March 26, 2010

 

Dear Fellow Shareholder:

 

I am pleased to invite you to attend our 2010 annual meeting of shareholders, which will be held on Tuesday, May 11, 2010, in The Belo Building at 400 South Record Street, Dallas, Texas. The meeting will be held on the third floor in the auditorium. A map is included for your use.

 

At the meeting, you will hear a report on Belo’s operations and have a chance to meet your directors and executive officers. This package includes the formal notice, proxy statement, and proxy card for the meeting, together with Belo’s 2009 annual report. The proxy statement tells you more about the agenda and voting procedures for the meeting. It also describes how the Board operates and provides information about our directors, including those nominated for election at this year’s meeting.

 

Participants in the Belo Savings Plan and other employee savings plans will once again receive a Notice of Internet Availability with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. The notice provides information on how these shareholders may obtain paper copies of our proxy materials free of charge, if they so choose. We believe that this approach allows us to provide these shareholders with the information they need to vote their shares while reducing delivery costs and the impact to the environment.

 

For those shareholders with access to the Internet, I encourage you to vote your shares on-line. Detailed instructions on how to vote over the Internet or by telephone are set forth on the proxy card. We encourage you to elect to receive future annual reports, proxy statements, and other materials over the Internet, by following the instructions in the proxy statement. This electronic means of communication is quick and convenient and reduces the Company’s printing and mailing costs.

 

Beginning this year, the rules that govern how brokers vote your shares have changed. Brokers may no longer use discretionary authority to vote shares for the election of directors and other non-routine matters if they have not received instructions from their clients. Whether or not you attend the annual meeting, it is important that your shares be represented at the meeting. I encourage you to vote your shares as soon as possible by returning your proxy card (or voting instruction card) or by voting using the Internet or telephone voting procedures outlined in the enclosed materials or in the Notice of Internet Availability of Proxy Materials. If you are unable to attend the annual meeting in person, you may listen to the meeting by on-line Webcast. Please see the notice on the next page for more information.

 

I hope to see you on May 11th.

 

Sincerely,

 

Dunia A. Shive

President and Chief Executive Officer

 

Belo Corp.  P. O. Box 655237 Dallas, Texas 75265-5237 Tel. 214.977.6606 Fax 214.977.6603
www.belo.com Deliveries: 400 South Record Street Dallas, Texas 75202-4841

 

Belo Corp.
P. O. Box 655237
Dallas, Texas 75265-5237
www.belo.com

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 11, 2010

 

 

 

To Belo Shareholders:

 

Please join us for the 2010 annual meeting of shareholders of Belo Corp. (“Belo” or the “Company”). The meeting will be held in The Belo Building at 400 South Record Street, Dallas, Texas, on Tuesday, May 11, 2010, at 11:00 a.m., Dallas, Texas time. The meeting will be held on the third floor in the auditorium. The annual meeting of shareholders will be simultaneously Webcast on Belo’s Web site (www.belo.com). Following the conclusion of the meeting, a replay of the Webcast will be archived on Belo’s Web site through May 25, 2010.

 

At the meeting, the holders of Belo Series A common stock and Belo Series B common stock will act on the following matters:

 

 

All record holders of shares of Belo Series A common stock and Belo Series B common stock at the close of business on March 17, 2010 are entitled to vote at the meeting or at any postponement or adjournment of the meeting.

 

Again this year, we will furnish proxy materials on the Internet to Belo shareholders who are participants and hold Belo shares in the Belo Savings Plan or the separate A. H. Belo Savings Plan. These shareholders will receive a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. The electronic delivery of our proxy materials will reduce our printing and mailing costs and any environmental impact.

 

The Notice of Internet Availability of Proxy Materials identifies the date, time and location of the annual meeting; the matters to be acted upon at the meeting and the Board of Directors’ recommendation with regard to each matter; and a toll-free telephone number, an e-mail address, and a Web site where shareholders can request a paper or e-mail copy of their proxy materials, including our proxy statement, annual report to shareholders and a voting instruction card, free of charge.

 

By Order of the Board of Directors

 

GUY H. KERR

Secretary

 

March 26, 2010

 

TABLE OF CONTENTS

 

 

 

Belo Corp.
P. O. Box 655237
Dallas, Texas 75265-5237
www.belo.com

 

 

PROXY STATEMENT

 

 

For the Annual Meeting of Shareholders
To Be Held On May 11, 2010

 

This proxy statement contains information related to the annual meeting of shareholders of Belo Corp. (“Belo” or the “Company”) to be held on Tuesday, May 11, 2010, beginning at 11:00 a.m., Dallas, Texas time, in The Belo Building at 400 South Record Street, Dallas, Texas, and any postponement or adjournment of the meeting. The meeting will be held on the third floor in the auditorium.

 

For those shareholders receiving a Notice of Internet Availability of Proxy Materials (the “Notice”), the Notice will be distributed to those shareholders on or about March 26, 2010. Paper copies of this proxy statement and related proxy card will be distributed to all other shareholders beginning on or about March 31, 2010.

 

What is the purpose of the annual meeting?

 

At the annual meeting, shareholders will act on matters outlined in the accompanying notice, including the election of four directors, the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, consideration of a shareholder proposal relating to repeal of Belo’s classified Board of Directors, and attention to any other matters properly brought before the meeting. Management will report on Belo’s performance in 2009 and respond to questions and comments from shareholders.

 

Who can attend the annual meeting?

 

Shareholders and guests of Belo may attend the annual meeting.

 

Who may vote at the meeting?

 

Only shareholders who owned Belo shares at the close of business on March 17, 2010, the record date, or their duly appointed proxies, are entitled to vote at the meeting. If you owned Belo shares at the close of business on March 17, 2010, you are entitled to vote all of the shares that you held on that date at the meeting, or at any postponement or adjournment of the meeting. Our common stock is divided into two series: Series A common stock and Series B common stock. Holders of either series of common stock as of the close of business on the record date will be entitled to vote at the meeting. At the close of business on the record date, a total of 91,305,751 shares of Series A common stock and 11,634,014 shares of Series B common stock were outstanding and entitled to vote.

 

What are the voting rights of the holders of Series A common stock and Series B common stock?

 

Holders of Belo Series A and Series B common stock vote together as a single class on all matters to be acted upon at the annual meeting. Each outstanding share of Series A common stock will be entitled to one vote on each matter. Each outstanding share of Series B common stock will be entitled to 10 votes on each matter.

 

Can I vote the shares of A. H. Belo Corporation (“A. H. Belo”) I received in the spin-off?

 

No, shares of A. H. Belo are not eligible for voting at this meeting. A. H. Belo is a separate public company and will hold a separate annual meeting of shareholders. Only shares of Belo Corp. are eligible to vote at Belo’s May 11, 2010 meeting.

What constitutes a quorum to conduct business at the meeting?

 

In order to carry on the business of the meeting, we must have a quorum present in person or by proxy. A majority of the voting power of the outstanding shares eligible to vote and at least one-third of the outstanding shares entitled to vote must be present at the meeting, in person or by proxy, in order to constitute a quorum.

 

Abstentions and broker non-votes are counted as present at the meeting for purposes of determining whether we have a quorum. A broker non-vote occurs when a broker or other nominee returns a proxy but does not vote on a particular proposal because the broker or nominee does not have authority to vote on that particular item and has not received voting instructions from the beneficial owner.

 

How do I cast my vote?

 

You may vote by proxy, which gives the proxy holder the right to vote your shares on your behalf, or you may vote in person at the meeting.

