the Company
(including the newspaper division), subject in addition to the Company achieving
a minimum average return on equity.
(2) With regard to the threshold amounts, Newsweek will have to achieve a
specified percentage of the average performance index of several groups of peer
companies based on changes in operating income margins (the "Newsweek threshold
goal") for Mr. Smith to receive the threshold payment listed above; Post-
(Footnotes continued on following page)
14
(Footnotes continued from preceding page)
Newsweek Stations will have to rank at a certain designated percentile among a
group of peer companies based on changes in operating income margins (the
"Post-Newsweek Stations threshold goal") for Mr. Ryan to receive the threshold
payment listed above; Post-Newsweek Cable will have to rank at a certain
designated percentile among a group of peer companies based on changes in
operating cash flow margins and return on assets (the "Post-Newsweek Cable
threshold goal") for Mr. Wall to receive the threshold amount listed above; and
the Company as a whole will have to have achieved, on a weighted average, a
performance that merits the threshold awards for each of the divisions and the
minimum return on equity goal for Messrs. Graham and Spoon to receive the
threshold payments listed above.
With regard to the target amounts, Newsweek will have to achieve 170% of the
Newsweek threshold goal for Mr. Smith to receive the target payment listed
above; Post-Newsweek Stations will have to rank 10 percentiles higher than the
Post-Newsweek Stations threshold goal for Mr. Ryan to receive the target payment
listed above; Post-Newsweek Cable will have to rank 10 percentiles higher than
the Post-Newsweek Cable threshold goal for Mr. Wall to receive the target
payment listed above; and the Company as whole will have to have achieved, on a
weighted average, a performance that merits the target awards for each of the
divisions and the applicable return on equity goal for Messrs. Graham and Spoon
to receive the target payments listed above.
With regard to the maximum amounts, Newsweek will have to achieve 250% of the
Newsweek threshold goal for Mr. Smith to receive the maximum payment listed
above; Post-Newsweek Stations will have to rank first among a group of peer
companies in terms of the Post-Newsweek Station threshold goal for Mr. Ryan to
receive the maximum payment listed above; Post-Newsweek Cable will have to rank
first among a group of peer companies in terms of the Post-Newsweek Cable
threshold goal for Mr. Wall to receive the maximum payment listed above; and the
Company as a whole will have to have achieved, on a weighted average, a
performance that merits the maximum awards for each of the divisions and the
applicable return on equity goal for Messrs. Graham and Spoon to receive the
maximum payments listed above.
15
RETIREMENT PLANS
Basic Plans. Most employees of the Company and its Newspaper, Magazine and
Broadcasting Divisions, including the individuals identified in the table on
page 13, are eligible to participate (subject to minimum service requirements)
in one or another of the defined benefit retirement plans maintained by the
Company and those Divisions. Benefits under these basic plans are determined on
the basis of base salary only, exclusive of all bonuses, deferred compensation
and other forms of remuneration. The Company and each of its business units also
maintain savings plans in which most employees are eligible to participate
(subject to minimum service requirements). (For a number of years the Cable
Division also maintained a defined benefit retirement plan; effective in January
1989 it ceased accruing benefits under that plan, which has been terminated, and
the Cable Division began making contributions to a savings plan for eligible
employees whether or not they contributed to the savings plan.)
Supplemental Executive Retirement Plan. All amounts over $118,800 that
would otherwise be payable under a basic retirement plan are currently subject
to reduction because of the annual pension limitation imposed by the Tax Equity
and Fiscal Responsibility Act of 1982, although the extent of such reductions
may vary in individual cases depending on circumstances existing at the time
retirement payments commence. In addition, the Omnibus Budget Reconciliation Act
of 1993 provides that starting in 1994, with certain exceptions, pension
benefits payable by tax-qualified plans may not be based on annual compensation
exceeding $150,000, as indexed.
