Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
Of the Securities Exchange Act of 1934
[X] Filed by Registrant
[ ] Filed by Party other than Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use by Commission only (as permitted by Rule 14a-6 (e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11 (c) or 240.14a-12
THE WASHINGTON POST COMPANY
(Name of Registrant as Specified in its Charter)
THE WASHINGTON POST COMPANY
(Name of Person(s) filing Proxy Statement)
Payment of Filing Fee (check appropriate box):
[X] No Fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (1) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
Filing fee is calculated and state how it was determined.): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total Fee paid: N/A
[ ] Fee paid previously with preliminary materials. N/A
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the Filing for which the offsetting fee was
paid previously. Identify the previous Filng by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
THE WASHINGTON POST COMPANY
1150 15TH STREET, N.W., WASHINGTON, D. C. 20071
March 31, 1999
TO OUR STOCKHOLDERS:
You are cordially invited to the Company's 1999 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 13,
1999, at 8:00 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,
ALAN G. SPOON DONALD E. GRAHAM
President Chairman
THE WASHINGTON POST COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS/MAY 13, 1999
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 13, 1999, at 8:00 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 15, 1999,
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, 1999
THE WASHINGTON POST COMPANY
1150 15th Street, N.W., Washington, D.C. 20071
PROXY STATEMENT
March 31, 1999
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 13, 1999, 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 3, 1999, are
being mailed to the stockholders on March 31, 1999. 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 15, 1999, the record date for the
Annual Meeting, the Company had outstanding and entitled to vote 1,739,250
shares of Class A Common Stock (hereinafter called "Class A Stock") and
8,359,752 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 15, 1999, 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 thirteen Directors is to be elected, nine 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
WARREN E. BUFFETT
Mr. Buffett, age 68, has for more than thirteen years been Chairman of
the Board and Chief Executive Officer of Berkshire Hathaway Inc.
(insurance underwriting, newspaper publishing and various
manufacturing and marketing activities). He was elected a Director of
the Company in May 1996 and serves as Chairman of the Finance
Committee of the Board. Mr. Buffett also served as a Director of the
Company between 1974 and 1986. He is a director of Berkshire Hathaway
Inc., The Coca-Cola Company and The Gillette Company. Mr. Buffett is
also a trustee of Grinnell College, The Business Enterprise Trust and
The Urban Institute.
GEORGE J. GILLESPIE, III
Mr. Gillespie, age 68, has since 1963 been a partner in Cravath,
Swaine & Moore, which is one of several law firms retained by the
Company in 1997 and 1998 and which it proposes to retain in 1999. He
has been a Director of the Company and is a member 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 Chairman of the Madison Square Boys
& Girls Club, a director and Secretary-Treasurer of the John M. Olin
Foundation, Inc., and 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.
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RALPH E. GOMORY
Mr. Gomory, age 69, 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. Mr. Gomory is also a member of the National
Academy of Sciences and the National Academy of Engineering.
DONALD E. GRAHAM
Mr. Graham, age 53, has been Chairman of the Board of the Company
since September 1993 and Chief Executive Officer of the Company since
May 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. By virtue of his ownership of 15.1% of the outstanding Class
A Stock of the Company, his right to control the vote, as a trustee of
a certain family trust, of an additional 14.3% of such stock, together
with the ownership right of his mother, Katharine Graham, of an
additional 30.8% of such stock, Donald and Katharine Graham
effectively vote a total of 60.2% of the Class A shares. Mr. Graham is
a trustee of the Federal City Council and the Philip L. Graham Fund,
and chairman of the board of the D.C. College Access Program.
KATHARINE GRAHAM
Mrs. Graham, age 81, has been Chairman of the Executive Committee
since September 1993. In September 1993, Mrs. Graham stepped down as
Chairman of the Board, a position she had held since 1973. Mrs. Graham
and her son, Donald Graham, effectively vote a total of 60.2% of the
Class A shares (see above). Mrs. Graham has been a Director of the
Company since 1957 and is a member of the Finance and Chairman of
Executive Committees of the Board. Mrs. Graham is also a director of
the Council for Aid to Education, a trustee of the Philip L. Graham
Fund, and The Urban Institute, and a Life Trustee of the University of
Chicago.
WILLIAM J. RUANE
Mr. Ruane, age 73, has for more than eleven 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
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the Audit and Finance Committees of the Board of Directors. He is also
a director of 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 64, has been retired since June 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 Finance Committee and
until May 1996 was a member of the Compensation Committee of the Board
of Directors. Through March 1996, Mr. Simmons served as President of
International Herald Tribune, S.A., a French publishing company owned
jointly by the Company and The New York Times Company, a position he
had held since 1989. Mr. Simmons is a director of Morgan Guaranty
Trust Company of New York, J.P. Morgan & Co. Inc., and Union Pacific
Corporation, and a Trustee of the White Burkett Miller Center of
Public Affairs at the University of Virginia and a director of the
Protestant Episcopal Cathedral Foundation.