 

You may receive more than one proxy card depending on how you hold your shares. Shares registered in your name are covered by a proxy card. If you hold shares indirectly through someone else, such as a broker, you may receive material from that person asking how you want to vote.

 

Shares held in your Belo Savings Plan account or in your A. H. Belo Savings Plan account may be voted only by the plan trustee, but you may instruct the plan trustee on how to vote them. Information on how to provide voting instructions to the plan trustee via the Internet is set out in the Notice of Internet Availability of Proxy Materials. The Notice also includes information on how to obtain paper copies of the proxy materials, including a voting instruction card, if you so desire. (For more information, please refer to the question and answer “How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan” below.)

 

It is important that you follow the instructions on each proxy card or the Notice and vote the shares represented by each card or the Notice separately.

 

Why did I receive a Notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?

 

Pursuant to rules adopted by the Securities and Exchange Commission, the Company has elected to provide access to its proxy materials over the Internet to participants in the Belo Savings Plan and the separate A. H. Belo Savings Plan. Accordingly, a Notice of Internet Availability of Proxy Materials was sent to these shareholders. These shareholders will have the ability to access the proxy materials on the Web site referred to in the Notice or request to receive free of charge a printed set of the proxy materials, including a voting instruction card. Instructions on how to access the proxy materials over the Internet or to request a printed copy are set out in the Notice. The Notice also has instructions on how to provide voting instructions to the plan trustee via the Internet.

 

In addition, all shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis by following the instructions in the paragraph captioned “How to Receive Future Proxy Statements and Annual Reports Online” in the “Annual Report and Additional Materials” section on page 47 of this proxy statement. The Company encourages shareholders to take advantage of the availability of the proxy materials on the Internet in order to help reduce printing and mailing costs and any environmental impact.

 

How do I vote by proxy?

 

If you vote by proxy, you may vote online via the Internet, by telephone, or by completing and returning your enclosed proxy card in the envelope provided. All proxy cards that are properly completed and submitted will be voted as specified.

 

If your shares are registered in your name and you sign, date, and return your proxy card but do not check any boxes, the shares represented by that card will be voted FOR all nominees standing for election as directors, FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, AGAINST the shareholder proposal relating to repeal of Belo’s classified Board, and, at the discretion of the proxy holders, on any other matter that properly may come before the meeting or any adjournment or postponement of the meeting.

If you hold your shares through a broker, your broker may vote your shares at its discretion on certain “routine matters.” The Company believes that the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm is a “routine matter” on which brokers will be permitted to vote. With respect to all other matters, however, your broker may not be able to vote your shares for you and the aggregate number of unvoted shares is reported as the “broker non-vote.” The Company believes that the election of directors and the shareholder proposal relating to the repeal of Belo’s classified board are not “routine matters” and brokers will not be permitted to vote any uninstructed shares on the election of directors or on the shareholder proposal.

 

If you want to vote using the Internet or telephone, please follow the instructions on each proxy card or the Notice and have the proxy card or the Notice available when you call in or access the voting site. In order to be included in the final tabulation of proxies, completed proxy cards must be received and votes cast using the Internet or telephone must be cast by the date and time noted on the card or the Notice.

 

If your shares are held indirectly, your broker or nominee may not offer voting using the Internet or telephone. Please be certain to check your proxy card or contact your broker or nominee to determine available voting arrangements.

 

If you participate in either the Belo Savings Plan or the A. H. Belo Savings Plan and had full shares credited to your account as of the record date, please refer to the information set forth in the question and answer “How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan” below.

 

How do I vote in person?

 

For shares registered in your name, you may vote in person by completing a ballot at the annual meeting. If you plan to vote in person but hold shares through a broker or other nominee, you must provide a legal proxy from the broker or nominee evidencing your authority to vote shares the broker held for your account at the close of business on March 17, 2010. You must contact your brokerage firm directly in advance of the annual meeting to obtain a legal proxy. Voting instructions with respect to shares held in the Belo Savings Plan or the A. H. Belo Savings Plan must be submitted by May 9, 2010, and may not be provided at the meeting.

 

Blank ballots will be available at the registration table at the meeting. Completed ballots may be deposited at the registration table and a call for completed ballots will be made during the course of the meeting prior to the close of the polls.

 

Can I change my vote or revoke my proxy?

 

Yes. For shares registered in your name, you may revoke your proxy (including an Internet or telephone vote) by:

 

 

If your shares are held through a broker or nominee, contact that broker or nominee if you wish to change your voting instructions.

 

For information on how to revoke or modify previously given voting instructions with respect to shares held through one of the Savings Plans, please see “How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan” below.

 

Attendance at the meeting does not by itself revoke a previously granted proxy.

 

How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan?

 

Fidelity Management Trust Company is the plan trustee for both the Belo Savings Plan and the separate A. H. Belo Savings Plan maintained by A. H. Belo (together, the “Savings Plans”). Only the plan trustee can vote the shares

held by the Savings Plans. If you participate in either of these Savings Plans and had full shares of Belo Corp. common stock credited to your account as of the record date, you received a Notice of Internet Availability of Proxy Materials in lieu of paper copies of our proxy materials. The Notice includes instructions on how to access the proxy materials over the Internet and how to request a printed set of the proxy materials, including a voting instruction card, if you desire to do so. The Notice also has information on how to provide your voting instructions to the plan trustee via the Internet. You will not be able to vote these shares in person at the annual meeting.

 

Because of the time required to tabulate voting instructions from participants in the Savings Plans before the annual meeting, the trustee must receive your voting instructions by May 9, 2010. If you sign, date, and return a paper voting instruction card but do not check any boxes on the card, the trustee will vote your shares FOR all nominees standing for election as directors, FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, and AGAINST the shareholder proposal relating to repeal of Belo’s classified Board. In addition, at its discretion, the trustee of the Savings Plans will be authorized to vote on any other matter that properly may come before the meeting or any adjournment or postponement of the meeting. If the trustee does not receive instructions from you (by Internet, telephone or voting instruction card) by May 9, 2010, the trustee will vote your shares in the same proportion as the shares in your particular Savings Plan for which voting instructions have been received. You may revoke or modify previously given voting instructions by May 9, 2010, by submitting a new voting instruction by Internet or telephone, filing with the trustee either a written notice of revocation or submitting a properly completed and signed voting instruction card by that date.

 

What vote does the Board recommend?

 

The Board recommends a vote FOR all nominees standing for election as directors, FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, and AGAINST the shareholder proposal relating to repeal of Belo’s classified Board. With respect to any other matter that properly comes before the meeting, the proxy holders will vote in their own discretion.

 

What number of votes is required to approve each matter?

 

4  Election of directors — The affirmative vote of a plurality of the voting power represented at the annual meeting and entitled to vote is required for the election of directors. This means that the nominees receiving the highest number of votes cast for the number of positions to be filled are elected. You do not have the right to cumulate votes in the election of directors. In other words, you cannot multiply the number of shares you own by the number of directorships being voted on and then cast the total for only one candidate or among any number of candidates as you see fit. Votes that are instructed to be withheld with respect to the election of one or more directors will not be voted for the director or directors indicated, although they will be counted for purposes of determining whether a quorum is present. Previously, if you did not provide instructions as to how to vote your shares held in broker or nominee name, your broker was permitted to vote them on your behalf in uncontested director elections. Beginning this year, brokers cannot vote on your behalf for the election of directors without your instruction.

