LEE ENTERPRISES, INCORPORATED
215 N. Main Street
Davenport, Iowa 52801-1924
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 22, 2003
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Lee Enterprises, Incorporated, a Delaware
corporation (the "Company"), will be held at the Radisson Quad City Plaza Hotel
& Conference Center, 111 E. 2nd Street, Davenport, Iowa, on January 22, 2003, at
9:00 a.m., for the following purposes:
(1) To elect three directors for terms of three years; and
(2) To consider and act upon a proposal to amend and restate the 1996
Stock Plan for Non-Employee Directors; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed December 2, 2002 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 whether or not you plan to
attend the Annual Meeting. You may vote by marking, signing and dating the
enclosed proxy card and returning it in the postage paid envelope. Stockholders
may also vote by telephone or via the Internet. If you attend the meeting, you
may withdraw your proxy at that time and vote your shares in person.
/s/ C. D. Waterman III
-----------------------------
C. D. Waterman III, Secretary
Davenport, Iowa
December 27, 2002
LEE ENTERPRISES, INCORPORATED
2003 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of the Company to be voted at the Annual Meeting of
Stockholders to be held at the Radisson Quad City Plaza Hotel & Conference
Center, 111 East 2nd Street, Davenport, Iowa on Wednesday, January 22, 2003, at
9:00 a.m., for the purposes set forth in the Notice of Annual Meeting of
Stockholders.
The principal executive offices of the Company are located at 215 N. Main
Street, Davenport, Iowa 52801-1924. This Proxy Statement and the enclosed form
of proxy are being mailed to stockholders on or about December 27, 2002,
together with a copy of the Company's Annual Report for the fiscal year ended
September 30, 2002.
PROXIES
Your vote is very important. For this reason, the Board of Directors is
requesting that you use the enclosed proxy card to vote your shares. If the
accompanying proxy is executed, the shares represented by the proxy will be
voted as specified below. You may also vote your shares by delivering your proxy
by telephone or via the Internet.
If a broker, bank or other nominee holds your Common Stock, you will receive
instructions from them that you must follow in order to have your shares voted.
If you hold certificate(s) in your own name as a holder of record, you may vote
your Common Stock or Class B Common Stock by signing, dating and mailing the
proxy card in the postage paid envelope provided. Alternatively, you may vote
your shares in person at the Annual Meeting.
You may revoke the proxy before the Annual Meeting, whether delivered by
telephone, Internet or through the mail, by using the telephone voting
procedures, the Internet voting procedures or by mailing a signed instrument
revoking the proxy to: C. D. Waterman III, Corporate Secretary, Lee Enterprises,
Incorporated, 215 N. Main St., Davenport, IA 52801-1924. To be effective, a
mailed revocation must be received by the Secretary on or before January 21,
2003. A stockholder may also attend the Annual Meeting in person, withdraw the
proxy and vote in person.
VOTING PROCEDURES
Stockholders of record at the close of business on December 2, 2002 will be
entitled to vote at the Annual Meeting or any adjournment thereof. As of
November 29, 2002, there were 34,741,422 shares of Common Stock and 9,672,943
shares of Class B Common Stock outstanding. Each share of Common Stock is
entitled to one vote at the Annual Meeting; each share of Class B Common Stock
is entitled to ten votes at the meeting. The holders of Common Stock and Class B
Common Stock will vote as a single class on all matters to be considered at the
Annual Meeting.
The presence, in person or by proxy, of a majority of the voting power of Common
Stock and Class B Common Stock of the Company issued and outstanding and
entitled to vote is necessary to constitute a quorum at the Annual Meeting. The
affirmative vote of the holders of a plurality of the voting power of Common
Stock and Class B Common Stock represented in person or by proxy at the Annual
Meeting is required to elect directors, and the affirmative vote of the holders
of a majority of the voting power of Common Stock and Class B Common Stock
represented at the Annual Meeting is required to act on Proposal 2 as more fully
set forth in this Proxy Statement and on any other matter properly brought
before the meeting.
Abstentions from voting will be included for purposes of determining whether the
requisite number of affirmative votes are received on any matters other than the
election of directors submitted to the stockholders for vote and, accordingly,
will have the same effect as a vote against such matters. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will be considered as present and
entitled to vote, but will have no effect on the vote, with respect to that
matter.
In voting by proxy with regard to the election of directors, stockholders may
vote in favor of all nominees, withhold their votes as to all nominees, or
withhold their votes as to specific nominees. Stockholders should specify their
choices on the accompanying proxy card or by using the telephone or Internet
voting procedures. All properly executed proxies delivered by stockholders to
the Company and not revoked will be voted at the Annual Meeting in accordance
with the directions given. If no specific instructions are given on a proxy card
with regard to the matters to be voted upon, the shares represented by a signed
proxy card will be voted "FOR" the election of all directors and the approval of
Proposal 2 as more fully set forth in this Proxy Statement. If any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters according to their judgment.
PROPOSAL 1 - ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting to hold office for
three-year terms expiring at the Annual Meeting of Stockholders in 2006.
Proxies will be voted for the election of these nominees unless the stockholder
giving the proxy withholds such authority. If as a result of circumstances not
now known any of such nominees shall be unable to serve as a director, proxies
will be voted for the election of such other person as the Board of Directors
may select. Information about the nominees and directors continuing in office,
including business experience for at least the last five years, is set forth
below:
Nominees for Election as Directors with Terms Expiring in 2006
Each of the individuals named below is a nominee of the Nominating and Corporate
Governance Committee of the Board of Directors. Messrs. Mayer, Schermer and
Vittert are presently directors whose current terms expire January 22, 2003.
William E. Mayer, 62, Director since 1998
Mr. Mayer is a founding partner of Park Avenue Equity Partners, L.P., New York,
NY, a private equity firm. He was the founding partner of Development Capital,
LLC, a company that invested in private and public companies, from 1996 to 1999.
He is also a director of First Health Group Corp. and a trustee of the Liberty
Mutual Funds.
Mr. Mayer is Chairman of the Executive Compensation Committee and a member of
the Nominating and Corporate Governance Committee. Mr. Mayer has been appointed
as the Company's lead director by the independent directors.
Gregory P. Schermer, 48, Director since 1999
Mr. Schermer is Vice President-Interactive Media and Corporate Counsel of the
Company. He is also a Director of Madison Newspapers, Inc., which is owned 50%
by the Company.
Mark Vittert, 54, Director since 1986
Mr. Vittert is a private investor.
Mr. Vittert is Chairman of the Nominating and Corporate Governance Committee and
a member of the Executive Compensation Committee.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR Proposal 1 for
the election of each of the nominees listed herein.
INCUMBENT DIRECTORS WITH TERMS EXPIRING IN 2004
Mary E. Junck, 55, Director since 1999
Ms. Junck was elected Chairman, President and Chief Executive Officer of the
Company in January 2002. From January 2001 to January 2002, she served as
President and Chief Executive Officer of the Company. She became Executive Vice
President and Chief Operating Officer of the Company in May 1999 and President
in January 2000. From May 1996 to April 1999 she was Executive Vice President of
The Times Mirror Company and President of Eastern Newspapers. She was named
Publisher and Chief Executive Officer of The Baltimore Sun in 1993. She is also
a Director of Madison Newspapers, Inc., which is owned 50% by the Company.
Ms. Junck is Chairman of the Executive Committee.
Andrew E. Newman, 58, Director since 1991
Mr. Newman is Chairman and Chief Executive Officer of Race Rock International,
Inc. and Culinary Essence, LLC, with principal offices in St. Louis, MO, both of
which are privately held companies that own and operate restaurants.
Mr. Newman is Chairman of the Audit Committee and a member of the Executive
Compensation Committee.