ALAN G. SPOON
Mr. Spoon, age 47, has been President since September 1993 and Chief
Operating Officer of the Company and a Director of the Company since
May 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 a director of American Management Systems, Inc.,
Ticketmaster Online-CitySearch, Inc., Human Genome Sciences, Inc. and
a trustee of the National Museum of Natural History.
GEORGE W. WILSON
Mr. Wilson, age 61, has for more than eighteen 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
serves as Chairman of the Compensation Committee of the Board of
Directors. Mr. Wilson is also a director of The Bakersfield
(California) Californian and The Associated Press.
NOMINEES FOR ELECTION BY CLASS B STOCKHOLDERS
DANIEL B. BURKE
Mr. Burke, age 70, has been retired since February 1994; prior to his
retirement he had been President and Chief Executive Officer of
Capital Cities/ABC, Inc., a leading media company. He has been a
member of the Board of Directors of the Company since May
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1996 and is a member of the Compensation and Audit Committees of the
Board. Mr. Burke is a director of C.F. Hathaway & Co., Darden
Restaurants, Morgan Stanley, Dean Witter, and Rohm & Haas Company. Mr.
Burke is also Vice-Chair of the Board of The New York and Presbyterian
Hospital in the City of New York. Mr. Burke is the brother of James E.
Burke, a Director of the Company.
JAMES E. BURKE
Mr. Burke, age 74, 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. Mr. Burke is a
trustee of the Robert Wood Johnson Foundation and Chairman of the
Business Enterprise Trust. He also serves on the boards of a number of
other foundations, councils and charitable organizations. Mr. Burke is
the brother of Daniel B. Burke, a Director of the Company.
DONALD R. KEOUGH
Mr. Keough, age 72, 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 Compensation Committee and was until
May 1996 a member of the Audit Committee of the Board. He is also
Chairman of Excaliber Technologies, and a director of The Home Depot,
Inc., McDonald's Corporation, USA Networks, Inc., and H.J. Heinz
Company. Mr. Keough is also a trustee of the University of Notre Dame,
Morehouse School of Medicine and St. Joseph's Hospital Foundation, and
serves on the boards of a number of other educational institutions and
charitable organizations.
BARBARA SCOTT PREISKEL
Mrs. Preiskel, age 74, 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, and serves as a trustee of Tougaloo College and
Wellesley College.
5
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 two times in 1998.
The Compensation Committee considers and approves the Company's incentive
compensation and bonus programs, and specifically approves all salaries of
$200,000 or more per year, all incentive compensation awards and all other
bonuses (other than sales bonuses) of $20,000 or more, and also awards stock
options. During 1998 the Committee held three 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 1998 the Executive Committee met six times.
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 twice in 1998.
During 1998 the Board held six regular bi-monthly meetings. With the
exception of Mr. Gillespie, each of the persons nominated by the Board for
election as a Director and who served as a Director in 1998 attended at least
75% of the aggregate of the total number of meetings held during 1998 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 annual fee of $40,000 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.
The Company has in place a voluntary fee deferral plan for Directors of the
Company. The plan provides an opportunity for participants to elect to defer the
receipt of all or a portion of the fees received for service as a Director.
Elections to defer must be filed in advance of earning such fees. Deferred
amounts will earn investment credits in accordance with participant elections
from a choice of investment indexes. Deferred amounts will be payable at
retirement or such other future date as specified by the participant at the time
of election.
6
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 2000 must be received by the Secretary of
the Company at its offices in Washington, D.C., no later than November 27, 1999.
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, 1999, 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 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.
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PRINCIPAL HOLDERS OF STOCK
SHARES(%)
NAME AND ADDRESS OF -----------------------------------------------------
BENEFICIAL OWNER CLASS A STOCK CLASS B STOCK*
- --------------------------------------------- ------------------------ --------------------------
Katharine Graham(a)(i) ...................... 536,257(30.8%) 781,432(7.7%)
2920 R Street, N.W.
Washington, D.C.
Donald E. Graham(b)(i) ...................... 941,469(54.1%) 3,406,682(33.7%)
3110 Newark Street, N.W.
Washington, D.C.
William W. Graham(c)(i) ..................... 227,627(13.1%) **
Suite 401
11661 San Vincente Blvd.
Los Angeles, California
Stephen M. Graham(d)(i) ..................... 309,889(17.8%) **
18 E. 78th Street
New York, N.Y.
Elizabeth G. Weymouth(e)(i) ................. 404,874(23.3%) 580,834(5.8%)
21 East 79 Street
New York, N.Y.
George J. Gillespie, III(f)(i) .............. 455,523(26.2%) 1,283,952(12.7%)
Sterling Road
Harrison, N.Y.