 

Additionally, if an incumbent director does not receive the affirmative vote of at least a majority of the votes cast with respect to that director’s election at the annual meeting (which for this purpose includes votes cast “for” the director’s election and votes to withhold authority with respect to the director’s election), then that director is required to promptly tender his or her resignation and the Board will act on such resignation as provided in the Company’s Corporate Governance Guidelines, the applicable portion of which is attached to this proxy statement as Appendix A. All nominees standing for election at the 2010 annual meeting of shareholders are incumbent directors.

 

4  Ratification of appointment of independent registered public accounting firm  — The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for 2010. With respect to shares held in broker or nominee name, your broker continues to have discretion to vote any uninstructed shares on this matter.

 

4  Consideration of shareholder proposal — The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required to approve the shareholder proposal that Belo’s Board of Directors take the necessary steps to repeal its classified Board. With respect to shares held in broker or nominee name, your broker will not have discretion to vote uninstructed shares on the shareholder proposal. The proposal, if

approved by the shareholders, would not eliminate the classified Board by itself. Instead, the proposal would be an advisory recommendation to the Board.

 

4  Other matters — Unless otherwise required by law or the Company’s Certificate of Incorporation, the affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required for other matters that properly may come before the meeting.

 

For matters requiring majority approval, abstentions have the effect of negative votes, meaning that abstentions will be counted in the denominator, but not the numerator, in determining whether a matter has received sufficient votes to be approved. Broker non-votes are not treated as shares entitled to vote on matters requiring majority approval and are excluded from the calculation.

 

Your proxy is being solicited on behalf of Belo’s Board of Directors. In addition to use of the mails, the solicitation may also be made by use of facsimile, the Internet or other electronic means, or by telephone or personal contact by directors, officers, employees, and agents of Belo. Belo pays the costs of this proxy solicitation.

 

We have hired Morrow & Co., Inc. to assist in soliciting proxies from beneficial owners of shares held in the names of brokers and other nominees, and have agreed to pay Morrow & Co., Inc. a fee of $7,000 plus its related costs and expenses. We also supply brokers, nominees, and other custodians with proxy forms, proxy statements, and annual reports for the purpose of sending proxy materials to beneficial owners. We reimburse brokers, nominees, and other custodians for their reasonable expenses.

 

The following tables set forth information as of March 17, 2010, about the beneficial ownership of Belo Corp. common stock by our current directors, nominees for election as director, the executive officers named in the Summary Compensation Table in this proxy statement, all current directors and named executive officers as a group, and by each person known to Belo to own more than 5% of the outstanding shares of Belo Series A or Series B common stock. At the close of business on March 17, 2010, there were 91,305,751 Series A shares, 11,634,014 Series B shares, and 102,939,765 combined Series A and Series B shares, issued and outstanding.

 

Under the rules of the Securities and Exchange Commission (the “SEC”), the beneficial ownership of a person or group includes not only shares held directly or indirectly by the person or group but also shares the person or group has the right to acquire within 60 days of the record date (to and including May 16, 2010) pursuant to exercisable options and convertible securities. The information below, including the percentage calculations, is based on beneficial ownership of shares rather than direct ownership of issued and outstanding shares.

 

Unless otherwise indicated, each person listed below has sole voting power and sole dispositive power with respect to the shares of common stock indicated in the table as beneficially owned by such person. Series A common stock has one vote per share and Series B common stock has 10 votes per share. Consequently, the voting power of Series B holders is greater than the number of shares beneficially owned. For example, the shares of Belo common stock beneficially owned by all directors and executive officers as a group, representing 14.9% of the outstanding shares of Series A and Series B common stock, have combined voting power of 57.7%.

 

Belo Corp. Stock Ownership of Directors and Executive Officers

 

 

 

 

 

Belo Corp. Stock Ownership of Other Principal Shareholders (greater than 5%)

 

 

 

 

Equity Compensation Plan Information

 

The following table provides information regarding Series A and Series B common stock authorized for issuance under Belo’s equity compensation plans as of December 31, 2009; the amounts set out in the table do not include any adjustment for risk of forfeiture:

 

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Federal securities laws require that Belo’s executive officers and directors, and persons who own more than ten percent of a registered class of Belo common stock, file reports with the SEC within specified time periods disclosing their beneficial ownership of Belo common stock and any subsequent changes in beneficial ownership of Belo common stock. These reporting persons are also required to furnish us with copies of these reports. Based on information provided to us by these reporting persons or otherwise, we believe that all filings required to be made by the reporting persons during 2009 were timely filed.

 

Belo’s bylaws provide that the Board of Directors comprises five to 10 directors, divided into three classes, approximately equal in number, with staggered terms of three years so that the term of one class expires at each annual meeting. The bylaws further provide that a director will retire on the date of the annual meeting of shareholders next following his or her 68th birthday.

 

Selection, Qualifications and Experience of Directors

 

The Nominating and Corporate Governance Committee of the Board of Directors is responsible for identifying director candidates and making recommendations to the Board. The Board is ultimately responsible for nominating candidates for election to the Board. The Committee employs a variety of methods for identifying and evaluating director nominees. Candidates may come to the Committee’s attention through current Board members, shareholders, or other persons. In evaluating director candidates, the Committee considers a variety of criteria, including an individual’s character and integrity; business, professional, and personal background; skills; current employment; community service; and ability to commit sufficient time and attention to activities of the Board. The Committee also may take into account any specific financial, technical, or other expertise and the extent to which such expertise would complement the Board’s existing mix of skills and qualifications. The Committee considers these criteria in the context of the perceived needs of the Board as a whole. (For more information regarding the Nominating and Corporate Governance Committee and the nominee selection and evaluation process, please see “Corporate Governance — Committees of the Board — Nominating and Corporate Governance Committee” on page 22 of this proxy statement.)

 

Based on a review of the background and experiences of the directors, we believe that each of our directors, including those proposed for election to the Board at the 2010 annual meeting, possesses the professional and personal qualifications necessary for service on the Belo Board of Directors. In the individual biographies below, we have highlighted particularly noteworthy attributes of each Board member. In addition, we note that several of our directors reside in local Belo markets which, together with the length of service to the Company, has provided them with significant exposure to both our business and the communities in which we operate.

 

Nominees for Belo Directors

 

The following candidates are nominated by the Board and each is an incumbent director. The independence of each director is addressed under “Corporate Governance — Director Independence” on page 21. Class III directors will be eligible to serve a three-year term until the 2013 annual meeting.

 

Each independent director serves on each of the three standing committees of the Board (Audit, Compensation, and Nominating and Corporate Governance); Mr. Decherd, Mr. Moroney, Mrs. Herndon, and Ms. Shive do not serve on any standing committee of Belo’s Board of Directors.

Class III Directors (Current terms expire at Belo’s 2010 annual meeting)

 

 

The Board of Directors recommends a vote FOR Proposal One for the election of each of the nominees.

Directors Continuing in Office

 

Information regarding our directors continuing in office is provided below.

 

Class I Directors (Terms expire at Belo’s 2011 annual meeting)

 

 

Class II Directors (Terms expire at Belo’s 2012 annual meeting)

 

 

Ernst & Young LLP served as Belo’s independent auditors for the fiscal year ended December 31, 2009. The Audit Committee has appointed Ernst & Young LLP to serve in such capacity for 2010, and as a matter of good corporate governance has determined to submit the appointment of Ernst & Young LLP for ratification by the shareholders. If the shareholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee will consider the appointment of other independent registered public accounting firms.

 

Representatives of Ernst & Young LLP will be present at the annual meeting. They will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions presented at the annual meeting.