Gordon D. Prichett, 61, Director since 1998
Mr. Prichett is a partner in Cairnwood Cooperative, Boston, MA, a private
investment group. He is also Professor of Mathematics, Statistics and
Information Systems at Babson College, Babson Park, MA.
Mr. Prichett is a member of the Audit Committee and the Executive Committee.
INCUMBENT DIRECTORS WITH TERMS EXPIRING IN 2005
Rance E. Crain, 64, Director since 1990
Mr. Crain is the President and Editorial Director of Crain Communications, Inc.,
a privately held, diversified publishing company with its principal offices in
Chicago, IL.
Mr. Crain is a member of the Executive Compensation Committee and the Executive
Committee.
Herbert W. Moloney III, 51, Director since 2001
Mr. Moloney is the Chief Operating Officer, North America, of Vertis, Inc.,
Baltimore, MD ("Vertis"), a privately held company that provides integrated
business marketing solutions. Prior to the formation of Vertis in 2000, Mr.
Moloney was Executive Vice President, Marketing and Sales, of TC Advertising, a
predecessor entity.
Mr. Moloney is a member of the Audit Committee and the Nominating and Corporate
Governance Committee.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors met 10 times in fiscal 2002.
The Company's Board of Directors has four committees. With the exception of the
Executive Committee, each is composed of at least three independent directors
and operates under a written charter. The Board of Directors of the Company has
examined the relationship between each director and the Company and has
determined that Messrs. Crain, Mayer, Newman, Prichett and Vittert do not have
any direct or material indirect relationship with the Company, other than in
their respective capacities as directors, which would compromise their ability
to act as independent directors as contemplated under Section 303 of the Listing
Standards of the New York Stock Exchange. Vertis, of which Mr. Moloney is Chief
Operating Officer, North America, provides the Company, in the normal course of
business, with an Internet subscription service that allows access to
advertising prototypes. Fees paid by the Company to Vertis for that service
totaled $76,000 in fiscal 2002. The Board of Directors does not consider the
relationship between the Company and Vertis to be material to either party, and
also considers Mr. Moloney an independent director of the Company.
The Company's Audit Committee met 10 times in fiscal 2002. Its functions include
review of the scope, timing and other considerations relative to the independent
public accountants' annual audit of the consolidated financial statements, the
adequacy of internal control and the internal audit function, and evaluation of
the performance of external and internal auditors and the Company's accounting
and financial functions. In addition, the Committee appoints, and approves
professional services provided by, the Company's independent public accountants,
prior to rendering of such services, and reviews the possible effect of any
non-audit-related services upon the independence of the Company's accountants.
The Company's Executive Compensation Committee met seven times in fiscal 2002.
Its functions are to administer the Company's Retirement Account Plan,
Supplementary Benefits Plan as Amended and Restated on April 26, 1990 and the
1990 Long Term Incentive Plan; to establish salary ranges and salaries, bonus
formulae and bonuses, and participation in other benefit plans or programs, for
executive officers; to review employment terminations involving payment to any
officer or other key executive in excess of $200,000; to approve employment
contracts for executives extending beyond one year; and to approve the position
description performance standards and key result areas for bonus criteria for
the Chief Executive Officer of the Company and to measure her related
performance. In addition, the Committee recommends to the Board of Directors
significant employee benefit programs and bonus or other benefit plans affecting
individuals on the executive payroll other than elected officers.
The Company's Nominating and Corporate Governance Committee met twice in fiscal
2002. Its functions are to consider and recommend to the Board all nominees for
possible election and re-election to the Board of Directors, and to consider all
matters relating to the size, composition and governance of the Board and the
general subject matter, size and composition of Board committees. The Nominating
and Corporate Governance Committee will consider nominees recommended by the
stockholders. Recommendations should be sent to Mark Vittert, Chairman,
Nominating and Corporate Governance Committee, in care of the Company, at the
address shown on the cover of this Proxy Statement.
No incumbent director attended fewer than 75% of the aggregate of (1) the total
number of meetings of the Board of Directors and (2) the total number of
meetings held by all committees of the Board on which he or she served during
fiscal 2002.
COMPENSATION OF DIRECTORS
No Company employee receives any remuneration for acting as a director. In
fiscal 2002 Messrs. Crain, Mayer, Moloney, Newman, Prichett and Vittert were
paid a $24,400 annual retainer, $1,000 for each Board meeting attended, $500 for
each Board telephonic meeting, $700 for each committee meeting attended and $350
for each committee telephonic meeting. Committee chairmen were also paid $3,000
as an annual retainer for acting as such. Directors engaged to provide
consultative services are normally compensated at the rate of $1,500 per diem.
No non-employee director was paid additional compensation for consultative
services in fiscal 2002.
For fiscal 2003, in consideration of the increased responsibilities being placed
on directors by the New York Stock Exchange, the Securities and Exchange
Commission and the Sarbanes-Oxley Act of 2002, the Company will pay all
non-employee directors a $30,000 annual retainer. The lead director will receive
an additional annual retainer of $10,000. The Chairman of the Audit Committee
will receive a $10,000 annual retainer for acting as such and other committee
chairmen will receive an annual retainer of $5,000. Non-employee directors will
receive $1,000 for each Board or committee meeting attended and $500 for each
Board or committee telephonic meeting. There have been no substantive changes in
non-employee director compensation since 1996.
In 1996 the stockholders of the Company approved the Stock Plan for Non-Employee
Directors. Under the plan, non-employee directors presently receive an annual
grant of 500 shares of Common Stock, and may elect to receive all or 50% of the
cash retainer and meeting fees described above in Common Stock of the Company.
As described more fully in Proposal 2, the Board of Directors proposes to
increase the annual grant of Common Stock to 1,500 shares under the plan.
The Board of Directors has authorized non-employee directors, prior to the
beginning of any Company fiscal year, to elect to defer receipt of all or any
part of the compensation a director might earn during such year. Amounts so
deferred will be paid to the director upon his or her ceasing to be a director
or upon attaining any specified age between 60 and 70, together with interest
thereon at the average rate of interest earned by the Company on its invested
funds during each year. Alternatively, directors may elect to have deferred
compensation credited to a "rabbi trust" established by the Company with an
independent trustee, which administers the investment of amounts so credited for
the benefit and at the direction of the trust beneficiaries until their accounts
are distributed under the deferred compensation plan.
PROPOSAL 2 - APPROVAL OF AMENDED AND RESTATED 1996 STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
At the 1996 Annual Meeting of the Company, the stockholders approved the
Company's 1996 Stock Plan for Non-Employee Directors (the "Stock Plan") in order
to encourage non-employee directors to increase their ownership of shares of the
Company's Common Stock and thereby link their interests more closely with the
interests of the other stockholders of the Company. The Board of Directors
believes that the Stock Plan has assisted the Company in attracting and
retaining non-employee directors of outstanding ability and in providing
compensation opportunities which are competitive with those of other major
corporations. Equally important, adoption of the Stock Plan has enabled
non-employee directors to participate in the long-term growth and financial
success of the Company.
The Stock Plan authorized the Board of Directors to reserve an aggregate of
50,000 shares of the Company's Common Stock (as such number may be adjusted for
stock splits and dividends and certain other corporate changes in accordance
with the Stock Plan), and to make an annual award of 500 shares of Common Stock
to each non-employee director of the Company. The Stock Plan has no expiration
date except that awards may not be granted in excess of the 50,000 shares of
Common Stock which have been reserved for award. Pursuant to the terms of the
Stock Plan, 38,401 shares of Common Stock have been issued to non-employee
directors through September 30, 2002. In order to continue the Plan and increase
the benefits of participation consistent with the enhanced duties imposed upon
non-employee directors by the New York Stock Exchange, the Securities and
Exchange Commission and the Sarbanes-Oxley Act of 2002, the Company is asking
the stockholders to increase the number of shares of Common Stock to be awarded
under the Amended and Restated Stock Plan to 150,000, and to authorize an annual
grant of 1,500 shares to each individual non-employee director. The following
summary sets forth the principal features of the Amended and Restated Stock
Plan, which is qualified in its entirety by the complete text of the Amended and
Restated Stock Plan set forth in Exhibit A to this Proxy Statement.