To offset these limitations on retirement benefits, the Company adopted
effective January 1, 1989, an unfunded Supplemental Executive Retirement Plan
(the "SERP") which is patterned after similar plans adopted by many other
companies. Under the Company's SERP there will be calculated for each
participating executive (including the executive officers included in the table
on page 13) a "supplemented normal retirement benefit", which will be determined
without reference to either of the abovementioned limitations and will also
include in earnings not only base salary (as in the past) but also bonuses under
the Annual Incentive Compensation Plan. Starting in 1994, a number of other
management employees (not including the executive officers included in the table
on page 13) became participants under the Company's SERP, for whom the
supplemented normal retirement benefits will be determined without reference to
either of the above-mentioned limitations, but will include in only base salary
and not bonuses. In each case in which a retiring executive's supplemented
normal retirement benefit exceeds the benefit payable by the retirement plan or
plans in which the executive has participated, the Company will pay such excess
amount to him or her as a supplemental retirement benefit. Participation in the
SERP is determined by the Compensation Committee of the Board of Directors,
which has designated as participants a number of senior executives including all
those named in the table on page 13 (except that Mr. Graham, who has elected not
to participate in savings plan features of the SERP, will be covered only by the
retirement plan features of the SERP described above).
16
As of December 31, 1993, Mr. Wall had three years of service under the
Company plan and four years of service under the discontinued Post-Newsweek
Cable plan, Mr. Spoon had 12 years of service under the Company plan, Mr. Smith
had 23 years of service under the Newsweek plan, Mr. Ryan had 20 years of
service under the Post-Newsweek Stations plan and Mr. Graham had 20 years under
the Company plan.
The following tables show the estimated annual benefits payable upon
retirement at age 65 to persons in specified remuneration and years-of-service
classifications who participate in both the basic retirement plans and the SERP
(which includes all the individuals identified in the table on page 13):
PENSION PLAN TABLES
- --------------------------------------------------------------------------------
ESTIMATED ANNUAL PENSION (COMPUTED AS
STRAIGHT LIFE ANNUITY) FOR
REPRESENTATIVE YEARS OF CREDITED SERVICE(A)
COVERED ----------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- -------------------- --------- --------- --------- --------- --------- ---------
COMPANY PLAN(C)
- --------------------
$300,000 $ 54,000 $ 81,000 $ 108,000 $ 135,000 $ 162,000 $ 162,000
400,000 71,500 107,250 143,000 178,750 214,500 214,500
450,000 80,250 120,375 160,500 200,625 240,750 240,750
500,000 89,000 133,500 178,000 222,500 267,000 267,000
550,000 97,750 146,625 195,500 244,375 293,250 293,250
600,000 106,500 159,750 213,000 266,250 319,500 319,500
650,000 115,250 172,875 230,500 288,125 345,750 345,750
700,000 124,000 186,000 248,000 310,000 372,000 372,000
750,000 132,750 198,875 265,000 331,625 398,250 398,250
800,000 141,500 212,250 283,000 353,750 424,500 424,500
850,000 150,250 225,375 300,500 375,625 450,750 450,750
- ---------------
Footnotes appear on page 18.
17
ESTIMATED ANNUAL PENSION (COMPUTED AS
STRAIGHT LIFE ANNUITY) FOR
REPRESENTATIVE YEARS OF CREDITED SERVICE(A)
COVERED ----------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- -------------------- --------- --------- --------- --------- --------- ---------
POST-NEWSWEEK
STATIONS
PLAN(C)
- --------------------
$300,000 $ 53,500 $ 80,500 $ 107,500 $ 134,500 $ 161,500 $ 161,500
400,000 71,000 106,750 142,500 178,250 214,000 214,000
450,000 79,750 119,875 160,000 200,155 240,250 240,250
500,000 88,500 133,000 177,500 222,000 266,500 266,750
550,000 97,250 146,125 195,000 243,875 292,750 292,750
600,000 106,000 159,250 212,500 265,750 319,000 319,000
650,000 114,750 172,375 230,000 287,625 345,250 345,250
700,000 123,500 185,500 247,500 309,500 371,500 371,500
750,000 132,250 198,375 265,000 331,125 397,500 397,500
800,000 141,000 211,750 282,500 353,250 424,000 424,000
850,000 149,750 224,375 300,000 375,125 450,250 450,250
NEWSWEEK PLAN(B)(C)
- --------------------
$300,000 $ 31,500 $ 47,250 $ 63,000 $ 78,750 $ 96,000 $ 112,500
400,000 41,500 62,250 83,000 103,750 126,500 148,500
450,000 46,500 69,750 93,000 116,250 141,750 166,500
500,000 51,500 77,250 103,000 128,950 157,000 184,500
550,000 56,500 84,750 113,000 141,250 172,250 202,500
600,000 61,500 92,250 123,000 153,750 187,500 220,500
650,000 66,500 99,750 133,000 166,250 202,750 238,500
700,000 71,500 107,250 143,000 178,750 218,000 256,500
750,000 76,500 114,750 153,000 191,250 233,250 274,500
800,000 81,500 122,250 163,000 203,750 248,500 292,500
850,000 86,500 129,750 173,000 216,250 263,750 310,500
- ---------------
(a) Before deducting the effect on benefits of an offset applicable to
benefits paid under the Company Plan and the Post-Newsweek Stations Plan and
based on average compensation over the employee's career. For an individual
retiring at age 65 during 1994 the deduction would be as follows for the
indicated number of years of credited service: 10 years, $1,823; 15 years,
$2,735; 20 years, $3,647; 25 years, $4,559; 30 and 35 years, $5,470.