 

The table below sets forth the Ernst & Young LLP fees related to the audits of our financial statements for the fiscal years ended December 31, 2009 and December 31, 2008 and the reviews of our financial statements for the quarterly periods within those fiscal years, and all other fees Ernst & Young LLP has billed us for services rendered during the fiscal years ended December 31, 2009 and December 31, 2008:

 

 

 

 

The Audit Committee has adopted a policy and procedures that set forth the manner in which the Audit Committee will review and approve all services to be provided by Ernst & Young LLP before the firm is retained to provide such services. The policy requires Audit Committee pre-approval of the terms and fees of the annual audit services engagement, as well as any changes in terms and fees resulting from changes in audit scope or other items. The Audit Committee also pre-approves, on an annual basis, other audit services, and audit-related and tax services set forth in the policy, subject to estimated fee levels pre-approved by the Committee. Any other services to be provided by the independent auditors must be separately pre-approved by the Audit Committee. In addition, if the fees for any pre-approved services are expected to exceed by 5% or more the estimated fee levels previously approved by the Audit Committee, the services must be separately pre-approved by the Committee. As a general guideline, annual fees paid to the independent auditors for services other than audit, audit-related, and tax services should not exceed one-half the dollar amount of fees to be paid for these three categories of services collectively. The Audit Committee has delegated to the Committee chairman and other Committee members the authority to pre-approve services in amounts up to $500,000 per engagement. Services pre-approved pursuant to delegated authority must be reported to the full Committee at its next scheduled meeting. The Company’s Chief Financial Officer reports periodically to the Audit Committee on the status of pre-approved services, including projected fees. All of the services reflected in the above table were approved by the Audit Committee.

Vote Required for Approval

 

The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote on this proposal is required for approval.

 

The Board of Directors recommends a vote FOR Proposal Two for the ratification of the appointment of Ernst & Young LLP as Belo’s independent registered public accounting firm.

 

William C. Thompson, Jr., Comptroller, City of New York, on behalf of the Boards of Trustees of the New York City Pension Funds, 1 Centre Street, Room 736, New York, New York 10007-2341, together owning 252,936 shares of the Company’s common stock, has notified the Company that the Boards of Trustees of the New York City Employees’ Retirement System, the New York City Teachers’ Retirement System, the New York City Police Pension Fund, the New York City Fire Department Pension Fund, and the New York City Board of Education Retirement System, intend to present the following proposal for consideration at the meeting. The Board of Directors opposes such shareholder proposal for the reasons set forth below.

 

Shareholder Proposal

 

“BE IT RESOLVED, that the stockholders of Belo Corporation request that the Board of Directors take the necessary steps to declassify the Board of Directors and establish annual elections of directors, whereby directors would be elected annually and not by classes. This policy would take effect immediately, and be applicable to the re-election of any incumbent director whose term, under the current classified system, subsequently expires.”

 

“SUPPORTING STATEMENT: We believe that the ability to elect directors is the single most important use of the shareholder franchise. Accordingly, directors should be accountable to shareholders on an annual basis. The election of directors by classes, in our opinion, minimizes accountability and precludes the full exercise of the rights of shareholders to approve or disapprove annually the performance of a director or directors.”

 

“In addition, since only a fraction of the Board of Directors is elected annually, we believe that classified boards could frustrate, to the detriment of long-term shareholder interest, the efforts of a bidder to acquire control or a challenger to engage successfully in a proxy contest.”

 

“We urge your support for the proposal to repeal the classified board and establish that all directors be elected annually.”

 

Statement Against Shareholder Proposal

 

The Belo Board of Directors unanimously recommends a vote AGAINST the proposal for the following reasons:

 

The Board and the Nominating and Corporate Governance Committee have given this proposal careful consideration and believe that it should not be implemented. Substantially the same shareholder proposal, submitted by substantially the same shareholders, was considered at Belo’s 2007, 2008 and 2009 annual meetings of shareholders and rejected by over 70%, 72% and 66%, respectively, of the votes cast at those meetings.

 

Under the Company’s Bylaws, the Board of Directors consists of three classes of directors with three-year staggered terms. Each year, shareholders elect one-third of the Company’s directors. This classified structure has been in place since 1983 and has been and continues to be an integral part of the Company’s overall governance.

 

For the reasons discussed below, the Board and the Nominating and Corporate Governance Committee believe that a classified board is more advantageous to, and better serves the long-term interests of, the Company and its shareholders, in contrast to a board that is elected annually. The Board and the Nominating and Corporate Governance Committee believe that each of the benefits of a classified board discussed below are particularly important currently, in light of the refocusing of the Company’s business as a result of the spin-off of the newspaper business, and the depressed stock prices that currently prevail in the marketplace.

 

 

 

For these reasons, the Board recommends a vote AGAINST this shareholder proposal.

 

Introduction

 

Our Board periodically reviews and evaluates Belo’s corporate governance policies and practices in light of the Sarbanes-Oxley Act of 2002, SEC regulations implementing this legislation, corporate governance listing standards adopted by the New York Stock Exchange (“NYSE”), and evolving best practices. The Board has formalized its corporate governance guidelines, approved a code of business conduct and ethics applicable to Belo’s directors, management and other Belo employees, and adopted a charter for each Board committee. The Nominating and Corporate Governance Committee reviews Belo’s corporate governance guidelines and Board committee charters annually and recommends changes to the Board as appropriate. Our corporate governance documents are posted on our Web site at www.belo.com under “About Belo — Corporate Governance,” and are available in print, without charge, upon written or oral request to Belo Corp., Attention: Guy H. Kerr, Secretary, P. O. Box 655237, Dallas, Texas 75265-5237, (214) 977-6606. Belo’s corporate governance documents codify our existing corporate governance practices and policies.

 

Director Independence

 

To assist it in making determinations of a director’s independence, the Board has adopted independence standards, which are set forth in Belo’s corporate governance guidelines, the applicable portion of which is attached to this proxy statement as Appendix B. These standards incorporate the director independence criteria included in the NYSE listing standards, as well as additional, more stringent criteria established by the Board. The Board has determined that the following directors are independent under these standards: Henry Becton, Judy Craven, Wayne Sanders, Anne Szostak, Mac Tichenor, and Lloyd Ward. Each of the Audit, Compensation, and Nominating and Corporate Governance Committees is composed entirely of independent directors. In accordance with SEC requirements, NYSE listing standards and the independence standards set forth in Belo’s corporate governance guidelines, all members of the Audit Committee meet additional independence standards applicable to audit committee members.

 

Meetings of the Board

 

The Board held six meetings in 2009. Each incumbent director attended at least 75% of the aggregate of (1) the total number of meetings held by the Board and (2) the total number of meetings held by all committees on which he or she served. Directors are expected to attend annual meetings of shareholders, and all of the current directors attended the 2009 annual meeting.

 

Committees of the Board

 

Each of the Board’s standing committees consists of Henry Becton, Judy Craven, Wayne Sanders, Anne Szostak, Mac Tichenor, and Lloyd Ward, each of whom is an independent director under the NYSE listing standards and under the independence standards set forth in Belo’s corporate governance guidelines.

 

The Belo Board has the following committees:

 

Audit Committee.  Wayne Sanders chairs the Audit Committee. The Audit Committee is responsible for the appointment, compensation, and oversight of the independent auditors. The Audit Committee also represents the Board in overseeing Belo’s financial reporting processes, and, as part of this responsibility, consults with our independent auditors and with personnel from Belo’s internal audit and financial staffs with respect to corporate accounting, reporting, and internal control practices. The Audit Committee met seven times during 2009.