Awards may be granted only to non-employee directors of the Company. Awards may
not be granted to any person who is an employee of the Company or of any
subsidiary of the Company.
If approved by the stockholders, an award of 1,500 shares of the Company's
Common Stock will be made automatically to each non-employee director on the
first business day of June of each year, beginning on June 2, 2003. No
consideration will be paid by a participant upon award of the shares. A
non-employee director who is elected by the Board of Directors to fill a vacancy
or newly created directorship between annual meetings of stockholders will
automatically receive 1,500 shares of Common Stock on the earlier of the first
business day of the fourth month after taking office or the last business day of
the year in which he or she takes office.
Non-employee directors will continue to have the right to elect in writing to
receive all or 50 percent of the compensation described above under the caption
"Compensation of Directors", which would otherwise be payable in cash, in shares
of Common Stock. The number of shares so awarded will be determined by dividing
the amount of the compensation to be paid by the closing price of the Company's
Common Stock as reported for New York Stock Exchange-Composite Transactions on
the trading day immediately preceding the date of payment and rounding to the
nearest whole number. Elections under this section must be made at least one
week prior to the beginning of the Company's next fiscal quarter. A non-employee
director's election will remain in effect from year to year until changed by the
participant. A change in an election is effective, if timely made, beginning
with the Company's next fiscal quarter.
The Stock Plan is administered by the Chief Executive Officer of the Company
(the "Administrator"), who is authorized to interpret the Stock Plan but has no
authority with respect to the selection of directors to receive awards, the
number of shares subject to the Stock Plan or each grant thereunder, or the
price or timing of awards to be made except as provided below. The Administrator
has no authority to increase materially the benefits under the Stock Plan. The
Administrator may amend, suspend or terminate the Stock Plan as he or she deems
advisable or to comply with changes in the Internal Revenue Code of 1986, the
Employee Retirement Income Security Act of 1974, or the rules and regulations
thereunder, but may not amend the Stock Plan without further approval of the
stockholders if such approval is required by law. The determinations of the
Administrator are final, binding and conclusive upon all persons. Adjustments
shall be made in the number and kind of shares subject to the Stock Plan for
stock splits or stock dividends.
Federal Tax Consequences
The non-employee directors are considered to have earned directors' compensation
at the time of the stock awards. The amount of taxable compensation equals the
fair market value of the shares on the date awarded. This treatment applies to
minimum awards and elective awards of Common Stock.
Other Information
If the Amended and Restated Stock Plan had been in effect in fiscal 2002, the
following table sets forth the cumulative benefits that would have been received
by the six persons eligible to participate in the Stock Plan.
Amount Number of Shares
--------------------------------------------------------------------------------------------------------------------
Non-Employee Director Group $ 327,000 (1) 9,000
--------------------------------------------------------------------------------------------------------------------
(1) Based on the closing price of the Common Stock on June 3, 2002 of $36.33.
The affirmative vote of a majority of the voting power of all Common Stock and
Class B Common Stock present in person or by proxy, voting as a single class, a
quorum being present, will be required for the approval of the foregoing
proposal. The Amended and Restated Stock Plan becomes effective upon its
approval by the stockholders.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR Proposal 2 to adopt the Amended and
Restated 1996 Stock Plan for Non-Employee Directors.
EQUITY COMPENSATION PLAN INFORMATION
Information as of September 30, 2002 with respect to equity compensation plans
is as follows:
Number of securities to Weighted average
be issued upon exercise exercise price of Number of securities
of outstanding options, outstanding options, remaining available
Plan Category warrants and rights warrants and rights for future issuance
-------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by stockholders (1)(2) 1,048,809 $ 29.04 3,038,235
-------------------------------------------------------------------------------------------------------------------
(1) 1990 Long-Term Incentive Plan.
(2) Excludes purchase rights accruing under the Company's Employees' Stock
Purchase Plan ("Purchase Plan"), which has a stockholder approved reserve of
925,000 shares. Under the Purchase Plan, each eligible employee may purchase up
to 5% of base compensation not to exceed $25,000 on the last business day of
April each year at a purchase price per share equal to 85% of the lower of the
average of the high and low market price on either the first or last business
day of the plan year.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of November 29, 2002 as to each
person known by the Company to own beneficially more than five (5%) percent of
the Common Stock or Class B Common Stock of the Company. Holders of Class B
Common Stock are entitled to ten votes per share on all matters.
Percent Class B Percent
Beneficial Owners Common Stock of Class Common Stock of Class
-----------------------------------------------------------------------------------------------------
Ariel Capital Management, Inc. (1) 7,996,328 22.8% --- --- %
200 E. Randolph Street
Suite 2900
Chicago, IL 60601
Lloyd G. Schermer (2) --- --- 1,227,586 12.7
c/o Lee Enterprises, Incorporated
215 North Main Street
Davenport, IA 52801-1924
Betty A. Schermer (3) --- --- 1,116,354 11.5
c/o Lee Enterprises, Incorporated
215 North Main Street
Davenport, IA 52801-1924
The Bair Co. (4) --- --- 694,008 7.2
c/o First Trust National Association
Income Collections
P.O. Box CM-9551
St. Paul, MN 55170
Gregory P. Schermer (5) 155,496 * 528,770 5.5
c/o Lee Enterprises, Incorporated
215 North Main Street
Davenport, IA 52801-1924
Lee Endowment Foundation (6) --- --- 517,648 5.4
First Citizens National Bank
2601 Fourth Street
P.O. Box 1708
Mason City, IA 50402
Grant Schermer 99 * 513,146 5.3
c/o Lee Enterprises, Incorporated
215 North Main Street
Davenport, IA 52801-1924
----------------------------------------------------------------------------------------------------
* Less than one percent of the class.
(1) The information is based on a report on Schedule 13G, dated October 31,
2002, filed by Ariel Capital Management, Inc. ("Ariel") with the Securities
and Exchange Commission. Ariel reported sole voting power with respect to
7,216,523 of the reported shares and sole dispositive power with respect to
7,966,878 shares.
(2) Includes (i) 458,028 shares of Class B Common Stock owned by a trust as to
which Lloyd G. Schermer retains sole voting and investment powers; (ii)
338,838 shares of Class B Common Stock held by a charitable trust as to
which Mr. Schermer has sole voting and shared investment power; and (iii)
110,020 shares of Class B Common Stock held by a trust and 320,700 shares
of Class B Common Stock held by a charitable foundation as to which Mr.
Schermer shares voting and investment powers. Mr. Schermer disclaims
beneficial ownership of 769,558 shares of Class B Common Stock listed
above, and of the Class B Common Stock beneficially owned by Betty A.
Schermer listed above and described in footnote (3) below.
(3) Includes (i) 795,654 shares of Class B Common Stock owned by trusts under
which Betty A. Schermer has sole voting and investment powers; and (ii)
320,700 shares of Class B Common Stock held by a charitable foundation as
to which Mrs. Schermer has shared voting and investment power, but
disclaims all beneficial ownership. Mrs. Schermer also disclaims beneficial
ownership of all Class B Common Stock beneficially owned by Lloyd G.
Schermer listed and described in footnote (2) above.
(4) The information is based solely on the stock ownership records of the
Company.
(5) Includes 6,000 shares of Class B Common Stock owned by his spouse, 2,000
shares of Common Stock and 6,000 shares of Class B Common Stock held by a
trust for the benefit of his minor son, and 4,000 shares of Class B Common
Stock held by a trust for the benefit of a minor daughter, as to which Mr.
Schermer disclaims all beneficial ownership. Includes 25,320 shares of
Common Stock subject to acquisition within 60 days by exercise of
outstanding stock options.