Berkshire Hathaway Inc.(g) .................. -- 1,727,765(17.1%)
1440 Kiewit Plaza
Omaha, Nebraska
Morgan Guaranty Trust Company of New York(h). -- 661,853(6.6%)
9 West 57th Street
New York, N.Y.
- ----------
* The calculations set forth in this table relating to percentage ownership
of Class B Stock include 1,739,250 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)
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(Footnotes continued from preceding page)
(a) According to information as of February 1, 1999, 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, 536,257 (30.8%) shares, and
sole investment power, 536,257 (30.8%) shares. Mrs. Graham also has voting
and investment power with respect to shares of Class B Stock as follows:
shared voting power, 115,870 (1.1%) shares, and shared investment power,
115,870 (1.1%) shares. In addition Mrs. Graham, as the beneficiary of a
revocable trust, is deemed the beneficial owner of 129,305 (1.3%) shares of
Class B Stock. Mrs. Graham is also deemed the beneficial owner of 536,257
(5.3%) shares of Class B Stock issuable upon conversion of shares of Class
A Stock beneficially owned by her.
(b) According to information as of February 1, 1999 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 (15.1%)
shares, sole investment power, 262,314 (15.1%) shares, shared voting power,
679,155 (39.0%) shares, and shared investment power, 679,155 (39.0%)
shares. Mr. Graham also has voting and investment power with respect to
shares of Class B Stock as follows: sole voting power, 1,958,192 (19.4%)
shares, sole investment power 230,427 (2.3%) shares, shared voting power
472,021 (4.7%) shares, and shared investment power, 472,021 (4.7%) 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, and 941,469 (9.3%) 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 dated as of February 25, 1977, and amended and extended on
September 13, 1985, and on May 15, 1996, which has a termination date
(which may be extended) of February 24, 2007.
(c) According to information as of February 1, 1999, 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, 17,514 (1.0%)
shares, sole investment power, 17,514 (1.0%), shared voting power, 85,697
(4.9%) shares, and shared investment power, 85,697 (4.9%) 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 124,416 (7.2%) 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, 1999, 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, 124,976 (7.2%)
shares, sole investment power, 124,976 (7.2%) shares, shared voting power,
60,497 (3.5%) shares and shared investment power, 60,497 (3.5%) 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 124,416 (7.2%) 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.
(e) According to information as of February 1, 1999, 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 (5.4%)
shares, sole investment power, 93,834 (5.4%) shares, shared voting power,
248,832 (14.3%) shares, and shared investment power, 248,832 (14.3%)
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 (3.6%) shares of Class A Stock. Mrs.
Weymouth also has voting and investment power with respect to shares of
Class B Stock as follows: sole voting power, 20,000 (less than 1%) shares,
sole investment power, 20,000 (less than 1%), shared voting and investment
power, 135,168 (1.3%) 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 20,792(less than
1%)shares of Class B Stock. Mrs. Weymouth is also deemed the beneficial
owner of 404,874 (4.0%) of Class B Stock issuable upon conversion of shares
of Class A Stock beneficially owned by her.
(Footnotes continued on following page)
9
(Footnotes continued from preceding page)
(f) According to information as of February 1, 1999, 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, 455,523 (26.2%) shares, and shared investment power, 455,523
(26.2%) shares. In addition, Mr. Gillespie has voting and investment power
with respect to shares of Class B Stock as follows: sole voting power,
593,606 (5.9%) shares, sole investment power, 139,305 (1.4%) shares, shared
voting power, 234,823 (2.3%) shares, and shared investment power, 689,124
(6.8%) 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 (4.5%)
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, 1999, and available to the
Company, Berkshire Hathaway, Inc. ("Berkshire") was the beneficial owner of
1,727,765 (17.1%) 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 certain
trusts of which Mr. Buffett is a trustee, but in which he has no economic
interest, own approximately 33.9% of the aggregate economic interest of
Berkshire Class A and Class B common stock 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, and on May 15, 1996 (which has a
termination date (which may be extended) of February 24, 2007), 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, 1999, and available to the
Company, Morgan Guaranty Trust Company of New York ("Morgan"), was the
beneficial owner of 661,853 (6.6%) 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, 127,762 (1.3%) shares ,
sole investment power, 176,562 (1.7%) shares, shared voting power, 28,790
(less than 1%) shares, and shared investment power, 485,291 (4.8%) shares.
(i) According to information as of February 1, 1999, and available to the
Company, Mr. Donald Graham, Mrs. Weymouth, and Mr. Gillespie share voting
and investment power over 248,832 (14.3%) 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. Gillespie, Mr. William Graham
and Mr. Donald Graham share voting and investment power over 60,497 (3.5%)
shares of Class A Stock; Mr. Gillespie, Mr. Stephen Graham and Mr. Donald
Graham share voting and investment power over 60,497 (3.5%) shares of Class
A Stock; Mr. Donald Graham and Mr. Gillespie share voting and investment
power over 60,497 (3.5%) shares of Class A Stock; Mr. Donald Graham, Mrs.