 

As specified in the Audit Committee Charter, one of the specific duties and responsibilities of the Audit Committee is to review and discuss the Company’s policies with respect to risk assessment and risk management. To facilitate and assist the Audit Committee with its risk oversight responsibilities, the Audit Committee, at least annually, receives a report from Company management regarding its enterprise risk assessment and discusses the findings with management. The report identifies areas of enterprise risk, and

aligns managerial and Board-level oversight, including at the Board committee level, and responsibility with the type of risk.

 

The Board has determined that each member of the Audit Committee meets both the SEC and the NYSE standards for independence. In addition, the Board has determined that at least one member of the Audit Committee meets the NYSE standard of having accounting or related financial management expertise. The Board has also determined that at least one member of the Audit Committee, Wayne Sanders, the chairman of the Audit Committee, meets the SEC criteria of an “audit committee financial expert.”

 

Compensation Committee.  Anne Szostak chairs the Compensation Committee. The Compensation Committee evaluates the performance of the Chief Executive Officer and sets his or her compensation level based on this evaluation. The Compensation Committee makes recommendations to the Board for base salaries of other executive officers and compensation for non-management directors, approves bonus levels and stock option awards for executive officers, and administers, among other plans, the Company’s 1995 Executive Compensation Plan, 2000 Executive Compensation Plan, Amended and Restated 2004 Executive Compensation Plan (collectively, “Executive Compensation Plans”), The G. B. Dealey Retirement Pension Plan, the Belo Savings Plan, the Change in Control Severance Plan, the Pension Transition Supplement Plan, and the Pension Transition Supplement Restoration Plan. The Committee also has responsibility for senior executive succession planning. The Compensation Committee met five times during 2009.

 

To assist the Committee and management in assessing and determining appropriate, competitive compensation for our executive officers, the Committee annually engages an outside compensation consultant. Starting in February 2007, the Compensation Committee has annually engaged Mercer Human Resource Consulting (“Mercer”), a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (“Marsh”), as its compensation consultant. The scope of Mercer’s engagement is to assist the Committee with its responsibilities related to the Company’s executive and Board-level compensation programs. For additional information regarding the operation of the Compensation Committee, including the role of consultants and management in the process of determining the amount and form of executive compensation, see the Company’s Compensation Discussion and Analysis below.

 

Mercer’s fees for executive compensation consulting to the Committee in 2009 were $76,000. During 2009, the Company also retained Mercer and its Marsh affiliates to provide other services, unrelated to executive compensation. The aggregate 2009 expense for these other services was $704,900. Besides Mercer’s consulting services for executive compensation, Marsh or one of its affiliate companies provided consulting, actuarial services and data management for the Company’s retirement plans, and health and welfare plans, as well as the Company’s property, casualty, and general liability risk analysis and insurance programs. The foregoing amount is exclusive of insurance premiums.

 

Nominating and Corporate Governance Committee.  The Nominating and Corporate Governance Committee is chaired by Henry Becton, who also serves as the Board’s Lead Director. The responsibilities of the Nominating and Corporate Governance Committee include the identification and recommendation of director candidates and the review of qualifications of directors for continued service on the Board. The Nominating and Corporate Governance Committee also has responsibility for shaping Belo’s corporate governance practices, including the development and periodic review of the corporate governance guidelines and the Board committee charters. The Nominating and Corporate Governance Committee met three times in 2009.

 

In evaluating director nominees, the Nominating and Corporate Governance Committee considers a variety of criteria, including an individual’s character and integrity; business, professional, and personal background; skills; current employment; community service; and ability to commit sufficient time and attention to the activities of the Board. It also may take into account any specific financial, technical or other expertise and the extent to which such expertise would complement the Board’s existing mix of skills and qualifications. The Committee considers these criteria in the context of the perceived needs of the Board as a whole and seeks to achieve a diversity of backgrounds and perspectives on the Board. The Board does not have a formal diversity policy, but does endeavor to comprise itself of members with a broad mix of professional and personal backgrounds.

The Nominating and Corporate Governance Committee employs a variety of methods for identifying and evaluating director nominees. The Committee reviews the size and composition of the Board as part of the annual Board evaluation process and makes recommendations to the Board as appropriate. If vacancies on the Board are anticipated, or otherwise arise, the Nominating and Governance Committee considers various potential candidates for director. Candidates may come to the Committee’s attention through current Board members, shareholders, or other persons.

 

The policy of the Nominating and Corporate Governance Committee, as set forth in Belo’s corporate governance guidelines, is to consider a shareholder’s recommendation for nominee(s) when the shareholder supplies the information required for director nominations under the advance notice provisions set forth in Article II of Belo’s bylaws within the time periods set forth in such Article of the bylaws. Shareholders desiring to submit a nomination for director should consult Belo’s bylaws, which are available upon request, for more specific information prior to submitting a nomination. The Committee evaluates shareholder-recommended nominees based on the same criteria it uses to evaluate nominees from other sources.

 

After the Nominating and Corporate Governance Committee identifies a potential candidate, there is generally a mutual exploration process, during which Belo seeks to learn more about a candidate’s qualifications, background, and level of interest in Belo, and the candidate has the opportunity to learn more about Belo. A candidate may meet with members of the Nominating and Corporate Governance Committee, other directors, and senior management. Based on information gathered during the course of this process, the Nominating and Corporate Governance Committee makes its recommendation to the Board. If the Board approves the recommendation, the candidate is nominated for election by Belo’s shareholders. On occasion, the Board elects a director between annual meetings of shareholders. In those instances, the new director is nominated for re-election by Belo’s shareholders at the first annual meeting after his or her interim election to the Board.

 

The Board convenes executive sessions of non-management directors without Company management at each regularly-scheduled meeting. The Lead Director is responsible for presiding at the executive sessions of the non-management directors. In addition, the independent directors meet in executive session at least annually. Board committee chairs preside at executive sessions of their respective committees.

 

Board Leadership Structure

 

In connection with the spin-off of A. H. Belo in 2008, the Belo Board decided to separate the positions of Chair and Chief Executive Officer as it believes this Board leadership structure aligns with the current composition and experience of the Company’s Board post-split. Robert Decherd, the Company’s former Chief Executive Officer, serves as non-executive Chair of the Board, and Dunia Shive serves as president and Chief Executive Officer. The Board believes that having our former Chief Executive Officer serve as non-executive Chair of the Board is appropriate because of his familiarity with the Company’s business. In addition, the Board has established the position of Lead Director in order to continue to provide a designated leadership role for an independent director on Board matters. Currently, Henry Becton serves as Lead Director.

 

The Board evaluates the continued appropriateness of its leadership structure from time to time. In addition, the Board believes that the issue of Board leadership is part of the succession planning process, and considers its leadership structure as part of the process of planning for succession to the positions of Chair and Chief Executive Officer.

 

Audit Committee Report

 

As described more fully in our written charter, which is posted on the Company’s Web site at www.belo.com under “About Belo — Corporate Governance,” the Audit Committee represents the Board in its oversight of Belo’s financial reporting processes. In this context, the Audit Committee has reviewed and discussed with management and Ernst & Young LLP, the Company’s independent auditors, Belo’s audited consolidated financial statements and the audit of the effectiveness of Belo’s internal control over financial reporting. The Audit Committee has discussed with Ernst & Young LLP various matters, including the firm’s judgments as to the quality of Belo’s accounting principles and other matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the

Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. In addition, the Audit Committee has received from Ernst & Young LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with the firm its independence from Belo and our management team.

 

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited consolidated financial statements be included in Belo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, for filing with the SEC.