(6) The information is based solely on the stock ownership records of the
Company. The Lee Endowment Foundation is an Iowa not-for-profit corporation
organized by several stockholders of the Company in 1977 as a charitable
foundation to benefit certain communities in which the Company conducts
business. It is independently governed and is not an affiliate of the
Company.
The following table sets forth information as to the Common Stock and Class B
Common Stock of the Company beneficially owned as of November 29, 2002 by each
director and nominee, each of the named executive officers listed in the Summary
Compensation Table below, and by all directors and executive officers as a
group:
Name of Percent Class B Percent
Beneficial Owner Common Stock of Class Common Stock of Class
--------------------------------------------------------------------------------
Rance E. Crain 12,500 * --- --- %
James W. Hopson (2) 41,115 * --- ---
Mary E. Junck (2) 135,507 * --- ---
William E. Mayer 5,901 * --- ---
Herbert W. Moloney III 1,000 * --- ---
Andrew E. Newman 5,500 * --- ---
Michael E. Phelps (2) 21,771 * --- ---
Gordon D. Prichett 4,100 * --- ---
Gregory P. Schermer (1) (2) 155,496 * 528,770 5.5
Carl G. Schmidt (2) 18,800 * --- ---
Greg R. Veon (1) (2) 99,842 * 5,804 *
Mark Vittert 5,500 * --- ---
All executive officers
and directors as a group
(15 persons) 577,330 1.7% 534,574 5.5
--------------------------------------------------------------------------------
* Less than one percent of the class.
(1) The following directors and named executive officers disclaim beneficial
ownership of the following shares, included above: Mr. Schermer - 6,000
shares of Class B Common Stock owned by his spouse, 2,000 shares of Common
Stock and 6,000 shares of Class B Common Stock held by a trust for the
benefit of his minor son, and 4,000 shares of Class B Common Stock held by
a trust for the benefit of a minor daughter; and Mr. Veon - 400 shares of
Common Stock.
(2) The table includes the following shares of Common Stock subject to
acquisition within 60 days by the exercise of outstanding stock options:
Mr. Hopson - 33,000; Ms. Junck - 65,500; Mr. Phelps - 15,000; Mr. Schermer
- 25,320; Mr. Schmidt - 12,000; and Mr. Veon - 63,686.
EXECUTIVE COMPENSATION
The following table and discussion summarize the compensation which the Company
paid for services rendered in all capacities for the fiscal year ended September
30, 2002 to the Chief Executive Officer of the Company and to each of the four
other most highly compensated executive officers.
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
--------------------------------------------- --------------------------
Restricted Stock
Name and Principal Other Stock Options All
Position Year Salary Bonus Annual Awards (#) Other
--------------------------------------------------------------------------------------------------------------------
(6) (7) (6)(9) (6) (11)
Mary E. Junck 2002 $575,000 $750,000 $ --- $1,137,200 80,000 $123,200
Chairman, President 2001 575,000 300,000 --- 709,200 75,000 115,900
and Chief Executive 2000 460,000 138,100 --- 129,700 30,000 42,800
Officer (1)
James W. Hopson 2002 325,000 153,400 --- 78,000 20,000 54,000
Vice President - 2001 325,000 58,800 --- 85,100 20,000 4,100
Publishing (2) 2000 50,800 --- --- 75,200 (8) 45,000 (8) ---
Carl G. Schmidt 2002 300,000 269,900 --- 78,000 20,000 10,900
Vice President, Chief 2001 125,000 18,800 --- 147,200 (8) 40,000 (8) ---
Financial Officer and 2000 --- --- --- --- --- ---
Treasurer (3)
Greg R. Veon 2002 275,000 227,100 --- 78,000 21,730 (10) 45,100
Vice President - 2001 258,300 47,500 --- 85,100 24,186 (10) 45,700
Publishing (4) 2000 238,600 53,300 --- 51,900 20,000 46,700
Michael E. Phelps 2002 210,000 153,700 --- 52,000 15,000 39,400
Vice President - 2001 210,000 68,300 --- 56,700 15,000 16,200
Publishing (5) 2000 122,100 45,000 --- 60,400 (8) 17,500 (8) ---
----------------------------------------------------------------------------------------------------------------------------
(1) Ms. Junck was elected Chairman, President and Chief Executive Officer in
January 2002. From January 2001 to January 2002 she served as President and
Chief Executive Officer. From January 2000 to January 2001 she served as
President and Chief Operating Officer. From May 1999 to January 2000 she
served as Executive Vice President and Chief Operating Officer.
(2) Mr. Hopson was elected Vice President - Publishing and named Publisher of
the Wisconsin State Journal in July 2000. In January 2002, he was elected
Chairman of Madison Newspapers, Inc.
(3) Mr. Schmidt was elected Vice President, Chief Financial Officer and
Treasurer in May 2001.
(4) Mr. Veon was elected Vice President - Publishing in November 1999. From
November 1995 to November 1999 he served as Vice President - Marketing.
(5) Mr. Phelps was elected Vice President - Publishing and named Publisher of
the Quad-City Times in June 2002. From February 2000 to June 2002 he served
as Vice President - Sales & Marketing.
(6) The Executive Compensation Committee of the Company meets following the
conclusion of the Company's fiscal year to determine, among other things,
the annual bonus and long term compensation grants to be awarded, if any,
for the fiscal year just concluded. The Summary Compensation Table includes
the value of shares of restricted Common Stock and the number of stock
options granted by the Executive Compensation Committee under the Company's
1990 Long-Term Incentive Plan in each of the years indicated for the
corresponding fiscal year. Bonuses were also awarded for fiscal 2002
related to successful completion of the acquisition of Howard Publications,
Inc. and other merger and acquisition activities.
(7) Less than the lesser of $50,000 or 10% of compensation.
(8) Includes compensation received by the named executive officer in
conjunction with his or her employment by the Company.
(9) Represents shares of restricted Common Stock in the following amounts
granted to the named executive officers for fiscal 2002, 2001 and 2000,
respectively.
2002 2001 2000
--------------------------------------------------------------------------
Mary E. Junck 35,000 20,000 5,000
James W. Hopson 2,400 2,400 3,000(8)
Carl G. Schmidt 2,400 4,400(8) ---
Greg R. Veon 2,400 2,400 2,000
Michael E. Phelps 1,600 1,600 2,500(8)
--------------------------------------------------------------------------
(10) Includes replacement, or "reload," options awarded at fair market value at
date of exercise of non-qualified stock options as follows: Mr. Veon -
1,730 in 2002 and 4,186 in 2001. Such options have a term equal to the
remaining term of the options exercised and are exercisable after one year.
(11) Represents direct and matching contributions by the Company on behalf of
the named individuals to the Company's Retirement Account Plan and
Supplementary Benefits Plan.
Option Grants For Year Ended September 30, 2002
The following table summarizes option grants to named executive officers
for fiscal 2002:
% of Total
Options Granted
Options to Employees in Exercise Price Expiration Grant Date
Name Granted Fiscal Year Per Share Date Present Value
--------------------------------------------------------------------------------------------------------
(1) (3)
Mary E. Junck 80,000 24.1% $32.49 11/13/2012 $591,200
James W. Hopson 20,000 6.0 32.49 11/13/2012 147,800
Carl G. Schmidt 20,000 6.0 32.49 11/13/2012 147,800
Greg R. Veon 20,000 6.0 32.49 11/13/2012 147,800
1,730 (2) 0.5 39.25 11/01/2004 12,600
Michael E. Phelps 15,000 4.5 32.49 11/13/2012 110,900
--------------------------------------------------------------------------------------------------------
(1) The options granted to the named individuals (other than replacement
options) were determined by the Executive Compensation Committee following
review of each individual's performance in fiscal year 2002, and become
exercisable in installments of 30% of the original grant on each of the
first and second anniversaries of the grant date and 40% on the third
anniversary. All options are for Common Stock and have an exercise price
equal to the closing market price of the stock on the grant date. The
lesser of 25% or the maximum number of shares permitted by law are
designated as incentive stock options, and the balance are non-qualified
options. All options were granted under the Company's 1990 Long-Term
Incentive Plan, the provisions of which, among other things, allow an
optionee exercising an option to satisfy the withholding tax obligations by
electing to have the Company withhold shares of stock otherwise issuable
under the option with a fair market value equal to such obligations. The
Plan also permits an optionee exercising an option to satisfy the exercise
price by delivering previously awarded restricted stock or previously owned
Common Stock. The limitations accompanying any restricted stock delivered
at the exercise of an option remain in effect and apply to the
corresponding number of shares issued upon the stock option exercise until
they lapse according to their original terms.