(b) Newsweek's plan required employee contributions until the end of 1982,
when it was amended to make the plan non-contributory. The benefits shown in the
table are those provided under the amended plan.
(c) Plan provides increased benefits for years of service after 1991. The
benefits shown in the table are those provided for service after that year.
18
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERALL POLICY
The Company's executive compensation program is based on the premise that
compensation should be competitive and linked to corporate performance. To that
end, the Company has developed an overall compensation strategy and compensation
plans that tie a significant portion of executive compensation to the Company's
success in meeting specified short-term and long-term performance goals and to
long-term appreciation in the Company's stock price. The strategy also supports
an environment that rewards Company and business unit achievement as compared to
that of industry performance levels over a number of years. The overall
objectives of this strategy are to attract and retain key executive talent
critical to the long-term success of the Company, to motivate these executives
to achieve goals inherent in the Company's business strategy, to link executive
and shareholder interests through equity-based plans and finally to provide a
compensation package that recognizes individual contributions as well as overall
business results.
Each year the Compensation Committee conducts a full review of the
Company's executive compensation program. This review includes a comprehensive
report from the Company's Vice President of Human Resources assessing the
effectiveness of the Company's compensation program and comparing the Company's
executive compensation, corporate performance and total return to shareholders
to a group of corporations that represent the Company's most direct competitors
for executive talent. The Compensation Committee reviews the selection of peer
companies used for compensation purposes. Certain information about compensation
levels in other media companies included in this report is collected by
independent consultants. The Compensation Committee uses the median executive
compensation range of such peer companies as a guideline in setting the
compensation of the Company's executives. The peer companies used for
compensation purposes are constructed on a division by division basis and, thus,
are not necessarily identical to the peer group index in the Performance Graph
included in this proxy statement. For example, in determining the companies by
which to measure the Company's cable divison, the comparison is made with purely
cable companies or cable divisions within multimedia companies; in contrast the
peer group selected for comparison purposes in the Performance Graph consists of
companies with multimedia holdings. The annual compensation reviews permit an
ongoing evaluation of the link between the Company's and its business units'
performance and its executive compensation in the context of the compensation
programs of other companies and of the Company's total return to shareholders.
The Compensation Committee determines the compensation of approximately the
40 most highly compensated corporate and divisional executives, including the
chief executive officer and the other individuals whose compensation is detailed
in this proxy statement (the "named executives"). In reviewing the individual
performance of the named executives, the Compensation Committee takes into
account the views of Mr. Graham and Mr. Spoon.
19
The key elements of the Company's executive compensation consist of base
salary, annual bonus, performance units, restricted stock and stock options. The
Compensation Committee's policies with respect to each of these elements,
including the bases for the compensation awarded to Mr. Graham, the Company's
chief executive officer, are discussed below. In addition, while the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to an individual, including pension and savings plan benefits,
supplemental retirement benefits and other benefits as well.
BASE SALARIES
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for executive
talent, including a comparison to base salaries for comparable positions at
other media companies.