Weymouth and Mr. Gillespie share voting and investment power over 135,168
(1.3%) shares of Class B Stock; Mr. Donald Graham and Mr. Gillespie share
voting and investment power over 66,333 (less than 1%) shares of Class B
Stock; Mr. Donald Graham, Mr. Gillespie and Mr. William Graham share voting
and investment power over 23,622 (less than 1%) shares of Class B Stock;
Mr. Donald Graham, Mrs. Graham and Mr. Gillespie share voting and
investment power of 2,600 (less than 1%) shares of Class B Stock; Mr.
Donald Graham and Mrs. Graham share voting and investment power over
113,270 (1.1%) shares of Class B Stock held by the Philip L. Graham Trust;
and Mr. Gillespie and Morgan Guaranty Trust share investment powers over
456,901 (4.5%) 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, 1999, 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(E)
-------------------------- --------------------------------
Warren E. Buffett**** .......................... -- 1,727,765(17.1%)
Daniel B. Burke ................................ -- 500*
James E. Burke ................................. -- 1,000*
George J. Gillespie, III** ..................... 455,523(26.2%) 1,283,952(12.9%)
Ralph E. Gomory ................................ -- 1,400*
Donald E. Graham**(d) .......................... 941,469(54.1%) 3,406,682(34.5%)
Katharine Graham**(d) .......................... 536,257(30.8%) 781,432(8.2%)
Donald R. Keough ............................... -- 500*
Barbara Scott Preiskel ......................... -- 350*
William J. Ruane(a) ............................ -- 13,497*
Richard D. Simmons ............................. -- 7,428*
Alan G. Spoon(b) ............................... -- 58,716*
George W. Wilson ............................... -- 200*
All Directors and executive officers as a group,
eliminating duplications ..................... 1,502,926(86.4%) 4,675,670(46.8%)(c)
- ----------
* 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.
**** With respect to voting securities which may be beneficially owned by Mr.
Buffett, see footnote (g) on page 10.
(Footnotes continued on following page)
11
(Footnotes continued from preceding page)
(a) According to information as of February 1, 1999, 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, 12,569 (less
than 1%) shares, and sole investment power, 13,469 (less than 1%) shares.
This number includes 28 shares owned by Mr. Ruane's children in which he
disclaims beneficial ownership.
(b) This number includes 51,750 shares of Class B Stock as to which Mr. Spoon
has a right to purchase on or before April 1, 1999 by exercise of stock
option.
(c) 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 61,750 shares of Class B Stock which Directors and officers
have the right to purchase on or before April 1, 1999 pursuant to stock
options; it does not include 172,584 shares of Class B Stock held as of
February 1, 1999 by the trustee of various savings plans maintained by the
Company and its business units over which the trustee has voting and
investment powers.
(d) In addition to the information set forth in footnote (i) in the Table of
"Principal Holders of Stock", Mr. Donald Graham and Mrs. Graham share
voting and investment power over 113,270 (1.1%) shares of Class B Stock in
connection with the Philip L. Graham Fund.
(e) Includes 1,739,250 shares of Class B Stock issuable upon conversion of
shares of Class A Stock beneficially owned.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 3, 1999, all
applicable Section 16(a) filing requirements were complied with.
12
EXECUTIVE COMPENSATION
The following table shows the compensation paid by the Company during 1998,
1997 and 1996 to each of the chief executive officer and the four most highly
compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
--------------------------
ANNUAL COMPENSATION
--------------------------------------
OTHER
ANNUAL
NAME AND COMPENSA-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) TION ($)
- ------------------------- ------ ------------ -------------- ----------
Donald E. Graham ........ 1998 $399,996 -- --
Chief Executive 1997 399,996 -- --
Officer 1996 399,996 -- --
Alan G. Spoon ........... 1998 605,004 $367,235 --
President and 1997 540,000 420,390 --
Chief Operating 1996 499,998 346,500 --
Officer
John B. Morse, Jr. ...... 1998 309,996 169,353 --
Vice President and 1997 290,004 203,189 --
Chief Financial 1996 280,004 174,636 --
Officer
Beverly R. Keil ......... 1998 279,996 135,968 --
Vice President 1997 260,004 161,928 --
1996 240,000 133,056 --
Diana M. Daniels ........ 1998 252,504 122,614 --
Vice President 1997 234,504 146,047 --
1996 221,670 122,892 --
LONG TERM COMPENSATION
------------------------------------------------
AWARDS PAYOUTS
RESTRICTED SECURITIES ------------------ ALL OTHER
NAME AND STOCK UNDERLYING LTIP COMPENSA-
PRINCIPAL POSITION AWARDS ($)(2) OPTIONS (#) PAYOUTS ($)(1) TION ($)(3)
- ------------------------- --------------- ------------- ------------------ ------------
Donald E. Graham ........ $171,000 -- -- $ 8,320
Chief Executive 148,838 -- $ 871,416 8,320
Officer -- -- -- 7,800
Alan G. Spoon ........... 171,000 -- -- 31,460
President and 132,300 50,000 4,898,434(4) 28,083
Chief Operating -- -- -- 26,000
Officer
John B. Morse, Jr. ...... 99,750 1,000 -- 16,120
Vice President and 66,150 -- 294,588 15,080
Chief Financial -- 1,000 -- 14,560
Officer
Beverly R. Keil ......... 85,500 -- -- 14,560
Vice President 49,613 2,000 168,021 13,520
-- 1,000 -- 12,480
Diana M. Daniels ........ 71,250 -- -- 13,130
Vice President 49,613 -- 168,021 12,194
-- 1,000 -- 11,572
- ----------
(1) Awards may be in the form of cash or deferred cash.