(2) Replacement, or "reload," options awarded at fair market value at date of
exercise of non-qualified stock options. Such options have a term equal to
the remaining term of the options exercised and are exercisable after one
year.
(3) The "grant date present value" is a hypothetical fair value ($7.39 for
November 13, 2002 grants) determined under the Black-Scholes Option Pricing
Model using certain specified assumptions. The range of assumptions used in
calculating the values is as follows:
Factor Grant of November 13, 2002 Reload Options
---------------------------------------------------------------------------
Dividend yield 2.0% 2.0%
Volatility 29.8% 27.2%
Risk-free interest rate 2.3% 3.7%
Turnover 3.0% ---
Expected life (years) 4.3 2.7
The Company's stock options are not transferable, are subject to a risk of
forfeiture, and the actual value of the stock options that an executive officer
may realize, if any, will depend on the excess of the market price on the date
of exercise over the exercise price.
Aggregate Option Exercises in Year Ended September 30, 2002 and Fiscal Year End
Option Values
The following table summarizes option exercises in fiscal 2002 and unrealized
value:
Value of Unexercised
Number of Unexercised In-the-Money Options
Number of Options at September 30, at September 30, 2002
Shares Acquired Value 2002 Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
Mary E. Junck --- $--- 34,000 $ 160,300
96,000 145,400
James W. Hopson --- --- 21,000 117,200
44,000 147,400
Carl G. Schmidt --- --- 6,000 10,800
34,000 25,200
Greg R. Veon 8,640 201,500 45,686 310,100
41,730 114,400
Michael E. Phelps --- --- 7,500 66,800
25,000 79,200
-------------------------------------------------------------------------------------------------------------
(1) All options are for Common Stock and were granted under the Company's 1990
Long-Term Incentive Plan.
(2) Market value of underlying securities at exercise date minus the exercise
price.
(3) Options granted under the Company's 1990 Long-Term Incentive Plan become
exercisable in three installments over a period of three years from the
date of grant. The number of unexercisable options shown excludes those
granted by the Executive Compensation Committee in November 2002 for the
fiscal year ended September 30, 2002. Replacement, or "reload," options are
awarded at fair market value at date of exercise of non-qualified stock
options. Such options have a term equal to the remaining term of the
options exercised and are exercisable after one year.
(4) Market value of underlying securities at September 30, 2002 ($32.86), minus
the exercise price.
Benefit Plans and Retirement Programs
Under the Company's Retirement Account Plan and Supplementary Benefits Plan, the
Company matches, upon eligibility, employee contributions up to 5.0% of employee
compensation and, in addition, contributes 4.96% of a participant's total
compensation plus an additional 4.56% of such compensation in excess of $84,900.
These retirement plans are defined contribution plans. Company and employee
contributions are invested and the total amount is paid following retirement.
Company contributions vest after six years of service for the Company's
Retirement Account Plan. Contributions to the Supplementary Benefits Plan are
vested immediately. Amounts credited in fiscal 2002 under the Retirement Account
Plan and Supplementary Benefits Plan to the accounts of named executive officers
are listed in the Summary Compensation Table under the caption "All Other
Compensation."
Change-of-Control Employment Agreements
In 1998 the Board of Directors approved employment agreements between the
Company and its executive officers, including each of the named executive
officers, which become effective upon a change of control or in the event of a
termination of employment in anticipation of a change of control. The agreements
extend for three years, but renew annually for a new three-year period unless
the Company gives prior notice of termination. The agreements provide that each
such officer is to remain an employee for a three-year period following a change
of control of the Company (the "Employment Period"). During the Employment
Period, the officer is entitled to (i) an annual base salary, payable monthly in
an amount at least equal to his or her highest monthly base salary during the
year prior to the change of control, (ii) an annual bonus in an amount at least
equal to his or her highest annual bonus in the three years prior to the change
of control, and (iii) continued participation in the Company's incentive,
savings, retirement and welfare benefit plans. The officer also is entitled to
payment of expenses and fringe benefits to the extent paid or provided to (a)
such officer prior to the change of control or (b) other peer executives of the
Company.
If during the Employment Period, the officer's employment is terminated other
than for "Cause" or disability or the officer terminates his or her employment
for "Good Reason", including a detrimental change in responsibilities or a
reduction in salary or benefits, the officer will be entitled to the following
benefits: (i) all accrued and unpaid compensation; (ii) a severance payment
equal to three times the sum of such officer's (a) annual base salary, and (b)
highest recent annual bonus; (iii) payment equal to the retirement contribution
that the officer would have been eligible to receive from the Company under the
terms of the Company's Retirement Account Plan and Supplementary Benefits Plan
(or successor plan or program then in effect), determined as if the officer were
fully vested thereunder and had continued (after the date of termination) to be
employed for an additional three years at the officer's highest recent annual
compensation for purposes of determining the basic contributions and
supplemental contributions; (iv) the amount of any forfeited benefits under the
Company's Savings Plan, as defined; and (v) any legal fees and expenses incurred
by the officer in asserting legal rights in connection with the agreement. The
officer shall also be entitled to continued welfare benefits for three years and
outplacement services. Subject to certain limits on payments, the agreement also
requires tax "gross-up" payments to the officer to mitigate any excise tax
imposed on the officer under Sections 280G and 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), and any penalties and interest in connection
with a change of control. These payments would be in addition to awards of
restricted stock, stock options and stock appreciation rights or amounts payable
in lieu thereof under the Company's 1990 Long-Term Incentive Plan which, in the
event of a change of control and subject to certain limitations contained in the
agreements, provides for early exercise and vesting and issuance or payment of
such awards. The officer is entitled to receive such amounts in a lump-sum
payment within 30 days of termination.
A change of control includes certain mergers and acquisitions, liquidation or
dissolution of the Company, changes in the membership of the Company's Board of
Directors and acquisition of securities of the Company.
Performance Presentation
The following graph compares the quarterly percentage change in the cumulative
total shareholder return of the Company, the Standard & Poor's "S&P" 500 Stock
Index, and the S&P 500 Publishing Index, in each case for the five years ended
September 30, 2002 (with September 30, 1997 as the measurement point). Total
shareholder return is measured by dividing (a) the sum of (i) the cumulative
amount of dividends declared for the measurement period, assuming dividend
reinvestment and (ii) the difference between the issuer's share price at the end
and the beginning of the measurement period, by (b) the share price at the
beginning of the measurement period.
The data points used for the omitted graph were as follows:
September 30 1997 1998 1999 2000 2001 2002
-------------------------------------------------------------------------------------------------------------------
Lee Enterprises $100.00 $93.26 $100.53 $108.86 $122.03 $129.06
S&P 500 Stock Index 100.00 109.04 139.37 157.87 115.82 92.10
S&P 500 Publishing Index 100.00 100.87 137.48 142.28 134.14 156.23
-------------------------------------------------------------------------------------------------------------------
The S&P 500 Stock Index includes 500 U.S. companies in the industrial,
transportation, utilities and financial sectors and is weighted by market
capitalization. The S&P 500 Publishing Index, which is also weighted by market
capitalization, includes, among others, the following companies considered to be
peers of the Company: Gannett Co., Inc., Knight-Ridder, Inc., The New York Times
Company, Dow Jones & Company, Inc. and The Tribune Company.