Salary adjustments are generally implemented on a twelve-to eighteen-month
cycle and upon promotion. Such adjustments are determined by evaluating the
performance of the Company and the individual executive officer, and may also
take into account new responsibilities. In the case of executive officers with
responsibility for a particular business unit, such unit's financial results are
also considered, including, depending on the business unit, revenue, operating
income and cash flow. The Compensation Committee, where appropriate, also
considers other measures. These may include, among other factors, increases in
market share, reduction or cost containment in operating expenses, journalistic
achievements, improvements in product quality and improvements in relations with
customers, suppliers and employees, and comparisons to basic salaries for
comparable positions at other media companies. In order to preserve flexibility
in setting compensation, the Compensation Committee has not established specific
elements of Company or business unit performance which must be evaluated or
assigned relative weights to such elements. Different factors are considered in
evaluating each executive officer's base salary depending on such officer's
position and business unit.
With respect to the base salary granted to Mr. Graham in 1993, the
Compensation Committee took into account a comparison of base salaries of chief
executive officers of peer companies, the Company's results in 1992 and the
performance of the Company. The Compensation Committee also took into account
Mr. Graham's service to the Company, his performance since 1979 as publisher of
The Washington Post and Mr. Graham's recommendation. Mr. Graham's base salary in
1993 remained at $400,000, the level established in 1991 upon his promotion to
President and chief executive officer.
INCENTIVE COMPENSATION PLANS
The Company has two incentive compensation plans--the Annual Incentive
Compensation Plan and the Long-Term Incentive Compensation Plan--under which
awards are made primarily
20
to key management and professional employees, including the Company's executive
officers, who have made or are in a position to make significant contributions
to the profitability of the Company and enhance shareholder value. Each plan is
administered by the Compensation Committee.
Annual Bonus Plan
The Company's Annual Incentive Compensation Plan provides for annual
incentive compensation awards based on the Company's and its business units'
short-term, i.e., annual, financial performance. At the end of 1992, the
Compensation Committee approved a range of incentive payouts for 1993 keyed to
performance against specified goals related to budgeted operating income, cash
flow or earnings per share, which vary by business unit. In 1993 the Company
exceeded its budgeted earnings per share goal and each of its business units
exceeded the threshold level of operating income required for earning bonus
awards and, in the case of the cable division, the budgeted cash flow required
for earning bonus awards. Mr. Graham waived participation in the Annual
Incentive Compensation Plan with respect to 1993. Awards to the other executives
whose compensation is detailed in this proxy statement are shown in the column
headed "Bonus" in the Summary Compensation Table shown on page 13.
Long-Term Plan
To balance the Annual Incentive Compensation Plan, which is intended to
reward short-term financial performance, the Company's Long-Term Incentive
Compensation Plan (the "Long-Term Plan") provides incentives for improved
financial performance over periods of Award Cycles (which beginning in 1983 have
consisted, and are expected to continue to consist, of four-year periods
starting at two-year intervals).
Performance Units.
In December 1988, when Performance Units for the 1989-92 Award Cycle were
awarded, the Compensation Committee adopted a formula that made the payout value
of such Units depend on how the Company's rate of growth of earnings per share
during the Cycle would ultimately compare with the average rate of growth in
earnings per share of some 21 other media companies during approximately the
same period and also on achievement of a targeted average annual return on
equity. In December 1992, the Compensation Committee estimated that the
Company's compound rate of growth in earnings per share during the 1989-92
period will exceed the rate of growth of all but six of the other media
companies. Furthermore, the Compensation Committee estimated that the average
annual return on equity would exceed the minimum required average annual target
of 14% for Award Cycles prior to the 1991-94 Award Cycle. Acting in accordance
with the formula adopted at the beginning of the 1989-92 Award Cycle, the payout
value of the Performance Units awarded for that Cycle was estimated to be $83
per Unit, inasmuch as the average annual return on equity did not meet the level
required to receive the maximum award under the Long-Term Plan. The Compensation
Committee directed that 75% of the estimated value of the Performance Units
awarded for the 1989-92 Award Cycle be paid to Plan participants in December
1992, with the remaining 25% to be paid in 1993 pending final reporting of
earnings
21
per share growth by other media companies and final unit valuation. In May 1993,
the Compensation Committee determined that the final unit valuation, in
accordance with the Plan, was $90 per unit and the balance of the earned awards
was paid. Mr. Graham received a final payment of $79,642 for the balance due on
the Performance Units awarded to him for the 1989-92 Award Cycle. Payouts in
1993 to the named executives are shown in the column headed "LTIP Payouts" in
the Summary Compensation Table shown on page 13.