(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 1998, the Chief Executive Officer and the other named
executives had the following aggregate restricted stock holdings: Mr.
Graham--1,301 shares, $741,570; Mr. Spoon--1164 shares, $663,480; Mr.
Morse--655 shares, $373,350; Ms. Keil--513 shares, $292,410; and Ms.
Daniels--488 shares, $278,160. 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 1998 as
follows: Mr. Graham--$8,320 in Company contributions to 401(k) plan; Mr.
Spoon--$8,320 in Company contributions to 401(k) plan and $23,140 in
Company credits to SERP account; Mr. Morse--$8,320 in Company contributions
to 401(k) plan and $7,800 in Company credits to SERP account; Ms.
Keil--$8,320 in Company contributions to 401(k) plan and $6,240 in Company
credits to SERP account; and Ms. Daniels--$8,320 in Company contributions
to 401(k) and $4,810 in Company credits to SERP account.
(4) Mr. Spoon received a payout for performance units awarded under the 1993-96
Award Cycle of the Company's Long-Term Incentive Compensation Plan of
$718,830 and a payout of $4,179,604 under a special incentive program
created in 1995 for Mr. Spoon by the Compensation Committee, which was
based primarily on the attainment of financial goals relating to average
annual operating income and cumulative cash flow targets for three of the
Company's major business units.
13
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES
OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION
-------------------------------------------------------- FOR OPTION TERM
NUMBER OF PERCENT OF ---------------
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OF
OPTION EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------- ------------- ---------------- ------------ ----------- ------------ ------------
Donald E. Graham ...... -- -- -- -- -- --
Alan G. Spoon ......... -- -- -- -- -- --
John B. Morse,Jr. ..... 1,000 3.9% $ 517.25 12/11/08 $ 325,300 $ 824,370
Beverly R. Keil ....... -- -- -- -- -- --
Diana M. Daniels ...... -- -- -- -- -- --
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 .......... 5,000 $1,491,250 51,750/61,250 $4,923,688/$13,087,500
John B. Morse, Jr. ..... -- -- 3,500/1,500 $ 1,212,844/$181,156
Beverly R. Keil ........ -- -- 3,000/2,000 $ 838,031/$280,531
Diana M. Daniels ....... -- -- 3,500/500 $ 1,204,031/$118,156
14
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR(1)
- --------------------------------------------------------------------------------
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, UNITS OR OTHER PERIOD NON-STOCK PRICE-BASED PLANS
OR OTHER UNTIL MATURATION -----------------------------------------
NAME RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ------ --------- --------- ------ -------
Donald E. Graham ........... 7,500 12/31/02 $375,000 $750,000 $1,375,000
Alan G. Spoon .............. 7,500 12/31/02 375,000 750,000 1,375,000
John B. Morse, Jr. ......... 2,600 12/31/02 130,000 260,000 476,666
Beverly R. Keil ............ 1,900 12/31/02 95,000 190,000 348,333
Diana M. Daniels ........... 1,500 12/31/02 75,000 150,000 275,000
- ----------
(1) In December 1998, the Compensation Committee of the Board of Directors
approved grants of Performance Units for the 1999-2002 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 achievement of various
financial targets for major operating units of the Company and for the
Company's consolidated operations.
15
RETIREMENT PLANS
Basic Plan. Most employees of the Company, including the individuals
identified in the table on page 13, are eligible to participate (subject to
minimum service requirements) in the Company's defined benefit retirement plan.
(Prior to 1996, the Company and its newspaper, magazine and broadcast divisions
maintained separate defined benefit plans. These plans have been merged into the
Company plan.) Benefits under this basic plan 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
401(k) savings plans in which most employees are eligible to participate
(subject to minimum service requirements).
Supplemental Executive Retirement Plan. All amounts over $130,000 that
would otherwise be payable under a basic defined benefit 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, defined benefit pension
benefits and defined contribution plan benefits payable by tax-qualified plans
may not be based on annual compensation exceeding maximum amounts imposed by the
Omnibus Budget Reconciliation Act of 1993 (currently $160,000 per year).