Report of the Executive Compensation Committee
of the Board of Directors on Executive Compensation
The Committee
The Executive Compensation Committee of the Board of Directors (the "Committee")
is composed of four independent outside directors. No executive officer of the
Company is a member of the board of directors of any company with which a member
of the Committee is affiliated. The Board of Directors has delegated to the
Committee the authority to review, consider and determine the compensation of
the Company's executive officers and other key employees and, in accordance with
Rule 16b-3 of the Exchange Act, make the final determination regarding awards of
stock options, restricted stock, and other stock-based awards to such persons.
Compensation Policies
The Committee operates on the principle that the compensation of the Company's
executive management, including its Chief Executive Officer and the other
executive officers named in the Summary Compensation Table, should be
competitive with compensation of executive management at comparable companies.
The Committee also follows a policy of basing a significant portion of the cash
compensation of senior executive officers on the operating performance of the
Company, and of other members of the executive management team on the
performance of the enterprises, units or functions over which they exercise
significant management responsibility. The Committee's policies are designed to
assist the Company in attracting and retaining qualified executive management by
providing competitive levels of compensation that integrate the Company's annual
and long term performance goals, reward strong corporate performance, and
recognize individual initiative and achievement. The Committee also believes
that stock ownership by management and stock-based performance compensation
arrangements are beneficial in the linking of management's and stockholders'
interest in the enhancement of shareholder value.
The Company's executive compensation program is comprised of three elements: (1)
base salary; (2) annual incentive bonus; and (3) long-term incentive
compensation.
Base Salary
Salary levels for executive management are set so as to reflect the duties and
level of responsibilities inherent in the position, and to reflect competitive
conditions in the lines of business in which the Company is engaged in the
geographic areas where services are being performed. Comparative salaries paid
by other companies in the industries and locations where the Company does
business are considered in establishing the salary for a given position. The
Company participates in the Towers Perrin Media Industry Compensation Survey
(the "Towers Survey"), which is widely used in its industry and gives relevant
compensation information on executive positions. The Company strives to place
fully competent and highly performing executives at the median level of
compensation, as reported annually in the Towers Survey.
The Towers Survey provides annual compensation analyses for executives in the
media industry based on revenue, industry segments including publishing, and
market type and size. The statistical information, including revenue and
compensation levels, provided by survey participants is utilized by the Towers
Survey to develop statistical equations based on revenue, industry segments and
markets. These equations, along with other data, are used by the Company to
determine the median and other levels of compensation of the executive
management of media companies with profiles comparable to that of the Company.
Base salaries for executives named in the Summary Compensation Table are
reviewed annually by the Committee taking into account the competitive level of
pay as reflected in the Towers Survey. In setting base salaries, the Committee
also considers a number of factors relating to the particular executive,
including individual performance, level of experience, ability and knowledge of
the job. These factors are considered subjectively in the aggregate and none of
the factors is accorded a specific weight. The Committee believes the base
salary levels are reasonable and necessary to retain these key employees.
The Company, with the Committee's consent, froze executive salary levels in
fiscal 2002 due to general economic conditions.
Annual Incentive Bonus
The purpose of the annual incentive bonus program is to motivate and reward
executive management so that they consistently achieve specific financial
targets and are compensated for the accomplishment of certain non-financial
objectives. These targets and objectives are reviewed and approved by the
Committee annually in conjunction with its review of the Company's strategic and
operating plans. A target bonus level, stated as a percent of annual base
salary, is established for each member of the executive management team other
than executive officers, by the executive officer exercising responsibility over
an enterprise unit or function. For executive officers other than the Chief
Executive Officer, the bonus level and achievement targets are determined by the
Chief Executive Officer and approved by the Committee. Similarly, the Committee
determines the annual bonus opportunity and performance objectives of the Chief
Executive Officer. While the annual incentive bonus awards for executives other
than the Chief Executive Officer are generally approved upon the recommendation
of the Chief Executive Officer, the Committee retains the right to adjust the
recommended bonus awards to reflect its evaluation of the executive's, and the
Company's, overall performance.
Long Term Incentive Compensation
Under the Company's 1990 Long-Term Incentive Plan, the Committee is authorized,
in its discretion, to grant stock options and restricted stock awards in such
proportions and upon such terms and conditions as the Committee may determine.
The Committee meets following the end of each year to evaluate the performance
of the Company for the preceding fiscal year and determine long term incentive
awards of executive management of the Company for the fiscal year just ended.
Under the plan, grants to executives are based on criteria established by the
Committee, including responsibility level, base salary, current market practice
and the market price of the Company's Common Stock at the time of grant. The
number of stock options and/or restricted shares then determined is reviewed by
the Committee and may be increased or decreased to reflect the criteria noted
above, the individual executive's role in accomplishment of the Company's
operating objectives, and that individual's potential for long term growth and
contribution to the Company's strategic objectives. Grant guidelines for stock
options and restricted stock are established for all participants (including the
Chief Executive Officer) with the objective of providing a target total
compensation opportunity, including base salary and the target annual incentive
bonus, equal to the median of the peer group. Depending on stock price
performance and Company performance, actual total compensation for any given
year could be at, above, or below the median of the peer group.
A target level of stock option grants was established for each executive officer
position based on the scope of responsibilities and competitive practices in the
newspaper industry. Actual grants were based on the performance of the executive
officer. All stock options granted have an exercise price equal to the fair
market value of the Common Stock at time of grant and are exercisable within a
10-year period. In order to assure the retention of high level executives and to
tie the compensation of those executives to the creation of long term value for
stockholders, the Committee has provided that stock options vest in specified
portions over a three-year period.
The awards of restricted stock to executive officers and other key employees for
fiscal 2002 represent shares of Common Stock which the recipient cannot sell or
otherwise transfer until the applicable restriction period lapses. A target
level of restricted stock was established for each executive officer position
based on the scope of responsibilities and competitive practices in the
newspaper industry. Actual grants were based on the performance of the executive
officer. Restricted stock awards are also intended to increase the ownership of
executives in the Company, through which the value of long term stock ownership
and growth can be enhanced.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the deductibility of
executive compensation paid by publicly held companies to certain of their
executive officers to $1,000,000 per year, but contains an exception for
performance-based compensation. While the Committee's general policy is to
structure the Company's compensation programs to preserve the deductibility of
most compensation paid to its executive officers, the Committee periodically
authorizes payments that may not be deductible if it believes they are in the
best interests of both the Company and its stockholders.
Compensation of Chief Executive Officer
The Committee determined the 2002 base salary for the Company's Chief Executive
Officer, Mary E. Junck, in a manner consistent with the base salary guidelines
applied to executive officers of the Company as described above. The annual
bonus paid to Ms. Junck for fiscal 2002 was based upon an evaluation of the
performance of the Company in relation to past years and the performance of
comparable media companies, as well as the accomplishment of certain
non-financial performance objectives and the successful initiation of several
long-term and strategic initiatives which the Committee believes will be of
significant benefit to the Company in the future, including the successful
completion of the acquisition of Howard Publications, Inc. and other merger and
acquisition activities.
The Committee made a long-term compensation award of stock options and
restricted stock to Ms. Junck for fiscal 2002 by applying the same criteria
described for the determination of such awards to other executive officers of
the Company. The Committee considered the fiscal 2002 performance of the
Company, as more particularly described above, in the final determination of
such grants.
Executive Compensation Committee Participation
The current members of the Executive Compensation Committee are William E.