In December 1992, executive officers were granted new Performance Units,
effective January 4, 1993, for the 1993-96 Award Cycle based on the same formula
for determining the number of Performance Units used in prior years. At that
time 5,928 Performance Units were granted to Mr. Graham. The number of Units
Awarded is determined by dividing an amount not exceeding 120% of the
individual's plan grad mid-point by $100. The payout opportunities for the
1993-1996 award cycle for Performance Units granted Mr. Graham will be based on
a weighted average of the earned payouts for the major operating divisions*
(subject to the Company achieving a minimum average return on equity). Awards to
the named executives are referenced on page 14. No additional awards of
Performance Units were granted during the balance of 1993.
Restricted Stock.
In December 1992, executive officers and other key employees were granted
new Restricted Stock for the 1993-96 Award Cycle, effective January 4, 1993,
based on the same formula for determining the number of shares of Restricted
Stock used in prior years, including 551 shares of Restricted Stock awarded to
Mr. Graham. The number of shares of Restricted Stock awarded is determined by
dividing an amount equal to 25% of the individual's Long-Term Incentive
Compensation Plan grade mid-point by the actual market value of the Company's
Class B Stock on the trading day immediately preceding the date on which such
awards are approved. Awards to the named executives are referenced in the
Summary Compensation Table shown on page 13. No additional awards of Restricted
Stock were granted during the balance of 1993.
On January 4, 1993, the restrictions terminated on shares of Restricted
Stock awarded to Mr. Graham and the other named executives for the 1989-92 Award
Cycle. On that date, Mr. Graham received unrestricted title to 360 shares having
a fair market value of $82,373 on January 4, 1993.
Special Incentives.
From time to time the Compensation Committee adopts special targeted
incentive plans for key executives. These plans provide a one-time special
incentive opportunity based on the achievement of special quantifiable operating
objectives. In 1992 the Committee adopted a special incentive program for
Messrs. Ryan and Smith. In each case, a special incentive may be earned at the
end of a three-year period if certain financial goals relating to average annual
operating
- ---------------
* The payout opportunities for the 1993-1996 award cycle for the payout
units granted to the executive officers with responsibility for the major
operating divisions will be based on the financial performance of such
individuals' operating division as compared to that of peer companies.
22
income are met for Post-Newsweek Stations and Newsweek, respectively. No
incentive will be paid if the financial goals are not met. In 1993, the
Committee adopted a special incentive program for two key executives of other
divisions of the Company.
STOCK OPTION PLAN
Under the Company's Stock Option Plan, which was approved by shareholders,
shares of Class B Stock are issuable upon the exercise of stock options that
have been or may be granted to key employees of the Company and its
subsidiaries, including the executives whose compensation is detailed in this
proxy statement.
The Compensation Committee believes that significant equity interests in
the Company held by key employees responsible for the Company's future growth
and continued success align the interests of shareholders and management, since
the full benefit of the compensation package cannot be realized unless stock
appreciation occurs over a number of years. In the opinion of management, which
is concurred in by the Compensation Committee, there are at present
approximately 28 key employees who fall within that category. Although there is
no target stock ownership level for key employees, in determining the number of
shares to be granted under options, the Compensation Committee takes into
account the amount and value of options currently held, as well as makes a
judgment about the level of contribution already made by and the potential of
such key employees to continue to make contributions to the Company. The
Compensation Committee does not assign relative weights to such factors.
Given Mr. Graham's significant ownership in the Company (see description of
holdings under "Stock Holdings of Certain Beneficial Owners and Management"),
the Compensation Committee has not granted any stock options to Mr. Graham.
No stock option awards were granted to the executives whose compensation is
detailed in this proxy statement during 1993.