 

Respectfully submitted,

 

Audit Committee

Wayne R. Sanders, Chairman

Henry P. Becton, Jr.

Judith L. Craven, M.D., M.P.H.

M. Anne Szostak

McHenry T. Tichenor, Jr.

Lloyd D. Ward

 

Communications with the Board

 

The Company has a process for shareholders and other interested parties to communicate with the Board. These parties may communicate with the Board by writing c/o the corporate Secretary, P. O. Box 655237, Dallas, Texas 75265-5237. Communications intended for a specific director or directors (such as the Lead Director or non-management directors) should be addressed to his, her, or their attention c/o the corporate Secretary at this address. Communications received from shareholders are provided directly to Board members at, or as part of the materials mailed in advance of, the next scheduled Board meeting following receipt of the communications. The Board has authorized management, in its discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally are not forwarded to the directors.

 

Belo’s executive officers as of December 31, 2009 were as follows:

 

 

 

 

The following executive summary highlights and summarizes information from this Compensation Discussion and Analysis and does not purport to contain all of the information that is necessary to gain an understanding of our executive compensation policies and decisions. Please carefully read the entire Compensation Discussion and Analysis section and the compensation tables that follow for a more complete understanding of our executive compensation program.

 

Belo Corp. experienced significant economic challenges during 2009. Following the successful spin-off of the Company’s newspaper publishing business in February 2008, the recession that hit the U.S. economy demanded a reevaluation of many operating practices throughout the Company. Extraordinary measures were necessary to reduce spending to levels that would allow the significantly lower revenues of 2009 to return a sustainable profit to the Company and its shareholders. The Company believes the actions it took to reduce spending commensurate with lower expected revenue levels were aggressive. Base salaries for virtually all employees were frozen in late 2008 and management employees, including each of the named executive officers, experienced salary reductions in 2009. Furthermore, reductions in short-term incentive opportunities and retirement benefits were implemented in 2009. Finally, limited long-term incentive awards were granted to our named executive officers in 2009.

 

During 2009, in an effort to streamline decision-making and reporting processes as they relate to executive compensation, Belo made certain adjustments to its past practices with respect to the timing of compensation decisions and awards. In prior years, named executive officers received elements of equity compensation in the fourth and first quarter of each year. Beginning in 2010, the majority of pay decisions and compensation awards are planned to occur in the first quarter of each year. This change will result in a synchronization of all long-term incentive awards for executive officers with awards to all other equity plan participants.

 

Overview of Compensation Program

 

The Compensation Committee (“Committee”) of the Belo Board of Directors oversees the Company’s overall compensation structure, policies and programs, and has responsibility for establishing, implementing and continually monitoring adherence to the Company’s compensation philosophy. For 2009, the primary management liaisons to the Committee were the Company’s President and Chief Executive Officer (“CEO”), Dunia Shive, and Kim Besse, Vice President/Human Resources. During 2008, Marian Spitzberg, Senior Vice President/Human Resources, also served in an advisory capacity with respect to planning for 2009 executive compensation matters of the Company. Ms. Spitzberg retired in January 2009.

 

Compensation Objectives

 

The Company has adopted compensation policies to achieve the following objectives:

 

 

The emphasis on some of these objectives was changed relative to prior years as the Company adjusted to the difficult operating environment.

Setting Executive Compensation

 

Role of the Compensation Committee.  The Committee oversees our executive compensation program, establishing and monitoring our overall compensation strategy to ensure that executive compensation supports our business objectives. In carrying out its responsibilities, the Compensation Committee, with assistance from its compensation consultant, reviews and determines the compensation (including salary, annual incentive, long-term incentives and other key benefits) of our CEO and the other named executive officers (“NEOs”) of the Company. For a more complete description of the responsibilities of the Compensation Committee, see “Corporate Governance — Committees of the Board” beginning on page 21 of this proxy statement.

 

Role of the Compensation Consultant.  To assist the Committee and management in assessing and determining appropriate, competitive compensation for our executive officers, the Committee annually engages an outside compensation consultant. Since February 2007, Mercer Human Resource Consulting LLC (“Mercer”) has been retained for this purpose. Mercer reports directly to the Chair of the Compensation Committee. Design and assessment services provided by Mercer include periodic analysis of the market for total compensation of the named executive officers, including assistance in the determination of appropriate levels on long-term incentives. Mercer provides ongoing advice to the Committee with respect to executive compensation-related trends and developments within the Belo peer group, as well as best practices in broader industry, regulatory developments with respect to executive compensation and related issues, and external developments that may have an impact on Belo and its compensation programs. Mercer is also available to the Committee to provide assistance in responding to any compensation-related shareholder proposals and to maintain ongoing dialogue with the Committee Chair, attend Committee meetings as requested, and advise the Committee on any other executive compensation matters as requested by the Committee from time to time, including director compensation.

 

In December 2009, the Committee adopted a pre-approval policy that requires the Committee or the Committee chair to pre-approve certain consulting services provided by the Committee’s compensation consultant.

 

Role of Management.  The development of proposals and recommendations for our 2009 compensation programs for our NEOs other than the CEO was handled primarily by Dunia Shive, the President and CEO, and the Company’s senior Human Resources executive. The recommendations were reviewed and approved by the Compensation Committee and presented to the Board for approval. However, any final proposals and recommendations for the President and CEO were developed directly by the Compensation Committee, with input from Mercer, without involvement from management.

 

Surveys and Determination of the Market.  For 2009, given the decision to first freeze salaries in late 2008 and then to subsequently reduce salaries for our management employees, including our NEOs, along with the change in the bonus opportunities, no formal review of market survey data was done. Thus, the basis for our cash compensation levels prior to the reductions was set in 2008.

 

In 2008, a peer group of eight media companies with significant television operations was used to set total compensation levels for our NEOs. The peer group included the following companies:

 

 

Given the limited size of this peer group, as discussed last year, selected data were also taken from the Towers Perrin 2008 Media Survey (“Media Survey”) and the 2008 Mercer Benchmark Database (“General Industry Data”) to supplement the decision-making process.

 

The determination of long-term incentive (“LTI”) grant levels in late 2008 and early 2009 reflected several factors. Considering the unprecedented decline in the stock market and the impact on the television industry sector, management recommended and the Committee agreed to establish a target pool of shares representing an appropriate dilution level for making LTI award recommendations. In determining the size of the pool of shares, the Company also reviewed 2008 data from the peer group, the Media Survey and the General Industry Data

referenced above. However, overall determination as to the size of the pool was based primarily on the Company’s desire to maintain the overall dilutive effect at an acceptable level.

 

Elements of 2009 Executive Compensation

 

For 2009, the principal elements of compensation for Belo NEOs were:

 

 

The amount of long-term incentive awards made in 2009 was significantly lower than awards made in prior years. The rationale is provided later in this document.

 

The structure of the Company’s executive compensation program is set forth in the Belo Amended and Restated 2004 Executive Compensation Plan (referred to as the “ECP” or the “2004 Plan”), which was approved by the Company’s shareholders in 2004 and re-approved by the Company’s shareholders at the 2009 annual meeting. The ECP is administered by the Committee. The ECP provides for two elements of compensation: short-term annual cash incentives (annual performance bonuses) and long-term equity-based compensation. Awards under the ECP supplement participants’ base salaries. Officers of the Company and its subsidiaries, including Belo’s CEO and its other executive officers, are eligible to participate in the ECP. Selected ECP participants are reviewed by the Committee based on management’s recommendation, which includes evaluation of an individual’s ability to significantly affect the Company’s profitability.