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 certain
participating executives (including the executive officers included in the table
on page 13) a "supplemented normal retirement benefit", which will be determined
under the rules of the qualified defined benefit retirement plan, but without
reference to either of the above-mentioned limitations and will also include in
earnings not only base salary (as in the past) but also bonuses under the Annual
Incentive Compensation Plan. The SERP also provides a supplemental defined
contribution plan benefit, which is equal to the applicable company matching
contribution percentage times the participating executive's base salary that is
in excess of the annual covered compensation limit with respect to qualified
plan benefits. The executive is required to make contributions to the SERP in
order to receive the applicable matching company credit each year. 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 with respect to the supplemental normal retirement benefit only.
For these participants, the supplemented normal retirement benefits will be
determined without reference to either of the above-mentioned limitations, but
will include in earnings 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 num-
16
ber 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).
As of December 31, 1998, Mr. Graham had 25 years of service under the
Company plan, Mr. Spoon had 17 years of service under the Company plan, Mr.
Morse had 10 years of service under the Company plan, Ms. Keil had 20 years of
service under the Company plan, and Ms. Daniels had 21 years of service under
the Company plan.
The following table shows the estimated maximum 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 MAXIMUM ANNUAL PENSION (COMPUTED AS
COVERED STRAIGHT LIFE ANNUITY) FOR
COMPENSATION REPRESENTATIVE YEARS OF CREDITED SERVICE
- -------------- ---------------------------------------------------------------------------------
COMPANY
PLAN(A)(B) 10 15 20 25 30 35
- -------------- ----------- ----------- ----------- ----------- ----------- -----------
$ 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
750,000 132,750 199,125 265,500 331,875 398,250 398,250
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
- ----------
(a) Before deducting the effect on benefits of an offset applicable to certain
benefits paid under the Company Plan and based on average social security
covered compensation over the employee's career. For an individual retiring
at age 65 during 1999 the deduction would be as follows for the indicated
number of years of credited service: 10 years, $2,480; 15 years, $3,719; 20
years, $4,959; 25 years, $6,199; 30 and 35 years, $7,439.
(b) Plan provides increased benefits for years of service after 1991. The
benefits shown in the table are those provided for service after that year.
17
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, where such
comparisons are appropriate. 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 responsible for 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 companies with business
portfolios similar to that of the Company. 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
evaluating the compensation of the Company's executives. The peer companies used
for compensation purposes are constructed on a division by division basis. For
example, in determining the companies by which to measure the Company's
broadcasting division, the comparison is made with purely broadcasting companies
or broadcasting divisions within multimedia companies. 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
80 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 these executives, including the named executives, the
Compensation Committee takes into account the views of Mr. Graham and Mr. Spoon
(who expressed no view with respect to his own salary).
18
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 special incentive compensation plans,
pension and savings plan benefits, supplemental retirement benefits and other
benefits as well.
BASE SALARIES
Base salaries for 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,
where available, a comparison to base salaries for comparable positions at other
media companies.
Salary adjustments are generally implemented on a twelve-month or longer
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 base 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 paid to Mr. Graham in 1998, the
Compensation Committee took into account a comparison of base salaries of chief
executive officers of peer companies, the Company's results in 1997 and the
performance of the Company. The Compensation Committee also took into account
Mr. Graham's service to the Company and his performance since 1979 as publisher
of The Washington Post. The Compensation Committee noted that Mr. Graham's base
salary is significantly below the median of base salaries paid to chief
executive officers of peer companies; and furthermore that the performance of
the Company in 1997 exceeded budgeted financial goals. However, due to Mr.
Graham's continued request, for personal reasons, to forego a base salary
increase, Mr. Graham's base salary in 1998 remained at $400,000, the level
established in 1991 upon his promotion to President and chief executive officer.
The Compensation Committee
19
does not give significance to the below market salary of Mr. Graham when
reviewing and establishing base salary levels for other executives.
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 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 1997, the
Compensation Committee approved a range of incentive payouts for 1998 keyed to
performance against specified goals related to budgeted operating income, cash
flow or earnings per share, which vary by business unit. In 1998 the Company
exceeded its budgeted earnings per share goal. Mr. Graham waived participation
in the Annual Incentive Compensation Plan with respect to 1998. 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 1998, executive officers, including the Chief Executive Officer
and the four most highly compensated executive officers of the Company, were
granted Performance Units for the 1999-2002 Award Cycle. Pursuant to these
grants, the chief executive officer and the named executives received the
following: Donald E. Graham, 7,500 Performance Units; Alan G. Spoon, 7,500
Performance Units; John B. Morse, Jr., 2,600 Performance Units; Beverly R. Keil,
1,900 Performance Units; and Diana M. Daniels, 1,500 Performance Units. As in
the past, each Performance Unit has a nominal value of $100. The number of Units
awarded is determined with reference to an individual's scope of
responsibilities and level of Plan participation. The payout opportunities
20
for the 1999-2002 Award Cycle for Performance Units granted to these individuals
will be based on the achievement of various financial targets for major
operating units of the Company and for the Company's consolidated operations.