Mayer, Chairman, Rance E. Crain, Andrew E. Newman and Mark Vittert.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
OF DIRECTORS REGARDING ANNUAL FINANCIAL STATEMENTS
The Audit Committee of the Board of Directors is comprised of three directors
who are not officers of the Company. All members are independent under rules of
the New York Stock Exchange. The Board of Directors has a written charter for
the Audit Committee.
The Committee held 10 meetings during fiscal 2002. The meetings were designed to
facilitate and encourage private communication between the Committee, the
Company's internal auditors and the Company's independent public accountants.
During these meetings, the Committee reviewed and discussed the audited
financial statements with management and the independent public accountants. The
Audit Committee believes that management maintains an effective system of
internal controls that results in fairly presented financial statements. Based
on these discussions, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K.
The discussions with the independent public accountants also included the
matters required by Statement on Auditing Standards No. 61. The Audit Committee
received from the independent public accountants written disclosures and the
letter regarding its independence as required by Independence Standards Board
Standard No. 1. This information was discussed with the independent public
accountants.
Audit Committee Participation
The current members of the Audit Committee are Andrew E. Newman, Chairman,
Herbert W. Moloney III and Gordon D. Prichett.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP ("Deloitte"), Certified Public Accountants,
was designated by the Board of Directors of the Company to audit the
consolidated financial statements of the Company for the fiscal year ended
September 30, 2002. Representatives of Deloitte will be present at the Annual
Meeting and will be afforded the opportunity to make a statement, if they desire
to do so, and will be available to respond to appropriate questions. McGladrey &
Pullen, LLP ("McGladrey") served as independent public accountants of the
Company until June 2002.
For fiscal 2002, Deloitte, McGladrey and RSM McGladrey, Inc. (an affiliate of
McGladrey) performed the following professional services and received, or will
receive, fees in the amounts indicated:
--------------------------------------------------------------------------------
Deloitte McGladrey
--------------------------------------------------------------------------------
Audit of 2002 consolidated financial statements $207,000 $ 29,000
Tax and all other services 255,000 399,000
All other services include fees related to audit of acquired businesses, due
diligence, and other merger and acquisition assistance. The Board of Directors
will choose independent public accountants for purposes of auditing the
consolidated financial statements of the Company for the year ending September
30, 2003, after the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Proposals of stockholders with regard to nominees for the Board of Directors or
other matters to be presented at the 2004 Annual Meeting of the Company must be
received by the Company to be considered for inclusion in its proxy statement
and form of proxy relating to that meeting by September 1, 2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10 percent of the
Company's Common Stock or Class B Common Stock to file initial reports of
ownership and reports of changes in that ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
these reports have been established, and the Company is required to disclose in
its proxy statement any failure to file by these dates during the Company's 2002
fiscal year.
Based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, the Company
believes that all filing requirements applicable to its executive officers and
directors were satisfied. With respect to the Company's two known holders of
more than 10 percent of the Company's Class B Common Stock, Lloyd G. Schermer
filed two late reports involving four separate transactions in the Company's
Common Stock by a trust of which he is a co-trustee as to which he disclaims
beneficial interest.
OTHER MATTERS
The management of the Company knows of no matters to be presented at the Annual
Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. However, if any other matters properly come before the meeting,
your proxy, if signed and returned, will give discretionary authority to the
persons designated in it to vote in accordance with their best judgment.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, some of the officers and regular employees of
the Company may, without extra remuneration, solicit proxies personally or by
telephone, electronic transmission, facsimile or by telegram. The Company may
also request brokerage houses, nominees, custodians and fiduciaries to forward
proxy materials to the beneficial owners of stock held of record and will
reimburse such persons for their expenses. The Company has retained Morrow &
Co., Inc. to aid in the solicitation of proxies, for which the Company will pay
an amount that it has estimated will not exceed $10,000 plus expenses.
/s/ Mary E. Junck
-----------------------------------------------
MARY E. JUNCK
Chairman, President and Chief Executive Officer
EXHIBIT A
LEE ENTERPRISES, INCORPORATED
AMENDED AND RESTATED
1996 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purposes
The purpose of the Amended and Restated 1996 Stock Plan for Non-Employee
Directors (the "Plan") of Lee Enterprises, Incorporated (the "Company") is to
promote the interests of the Company and its stockholders by (i) encouraging
non-employee directors to own shares of the Company's Common Stock and thereby
link their interests more closely with the interests of the other stockholders
of the Company; (ii) attracting and retaining non-employee directors of
outstanding ability; (iii) providing incentive compensation opportunities which
are competitive with those of other major corporations; and (iv) enabling such
directors to participate in the long-term growth and financial success of the
company.
2. Definitions
The following definitions shall be applicable throughout the Plan:
"Administrator" - means the Chief Executive Officer of the Company.
"Award" - means a grant of Common Stock under Section 7 of the Plan.
"Board of Directors" - means the Board of Directors of the Company.
"Cash Compensation" - means annual retainer, fees payable for serving
as Chairman of the Board of Directors or of a committee of the Board
or for attending any meetings of the Board or any committee thereof,
per diem consultation fees or other compensation payable as a
non-employee director of the Company.
"Code" - means the Internal Revenue Code of 1986 as amended from time
to time.
"Common Stock" - means the common stock of Lee Enterprises,
Incorporated, $2.00 par value.
"Company" - means Lee Enterprises, Incorporated, a Delaware
corporation, including any and all subsidiaries.
"Exchange Act" - means the Securities Exchange Act of 1934 as amended
from time to time.
"Participant" - means a non-employee director of the Company who has
been granted an Award.
3. Effective Date and Duration of the Plan
The Plan shall become effective upon approval by the Company's stockholders at
the Annual Meeting of Stockholders to be held on January 22, 2003 or any
adjournment thereof. The Plan shall terminate at such time as may be determined
by the Administrator, and no Awards shall be granted after such termination.
4. Administration
(a) Administrator. The Plan shall be administered by the Administrator subject
to the restrictions set forth in the Plan. Before any Awards are granted,
the Administrator may require Participants to execute any agreements that
the Administrator, in his or her discretion, shall reasonably require.
(b) Powers. Subject to the provisions of the Plan, the Administrator shall have
the full power, discretion, and authority to interpret and administer the
Plan in a manner which is consistent with the Plan's provisions, but shall
have no authority with respect to the selection of directors to receive
awards, the number of shares subject to the Plan or each grant thereunder,
or the price or timing of Awards to be made except as provided in Section
9. The Administrator shall have no authority to increase materially the
benefits under the Stock Plan.
A-1
(c) Decisions Binding. All determinations and decisions made by the
Administrator according to the provisions of the Plan shall be final,
conclusive and binding on all persons, including the Participants, their
estates and beneficiaries, and the Company and it stockholders and
employees.
5. Common Stock Awards; Shares Subject to the Plan
(a) Stock Grant Limit. Awards will be granted to Participants in the Plan in
accordance with the provisions of Section 7 below. Subject to Section 8
below, the aggregate number of shares of Common Stock that may be issued
under the Plan shall not exceed 150,000 shares. Shares of Common Stock
shall be deemed to have been issued under the Plan only to the extent
actually issued and delivered pursuant to an Award.
(b) Stock Offered. The Common Stock to be granted constituting an Award may be
authorized but unissued Common Stock or Common Stock previously issued and
outstanding and reacquired by the Company.
6. Eligibility
Awards may be granted only to directors of the Company who, at the time of
grant, are not employees of the Company or of any subsidiary of the Company.
Awards may not be granted to any person who is an employee of the Company or of
any subsidiary of the Company.
7. Common Stock Awards
(a) Minimum Awards of Common Stock. An Award of 1,500 shares of Common Stock,
as adjusted according to Section 8 below, shall be made automatically to
Participants on the first business day of June of each year, beginning on
June 2, 2003. A Participant who is elected by the Board of Directors to
fill a vacancy or newly created directorship between annual meetings of
stockholders shall automatically receive 1,500 shares of Common Stock, as
adjusted according to Section 8 below, on the earlier of the first business
day of the fourth month after taking office or the last business day of the
year in which he or she took office.