OTHER COMPENSATION PLANS
At various times in the past the Company has adopted certain broad-based
employee benefit plans in which the chief executive officer and the other
individuals whose compensation is detailed in this proxy statement are eligible
to participate on the same terms as non-executive employees who meet applicable
eligibility criteria, subject to applicable legal limitations on the amount of
benefits that may be payable pursuant to those plans. Benefits under the savings
and retirement plans are not tied to Company performance.
For the chief executive officer and certain other senior executives and
managerial employees including the named executives, the Company's Supplemental
Executive Retirement Plan ("SERP") provides tax-deferred accruals of amounts
proportionate to the benefits available to non-highly compensated participants
in the Company's savings and retirement plans, but which exceed benefits
permitted under the Company's plans due to tax law limitations. In 1993 no
amount was accrued for the benefit of Mr. Graham with respect to an employer
credit under the
23
Company's SERP inasmuch as Mr. Graham waived his right for 1993 to maintain a
separate unfunded saving plan account under the SERP. The amount accrued to the
named executives are shown in the footnote to the column headed "All other
compensation" in the Summary Compensation Table shown on page 13. The estimated
annual pension amounts set forth in the table on pages 17 and 18 show the
benefits payable to Mr. Graham and the named executives to the extent they
participate in the applicable basic retirement plan and the supplemental
executive retirement plan. The benefits payable to Mr. Graham and the named
executives under the SERP are determined with reference to compensation
including bonuses under the Annual Incentive Compensation Plan.
CONCLUSION
Through the programs described above, a significant portion of the
Company's executive compensation is linked directly to business unit and
corporate performance and stock price appreciation. The Compensation Committee
intends to continue the policy of linking executive compensation to corporate
performance and returns to shareholders and would expect that compensation paid
under the Annual Incentive Compensation Plan, the Long-Term Incentive
Compensation Plan and the Stock Option Plan will meet the performance-based
compensation requirements of Section 162(m) of the Internal Revenue Code
concerning deductibility of executive compensation.
Nicholas deB. Katzenbach, Chairman
James E. Burke
Anthony J.F. O'Reilly
Richard D. Simmons
George W. Wilson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Richard D. Simmons, a member of the Compensation Committee of the Board
of Directors since May 14, 1992, was the Company's President and Chief Operating
Officer from September 1981 to May 9, 1991. During the past fiscal year, Mr.
Simmons received $300,000 pursuant to a three-year agreement with the Company
entered into following termination of his employment on June 30, 1991. Under
this agreement, Mr. Simmons consults and advises on business matters affecting
the Company and manages the Company's interest in the International Herald
Tribune, S.A., including serving as its President and directeur de la
publication.
24
PERFORMANCE GRAPH
The following graph is a comparison of the yearly percentage change in the
Company's cumulative total shareholder return with the cumulative total return
of the Standard & Poor's 500 Stock Index and the cumulative total return of a
group of peer issuers. For purposes of this graph, it has been assumed that
dividends were reinvested on the date paid in the case of the Company and the
group of peer issuers and on quarterly basis in the case of the Standard &
Poor's 500 Index.
[PERFORMANCE GRAPH]
The Washington Post Company
Cumulative Total Shareholder Return for
Five-Year Period Ending December 31, 1993
1988 1989 1990 1991 1992 1993
Washington Post $100.00 $134.56 $96.32 $96.47 $116.09 $131.04
S&P 500 $100.00 $131.59 $127.49 $166.17 $178.81 $195.75
Peer Group(1) $100.00 $116.86 $95.57 $103.80 $120.44 $145.14
(1) The peer group includes the following companies: Gannett Co. Inc., Knight
Ridder, Inc., The New York Times Company, The Times-Mirror Company, Tribune
Company, A.H. Belo Corp., Dow Jones and Company, Inc., Lee Enterprises, Inc.,
McGraw Hill Inc., Media General Inc., Meredith Corp., Multimedia Inc., Pulitzer
Publishing Company, CBS Inc., Capital Cities/ABC, Inc. and Park Communications,
Inc. Affiliated Publications, Inc., which is included in the peer group returns
prior to 1993, is not included in the peer group returns for 1993 because during
1993 Affiliated Publication, Inc., was acquired by The New York Times Company.
25
CERTAIN TRANSACTIONS
The firm of Ruane, Cunniff & Co., Inc., of which Mr. William J. Ruane, a
Director of the Company, is Chairman of the Board and a principal owner, is one
of two firms that managed the investment of the Company's retirement funds in
1993, for which services it received $953,937.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement the only matters that the Board of
Directors expects to present to the meeting are those discussed herein. If any
other matter or matters are properly brought before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of Proxy to vote on those matters in accordance with their
best judgment.