In December 1996, the Compensation Committee of the Board of Directors
approved grants of Performance Units under the Company's Long-Term Plan for the
1997-2000 Award Cycle to various key employees of the Company, including the
chief executive officer and the executive officers named in the table on page
13. Pursuant to these grants, the chief executive officer and the named
executives received the following: Donald E. Graham, 7,000 Performance Units;
Alan G. Spoon, 6,000 Performance Units; John B. Morse, Jr., 2,200 Performance
Units; Beverly R. Keil, 1,600 Performance Units; and Diana M. Daniels, 1,400
Performance Units. Each Performance Unit has a nominal value of $100. The number
of Units awarded was determined with reference to an individual's scope of
responsibilities and level of participation. The payout opportunities for
Messrs. Graham and Spoon the other executive officers named are based on the
simple average of the earned payouts for the major operating divisions of the
Company (66.6% weighting), and the Company's total shareholder return during the
Award Cycle compared to total shareholder returns of peer companies (33.3%
weighting).
In December 1994, executive officers, including the chief executive officer
and the executive officers named in the table on page 13, were granted
Performance Units for the 1995-1998 Award Cycle. The payout opportunities of
Messrs. Graham and Spoon, and the other executive officers was based on the
simple average of the payout values based on the achievement of financial
targets by each of the Company's four major operating divisions and the
Company's total shareholder return during the Award Cycle compared to total
shareholder returns of peer companies (33.3% weighting). The final Unit
valuation for the 1995-1998 Award Cycle will be determined by the Compensation
Committee in May 1999.
Restricted Stock.
In December 1998, executive officers and other key employees were granted
new Restricted Stock for the 1999-2002 Award Cycle, based on plan levels similar
to those used for determining the number of shares of Restricted Stock in prior
years, including 300 shares of Restricted Stock awarded to Mr. Graham. The
number of shares of Restricted Stock awarded is determined by an individual's
scope of responsibilities and relative level of Plan participation. Awards to
the named executives are referenced in the footnote to the column headed
"Restricted Stock Awards" in the Summary Compensation Table shown on page 13.
In December 1996, the named executives and other key employees were granted
Restricted Stock for the 1997-2000 Award Cycle, based on plan levels similar to
those used for determining the number of shares of Restricted Stock in prior
years, including 450 shares of Restricted Stock awarded to Mr. Graham. The
footnote to the column headed "Restricted Stock Awards" in the Summary
Compensation Table shown on page 13 includes the shares of Restricted Stock
awarded for the 1997-2000 Award Cycle.
21
On January 5, 1999, the restrictions terminated on shares of Restricted
Stock awarded to Mr. Graham and the other named executives for the 1995-98 Award
Cycle. Mr. Graham received unrestricted title to 551 shares having a fair market
value of $319,184 on January 5, 1999.
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 1998 the Committee adopted a special incentive program for Mr.
Spoon. A special incentive may be earned at the end of 2000, based principally
on the attainment of financial goals specified in this plan relating to
cumulative operating income targets and other cash flow and operating targets
for the Company's major business units that report to him. No incentives will be
paid if the financial goals are not met.
At the end of 1997, Mr. Spoon earned a one-time award under a special
incentive plan that was adopted in 1995. Under that plan, a special incentive
was earned based principally on the attainment of financial goals specified in
the plan primarily relating to average annual operating income targets and
cumulative cash flow targets for three of the Company's major business units.
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 54 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.
22
In 1998, one non-qualified stock option was granted to Mr. Morse at the
fair market value price on the date of grant. No other stock option awards were
granted to the executives whose compensation is detailed in this proxy statement
during 1998.
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 1998 no
amount was accrued for the benefit of Mr. Graham with respect to an employer
credit under the Company's SERP inasmuch as Mr. Graham waived his right for 1998
to maintain a separate unfunded savings 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 page 18 show the
maximum benefits payable to Mr. Graham and the named executives to the extent
they participate in the 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.
The Company has in place a voluntary deferred compensation plan for named
executives. The plan provides an opportunity for participants to elect to defer
the receipt of all or a portion of cash awards under the annual and/or long-term
cash incentive plans. Elections to defer must be filed in advance of earning
such awards. Deferred amounts will earn investment credits in accordance with
participant elections from a choice of investment indexes. Deferred amounts will
be payable at retirement or such other future date as specified by the
participant at the time of election.
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 deems it desirable that compensation
paid under the Annual Incentive Compensation Plan, the Long-Term Incentive
Compensation
23
Plan and the Stock Option Plan meet the performance-based compensation
requirements of Section 162(m) of the Internal Revenue Code concerning
deductibility of executive compensation. However, the Committee reserves the
right to put in place compensation programs that do not meet the requirements of
Section 162(m) so as to result in compensation payments that are not deductible
by the Company, if such programs are otherwise in the best interests of the
Company.