(b) Elective Payment in Common Stock. Participants shall have the right to
elect, in writing filed with the Company, to receive all or fifty percent
(50%) of their Cash Compensation payable for services rendered by them in
shares of Common Stock, commencing with the effective date of the Plan. The
number of shares shall be determined by dividing the amount of the Cash
Compensation to be paid by the closing price of the Company's Common Stock
as reported for New York Stock Exchange-Composite Transactions of the
trading day immediately preceding the date of payment and rounding to the
nearest whole number. If the Company's Common Stock is not then traded on
such exchange, the determination shall be based on the principal market
where the Company's Common Stock is actively traded as reported in The Wall
Street Journal, Midwest Edition. Elections under this section shall be made
at least one (1) week prior to the beginning of the Company's next fiscal
quarter. A change in an election shall be effective, if timely made,
beginning with the Company's next fiscal quarter. A Participant's election
shall remain in effect from year to year until changed by the Participant.
(c) Payment for Stock. A Participant shall not be required to make any payment
for Common Stock received pursuant to this Plan, except to the extent
otherwise required by law.
8. Change in Capital Structure
In the event of any change in the outstanding shares of Common Stock by reason
of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, combination or exchange of shares or other corporate change, or any
distributions to the holders of Common Stock other than cash dividends, the
Administrator shall make such substitution or adjustment, if any, as he or she
deems to be equitable to accomplish fairly the purposes of the Plan and to
preserve the intended benefits of the Plan to the Participants and the Company,
as to the number, including the number specified in Section 5(a) above, or kind
of shares of Common Stock or other securities issued or reserved for issuance
pursuant to the Plan, including the number of outstanding shares of Common
Stock.
A-2
9. Amendment, Modification and Termination
The Administrator may amend, suspend or terminate the Plan as he or she shall
deem advisable or to comply with changes in the Code, the Employee Retirement
Income Security Act of 1974, or the rules thereunder, but may not amend the Plan
without further approval of the stockholders if such approval is required by
law. Adjustments shall be made in the number and kind of shares subject to the
Plan as provided in Section 8 above.
10. Miscellaneous
(a) No Right to an Award. Neither the adoption of the Plan or any action of the
Administrator shall be deemed to give a director a right to an Award or any
other rights hereunder except as may be evidenced by an Award duly executed
on behalf of the Company, and then only to the extent and on the terms and
conditions expressly set forth herein. The Plan shall be unfunded. The
Company shall not be required to establish any special or separate fund or
to make any other segregation of funds or assets to assure the payment of
any Award.
(b) No Employment Rights Conferred. Nothing contained in the Plan shall (i)
confer upon any director any right with respect to continuation of service
or nomination for reelection as a director with the Company or (ii)
interfere in any way with the right to remove a director from office at any
time for cause as provided in the Company's Restated Certificate of
Incorporation.
(c) Other Laws; Withholding. The Company shall not be obligated to issue any
shares of Common Stock until there has been compliance with such laws and
regulations as the Company may deem applicable. No fractional shares of
Common Stock shall be delivered. The Company shall have the right to
collect cash from Participants in an amount necessary to satisfy any
federal, state or local withholding tax requirements. A Participant may
elect to satisfy tax withholding requirements, in whole or in part, by
having the Company withhold shares of Common Stock to satisfy the amount of
taxes required to be withheld.
(d) Severability. If any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
(e) Additional Compensation. Except as otherwise provided in Section 7(b)
above, shares of Common Stock granted under the Plan shall be in addition
to any Cash Compensation payable to a Participant as a result of his or her
service as a non-employee director of the Company.
(f) Requirements of Law. The granting of Awards under the Plan shall be subject
to all applicable laws, rules, and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be required.
(g) Governing Law. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to conflict
of law principles.
(h) Securities Law Compliance. With respect to any Participant subject to
Section 16 of the Exchange Act, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under
the Exchange Act, regardless of whether the conditions are expressly set
forth in the Plan. To the extent any provision of the Plan or action by the
Administrator fails to so comply, it shall be deemed null and void to the
extent permitted by law and deemed advisable by the Administrator.
A-3
LEE ENTERPRISES, INCORPORATED
PROXY FOR ANNUAL MEETING--JANUARY 22, 2003
COMBINED PROXY FOR COMMON STOCK AND CLASS B COMMON STOCK
The undersigned hereby appoints Mary E. Junck, Gregory P. Schermer and
William E. Mayer, and each of them, the attorneys and proxies of the undersigned
with full power of substitution to vote as indicated herein, all the Common
Stock and Class B Common Stock of Lee Enterprises, Incorporated held of record
by the undersigned on December 2, 2002, at the Annual Meeting of Stockholders to
be held on January 22, 2003, or any postponements or adjournments thereof, with
all the powers the undersigned would possess if then and there personally
present.
You are encouraged to specify your choices by marking the appropriate box,
SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. The above-named
proxies cannot vote your shares unless you sign and return this card.
FOLD AND DETACH HERE
ALL STOCKHOLDERS ARE URGED TO VOTE THEIR PROXY AS EARLY AS POSSIBLE.
PARTICIPANTS HOLDING SHARES THROUGH ANY OF THE COMPANY'S
EMPLOYEE BENEFIT PLANS ARE URGED TO VOTE THEIR SHARES
NO LATER THAN JANUARY 17, 2003 IN ORDER TO
ENSURE COMPLETE VOTING BY THE APPLICABLE PLAN ADMINISTRATOR.
PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING
YOUR PROXY BY TELEPHONE OR INTERNET.
Please mark your
Vote as in this X
Example. -----
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. EVERY PROPERLY SIGNED PROXY
WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, PROXIES WILL BE VOTED FOR
ITEMS 1 AND 2 AND IN THE DISCRETION OF MANAGEMENT IN CONNECTION WITH ITEM 3.
The Board of Directors Recommends a vote FOR:
1. ELECTION OF DIRECTORS 3. In their discretion, upon such
other matters as may properly
come before the meeting.
FOR all nominees WITHHOLD
listed to the right AUTHORITY 01 William E. Mayer
(except as marked to vote for all 02 Gregory P. Schermer
to the contrary nominees listed 03 Mark Vittert
below). ____ to the right. ____
For, except vote withheld from Receipt of Notice of Annual Meeting of
the following nominee(s): Stockholders and the related Proxy
Statement is hereby acknowledged.
___________________________________
PLEASE sign exactly as your name appears
2. To amend and restate the hereon. Executors, administrators,
Company's 1996 Stock Plan trustees, custodians, etc. should
for Non-Employee Directors. give full title. If shares are regis-
tered in joint names, each owner should
sign.
FOR ____ AGAINST ____ ABSTAIN ____ _________________________________ 2003
SIGNATURE(S) DATE
_________________________________2003
SIGNATURE(S) DATE
FOLD AND DETACH HERE
Dear Stockholder:
We encourage you to take advantage of two convenient ways by which you can vote
both of your shares. You can vote your shares electronically by telephone or via
the Internet, which eliminates the need to return the proxy card.
Vote by Telephone: To vote your shares by telephone, use a touch-tone telephone
and call the following toll-free number: 1-877-PRX-VOTE, 24 hours a day, 7 days
a week. Insert the Control Number printed in the box above, just below the
perforation. Follow the simple recorded instructions.
Vote by Internet: To vote via the Internet, go to web site www.
eproxyvote.com/lee. Insert the Control Number printed in the box above, just
below the perforation, and then follow the simple instructions. Please be aware
that if you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will be responsible.
The Internet and telephone voting facilities will be available until midnight on
January 21, 2003, the day before the Annual Meeting.
Do Not Return The Proxy Card If You Are Voting By Telephone Or The Internet