Upon the recommendation of the Audit Committee, the Board of Directors has
selected Price Waterhouse as the Company's independent accountants to audit and
report on its financial statements for the fiscal year 1994. The same firm has
acted as the Company's independent accountants continuously since the Company
was organized in 1946. As in previous years, a representative of Price
Waterhouse will be present at the Annual Meeting, will have the opportunity to
make any statement he may desire with respect to the Company's financial
statements for 1993 and his firm's relationship with the Company, and will be
available to respond to appropriate questions from stockholders.
26
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
1994
THE WASHINGTON POST COMPANY
---------------------------
PROXY
THE WASHINGTON POST COMPANY
CLASS A COMMON STOCK
PROXY-ANNUAL MEETING OF STOCKHOLDERS-MAY 12, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Katharine Graham, Donald E.
Graham, Alan G. Spoon and Diana M. Daniels, and each of them, his
true and lawful agents and proxies, with full power of
substitution in each, to represent the undersigned, and to vote
as indicated on the reverse of this Proxy all shares of Class A
Common Stock which the undersigned is entitled to vote, at the
Annual Meeting of Stockholders of THE WASHINGTON POST COMPANY to
be held on May 12, 1994, and at any adjournments thereof, on all
matters coming before said meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE
(Continued, and to be signed on reverse side)
X Please mark your 0577
vote as in this
example
This proxy will be voted as specified. If no direction is
given, this proxy will be voted "FOR" Proposals 1 and 2.
1. Election of FOR WITHHELD
Directors
(Check only one box) ____ ____
Nominees: Martin Cohen, George J. Gillespie, III,
Donald E. Graham, Katharine Graham, William Ruane,
Richard D. Simmons, Alan G. Spoon, George W. Wilson.
For all nominees (except as stockholder may indicate below)
_________________________________
2. To transact such other FOR AGAINST ABSTAIN
business as may properly
come before said meeting or ____ ____ ____
any adjournment thereof.
I will attend the meeting. ____
----------------------------------------------------------------
Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If the
signor is a corporation, please sign full corporate name by duly
authorized officer.
--------------------------------------------------
--------------------------------------------------
SIGNATURE(S) DATE
PROXY
THE WASHINGTON POST COMPANY
CLASS B COMMON STOCK
PROXY-ANNUAL MEETING OF STOCKHOLDERS-MAY 12, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Katharine Graham, Donald E.
Graham, Alan G. Spoon and Diana M. Daniels, and each of them, his
true and lawful agents and proxies, with full power of
substitution in each, to represent the undersigned, and to vote
as indicated on the reverse of this Proxy all shares of Class B
Common Stock which the undersigned is entitled to vote, at the
Annual Meeting of Stockholders of THE WASHINGTON POST COMPANY to
be held on May 12, 1994, and at any adjournments thereof, on all
matters coming before said meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE
(Continued, and to be signed on reverse side)
X Please mark your 0583
vote as in this
example
This proxy will be voted as specified, if no direction is
given, this proxy will be voted "FOR" Proposals 1 and 2.
1. Election of FOR WITHHELD
Directors
(Check only one box) ____ ____
Nominees: James E. Burke, Ralph E. Gomory,
Donald R. Keough and Barbara Scott President
For all nominees (except as stockholder may indicate below)
_________________________________
2. To transact such other FOR AGAINST ABSTAIN
business as may properly
come before said meeting or ____ ____ ____
any adjournment thereof.
I will attend the meeting. ____
----------------------------------------------------------------
Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If the
signor is a corporation, please sign full corporate name by duly
authorized officer.
--------------------------------------------------
--------------------------------------------------
SIGNATURE(S) DATE