 

Base Salary.  Historically, base salaries for our NEOs were reviewed annually, with adjustments made based on performance and available market compensation information. As stated earlier, due to the weakening U.S. economy in 2008, base salary levels were frozen in late 2008 as part of a Company-wide effort to control operating expenses. In April 2009, based on continuing economic challenges, base salaries of all ECP participants were reduced by 5%, including the NEOs. Following these reductions, the base salaries for Ms. Shive and Mr. Diaz were below the market median, while the base salaries for Mr. Williamson and Mr. Kerr were between the market median and 75th percentile.

 

Annual Cash Incentive Opportunity.  Consistent with our objective of motivating and rewarding executives for achievement of the Company’s financial and non-financial performance objectives, each executive officer is eligible to receive annual cash incentive compensation based on financial and strategic performance objectives established in the annual financial plan, as submitted to the Compensation Committee and the Board at the beginning of the year. These performance goals are communicated to our executive officers at the beginning of each year. The financial performance objectives vary from year to year and reflect the cyclical nature of the Company’s businesses due to fluctuating advertising demand, for example, relating to election years, the Olympics and other U.S. sports events, in addition to taking into consideration industry factors that include changes in media usage habits by consumers and advertisers. Strategic performance objectives establish a direct relationship between executive officer annual performance priorities and the overall strategic direction of the Company.

 

In December 2008, the Committee established 2009 target bonus opportunities expressed as a percentage of base salary for each of the NEOs as follows: Dunia Shive, 85%; Dennis Williamson, 65%; Guy Kerr, 55%; and Peter Diaz 55%. All of these targets were between market median and 75th percentile.

 

Of the target bonus amounts available to each executive officer, 75% is measured against the financial performance of the Company, specifically earnings per share for 2009, as adjusted. The remaining 25% is earned through the achievement of non-financial goals established for each individual executive. Achievement of both financial and non-financial goals is pro-rated within a range from zero to a maximum of 200% of the underlying target amount.

 

The Committee believes that linking bonus opportunity directly to financial performance, with an opportunity to earn a 200% payout of target bonus amount if maximum performance is achieved, provides participants with significant motivation to achieve the Company’s financial objectives while providing specific non-financial goals

for each executive serves to reward strategic accomplishments that benefit the long-term success of the organization.

 

Historically, performance at “plan” yielded a bonus at 100% of the target award opportunity. However, given that the Company’s financial plan for 2009 was significantly below historic levels due to the economic conditions, management recommended and the Committee approved a structure for 2009 where “plan” performance produced an incentive payout at 50% of the target bonus opportunity rather than 100%. The rest of the payout scale was recalibrated accordingly. The resulting EPS goals based on the Company’s financial plan are shown in the table below.

 

 

Actual Loss Per Share of $(1.06) for the year ended December 31, 2009 was adjusted at the Committee’s discretion. The primary adjustment was for the non-cash impairment charge of $1.51 for the decline in fair value of FCC licenses. The resulting EPS after adjustment was below “plan” performance. As a result, no cash incentive payments were earned by the executive officers with respect to 2009 financial performance.

 

Non-Financial Performance Cash Incentive Bonuses.  The Committee establishes an annual performance-based incentive pool for each senior executive, as permitted by the ECP and in compliance with the performance-based compensation exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). This performance pool (3% of Belo’s consolidated adjusted net income for Dunia Shive and 1.5% of Belo’s consolidated adjusted net income for each of Dennis Williamson, Guy Kerr and Peter Diaz) provides a maximum amount for the grant of additional awards of cash and time-based equity incentives under the ECP, and is designed to allow for tax deductibility of the compensation awarded within the pool. It is from this pool that the Committee may approve annual cash awards of up to 25% of the target bonus allocation attributable to non-financial performance objectives.

 

The 2009 strategic management objectives encompassed goals related to organizational alignment, refinancing of debt and strategic revenue initiatives. Performance reviews indicated successful achievement of most of management’s performance objectives. However, in light of the Company’s 2009 financial performance, management recommended and the Committee concurred that no payments be made under this component of the annual cash bonus program for Dunia Shive or Guy Kerr. Peter Diaz was awarded a bonus of $63,250 related to achievement of his non-financial objectives for the year regarding operational reviews, interactive strategy and organizational assessment and other considerations. Dennis Williamson was awarded a special award of $200,000 in recognition of his 27 years of service to Belo Corp. (and its predecessors) and to commemorate his retirement from the Company effective March 5, 2010.

 

Long-Term Equity Incentive Compensation.  Historically, the Company has awarded long-term equity incentive grants, or LTI compensation, to executive officers as part of its overall compensation package. These awards are designed to offer competitive compensation that encourages the retention and motivation of key executives, and rewards them based upon market-driven results. Generally, the Committee determines each executive officer’s intended annual LTI compensation value, and then determines the allocation of the LTI compensation award among the types of equity instruments available under the ECP, which include stock options and time-based Restricted Stock Units (“TBRSUs”) and a variety of other forms of LTI. The Committee believes these awards support the Company’s compensation objectives as follows: stock options encourage and reward strong stock price performance, thus aligning executive’s interests with those of shareholders, and TBRSUs encourage executives to remain with the Company and to focus on its long-term success. Additional details on these awards are outlined below.

 

Stock Option Awards.  Generally, stock option awards are granted for shares of Belo Series B common stock at an exercise price equal to the closing market price of Belo’s Series A common stock on the date of grant. Option awards to executive officers and eligible Company employees vest 40% on the first anniversary of the

date of grant, an additional 30% on the second anniversary, and the remaining 30% on the third anniversary of the date of grant. All options expire on the tenth anniversary of the date of grant.

 

Time-Based Restricted Stock Unit Awards.  TBRSUs awarded to ECP participants, including executive officers, are based on continued employment with the Company and vest 100% at the end of a three-year period. The Committee believes that the three-year cliff vesting feature of the TBRSUs optimizes the retention benefit of this form of award, and because the ultimate value of the award depends on Belo’s stock price, aligns the recipient’s interest with the maximization of shareholder value. TBRSU awards made to executive officers are granted following determination of the performance incentive pool amount set for each executive, as discussed previously.

 

2009 Awards.  During 2009, Belo made certain adjustments to its past practices with respect to the timing of compensation decisions and actions that affect participants in the ECP, and in particular, long-term incentive awards for the NEOs. This streamlined approach for decision-making and reporting eliminated the historical two-step approach to granting equity awards that was followed in previous years, providing for a one year transition period in which no 2009 awards are awarded in the 2009 calendar year. Thus, the long-term incentive awards indicated in the “Grants of Plan-Based Awards in 2009” table are in respect of 2008 performance, which was addressed in the prior year proxy materials.

 

Based primarily on dilution considerations, the Company targeted aggregate LTI awards (in respect of 2008 performance) for all LTI program participants, including the NEOs, that would not exceed 2% dilution of the Company’s outstanding common stock. Utilizing that pool of LTI awards, the Company then developed LTI award recommendations for eligible LTI program participants, including its NEOs. In December 2008, the Company recommended and the Committee determined that LTI awards in respect of 2008 performance be allocated 50% in stock options and 50% in TBRSUs. Although performance-based RSUs have been granted in prior years, none were granted for 2008 performance due to the difficulty of setting performance goals in an uncertain environment. The NEOs each received stock options in December 2008, intended as a component of their 2009 compensation package. Final approval of the TBRSU awards, which were also in recognition of 2008 performance, was deferred until March 2009 when the Company’s final 2008 financial results were certified by the Committee. These are the dollar amounts shown in both the “Summary Compensation Table” and the “Grants of Plan-Based Awards in 2009” table.