George W. Wilson, Chairman
Daniel B. Burke
James E. Burke
Donald R. Keough
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Daniel B. Burke, James E. Burke, Donald R. Keough, and George W. Wilson
served as members of the Compensation Committee in 1998. No member of the
Compensation Committee was, during the fiscal year, an officer or employee of
the Company or any of its subsidiaries or formerly an officer of the Company or
any of its subsidiaries or had any relationship requiring disclosure under Item
404 of Regulation S-K.
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 Standard & Poor's
Publishing/Newspapers Index. The Standard & Poor's 500 Stock Index is comprised
of 500 U.S. companies in the industrial, transportation, utilities and financial
industries, weighted by market capitalization. The Standard & Poor's
Publishing/Newspapers Index is comprised of Dow Jones & Company, Inc., Gannett
Co., Inc., Knight-Ridder, Inc., The New York Times Company, The Times Mirror
Company and Tribune Company, weighted by market capitalization.
The graph reflects the investment of $100 on December 31, 1993 in the
Company's Class B Common Stock, the Standard & Poor's 500 Stock Index and the
Standard & Poor's Publishing/ Newspapers Index. 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 and the Standard & Poor's Publishing/Newspaper
Index.
24
THE WASHINGTON POST COMPANY
CUMULATIVE TOTAL SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1998
[GRAPHIC OMITTED]
DECEMBER 31,... 1993 1994 1995 1996 1997 1998
--------------- ---- ---- ---- ---- ---- ----
WASHINGTON POST 100.00 96.84 114.51 138.14 203.08 243.59
S&P 500 100.00 101.32 139.40 171.40 228.59 293.91
S&P PUBLISHING (NEWSPAPERS) 100.00 92.38 116.39 147.97 241.22 249.67
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
1998, for which services it received $3,283,462.
Effective May 1, 1998, the Company renewed a contract with Mrs. Elizabeth
Weymouth, the daughter of Mrs. Katharine Graham and the sister of Mr. Donald
Graham, under which she contributes articles to The Washington Post newspaper.
Since May 1998, Mrs. Weymouth has received compensation of $85,000 on an
annualized basis and reimbursement of certain expenses associated with providing
those articles. In addition in 1998, Newsweek, Inc., a wholly-owned subsidiary
of the Company, entered into an agreement with Mrs. Weymouth, under which she
contributes articles to Newsweek magazine. During 1998, Mrs. Weymouth has
received compensation of $47,000 (in the form of fees and a retainer) and
reimbursement of certain expenses associated with providing those articles.
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 PricewaterhouseCoopers LLP as the Company's independent accountants to
audit and report on its financial statements for the fiscal year 1998. 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
PricewaterhouseCoopers LLP 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 1998 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
1999
THE WASHINGTON POST COMPANY
---------------------------
[X] PLEASE MARK YOUR
VOTES 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.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [ ] [ ] Nominees: Warren E. Buffett, George
Directors J. Gillespie, III, Ralph E. Gomory,
(Check only one Donald E. Graham, Katharine Graham,
box) William J. Ruane, Richard D.
Simmons, Alan G. Spoon, George W.
Wilson.
For all nominees (except as
stockholder may indicate below)
FOR AGAINST ABSTAIN
2. To transact such other [ ] [ ] [ ]
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
signer is a corporation, please sign
full corporate name by duly authorized
officer.
------------------------------------------
------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
P THE WASHINGTON POST COMPANY
R CLASS A COMMON STOCK
O PROXY--ANNUAL MEETING OF STOCKHOLDERS--MAY 13, 1999
X SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y
The undersigned hereby appoints Katharine Graham, Donald E. Graham, Alan G.
Spoon, John B. Morse, Jr. and Diana M. Daniels, and each of them, his/her 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 13, 1999, 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)
P THE WASHINGTON POST COMPANY
R CLASS B COMMON STOCK
O PROXY--ANNUAL MEETING OF STOCKHOLDERS--MAY 13, 1999
X SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y
The undersigned hereby appoints Katharine Graham, Donald E. Graham, Alan G.
Spoon, John B. Morse, Jr. and Diana M. Daniels, and each of them, his/her 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 13, 1999, 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
VOTES 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.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [ ] [ ] Nominees: Daniel B. Burke, James E.
Directors Burke, Donald R. Keough and Barbara
(Check only one Scott Preiskel
box)
For all nominees (except as stockholder
may indicate below)
- ----------------------------------------
FOR AGAINST ABSTAIN
2. To transact [ ] [ ] [ ]
such other
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
signer is a corporation, please sign
full corporate name by duly authorized
officer.
------------------------------------------
------------------------------------------
SIGNATURE(S) DATE