 

The resulting recommended awards reflected values ranging from 10% to 50% of the 2008 median value of survey reported market competitive grant values. These individual recommendations were further adjusted based on individual performance levels of eligible LTI program participants. These recommendations were presented to the Committee, which had full access to Mercer, Dunia Shive, Marian Spitzberg, and Kim Besse who were involved in the formulation of recommendations. The Committee and the non-management members of the Board evaluated the recommendations and determined the LTI awards for the NEOs. As noted earlier, Ms. Shive did not participate in any discussions regarding the awards for her as the President and CEO.

 

Retirement Benefits.  All Belo employees, including each of the NEOs, are eligible to participate in the Belo Savings Plan, the Company’s qualified 401(k) plan. Prior to April 2009, all employee contributions up to 6% of eligible pay were matched at a rate of 75% by the Company, subject to IRS compensation limits. However, based on the economic challenges experienced by the Company during 2009, the decision was made to suspend Company matching contributions beginning in April 2009. Employees are still afforded the opportunity to make tax-deferred contributions to the Belo Savings Plan and manage the investment of their savings through an independent record keeper.

 

Through March 31, 2007, the Company offered pension benefits to certain employees through its tax qualified pension plan, The G. B. Dealey Retirement Pension Plan (the “Pension Plan”). Effective March 31, 2007, the Pension Plan was frozen and all affected employees were provided with transition benefits, including the granting of five years of additional credited service.

 

In connection with the freeze of the Pension Plan, Belo adopted two separate defined contribution plans, which are designed to provide supplemental pension benefits for all employees who were participants in the Pension Plan at the time it was frozen. The Belo Pension Transition Supplement Plan, or PTS Plan, is an account-balance plan

intended to qualify under the provisions of Section 401(a) of the Internal Revenue Code. The Belo Pension Transition Supplement Restoration Plan (the “PTS Restoration Plan”) is a non-qualified plan and is intended to cover any pension supplement payments that exceed IRS limits to all qualified plan accounts. A participant in either plan must be actively employed on the last day of the plan year in which the contribution was earned in order to receive a contribution. Amounts set forth in the Summary Compensation Table under the column “All Other Compensation” include amounts contributed by the Company to our NEOs under the PTS Plan and PTS Restoration Plan during 2009, the specific amounts of which are set forth in footnote 5 to that column.

 

In response to the difficult financial circumstances of 2009, the Company amended the PTS and PTS Restoration plans to suspend the 2009 benefit for all plan participants, including the NEOs who participate in the PTS and PTS Restoration Plans, for an undefined period of time. Because the PTS and PTS Restoration Plans were not terminated, this action effectively postpones the payment of 2009 benefits until sometime after 2010.

 

Change in Control and Severance Benefits

 

Employment Agreements.  The Company does not presently have any individual employment severance agreements with executive officers.

 

Change in Control Severance Plan.  The Company provides for severance benefits for designated participants under the Change in Control Severance Plan (the “Severance Plan”). The current participants, as designated by the Compensation Committee, are the continuing NEOs of Belo. Additional participants may be designated by the Committee from time to time. Belo does not design its other elements of compensation in anticipation of a change in control, but instead change in control payments are designed to provide security to executives in the event of job loss in a triggering transaction. The Severance Plan provides for a severance multiple of 2 for the CEO and 1.5 for all other designated participants. Additional information regarding the severance and change in control payments, including a definition of key terms and quantifications of benefits that would have been received by our NEOs had termination occurred on December 31, 2009, is found under “Change in Control Arrangements and Other Agreements Upon Termination of Employment” beginning on page 40 of this proxy statement. This information includes the change in control benefits provided through both the ECP and the PTS Restoration Plan.

 

Tax Treatment

 

Under section 162(m) of the Internal Revenue Code, the Company generally receives an annual federal income tax deduction for compensation paid to the CEO and the other three most highly paid executives (excluding the CFO) only if the compensation is less than $1 million or is performance-based. The applicable awards granted under the ECP for 2009 are fully tax-deductible since the applicable compensation for all covered named executive officers is below $1 million. The Compensation Committee intends to continue seeking a tax deduction to the extent possible for all executive compensation, as long as it is in the best interests of Belo and its shareholders.

 

Compensation Committee Interlocks and Insider Participation

 

Henry Becton, Judy Craven, Wayne Sanders, Anne Szostak, Mac Tichenor, and Lloyd Ward served as members of Belo’s Compensation Committee during 2009. Judy Craven chaired the Committee until May 2009 and Anne Szostak has chaired the Committee since May 2009. Mac Tichenor’s service on the Committee began in August 2009 following his election to the Board of Directors. No member of the Compensation Committee during 2009 was a current or former officer or employee of Belo or had any relationship with Belo requiring disclosure under the caption “Director Compensation — Certain Relationships.” None of Belo’s executive officers served as a director or as a member of the compensation committee (or other committee serving an equivalent function) of any other entity that had an executive officer serving as a director or as a member of Belo’s Compensation Committee during 2009.

 

Stock Ownership Guidelines

 

In 2009, the Board established stock ownership guidelines for the Company’s directors and executive officers. Under these guidelines, the required minimum ownership level of common stock of the Company is 75,000 shares for the Company’s CEO, 25,000 shares for each other Section 16-reporting executive officer, and 10,000 shares for

each director. For purposes of meeting these ownership guidelines, issued and outstanding restricted stock unit shares are counted as shares owned, but shares subject to unexercised stock options are not. The ownership guidelines are to be achieved by August 1, 2014. See “Belo Corp. Stock Ownership of Directors and Executive Officers” beginning on page 6 for additional information.

 

Compensation Committee Report

 

In accordance with its written charter adopted by our Board, the Compensation Committee has oversight of the Company’s overall compensation structure, policies and programs. In exercising its oversight responsibility, the Committee has retained a compensation consultant to advise the Committee regarding market and general compensation trends.

 

The Committee, after consultation with its compensation consultant, has reviewed and discussed the Compensation Discussion and Analysis with management, which has the responsibility for preparing the Compensation Discussion and Analysis. Based upon this review and discussion, the Committee recommended to our Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2009.

 

COMPENSATION COMMITTEE

 

M. Anne Szostak, Chair

Henry P. Becton, Jr.

Judith L. Craven, M.D., M.P.H.

Wayne R. Sanders

McHenry T. Tichenor, Jr.

Lloyd D. Ward

 

The following information summarizes annual and long-term compensation awarded to, earned by or paid to Belo’s principal executive officer, principal financial officer and its two other most highly-paid executive officers (the “named executive officers”) for services in all capacities to Belo for the years ended December 31, 2009, 2008, and 2007, respectively.

 

 

 

 

 

 

 

The following table summarizes cash-based and equity awards that were granted under the ECP during 2009.

 

 

 

For 2009, the proportion of equity-based compensation in relation to total compensation, excluding changes in pension value and above-market interest from non-qualified deferred compensation plans, is less than 5% for each of the named executive officers, due to the substantial decline in stock market price since early 2008. The grant date value of the current year equity awards as indicated in the table above is nominal relative to the total earned compensation of each of the named executive officers. See “Compensation Discussion and Analysis” beginning on page 26 of this proxy statement for a discussion of all components of total direct compensation and objectives for each element, both cash and equity-based awards.

 

The following table contains information on all Belo Corp. equity awards that were outstanding as of December 31, 2009.

 

Belo Corp.