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[Gannett Logo]
Douglas H. McCorkindale
Chairman, President
and Chief Executive Officer March 22, 2002
Dear Shareholder:
On behalf of your Board of Directors and management, we cordially invite
you to attend the Annual Meeting of Shareholders to be held on Tuesday, May 7,
2002, at 10:00 a.m., at the Company's headquarters located at 7950 Jones Branch
Drive, McLean, Virginia.
At this meeting you will be asked to vote for the election of two directors
and for the election of PricewaterhouseCoopers as the Company's independent
auditors for 2002. These matters are discussed in detail in the attached proxy
statement.
Your Board of Directors believes these proposals are in the best interests
of the Company and its shareholders and recommends that you vote for them.
There is one shareholder proposal that we understand will be presented for
consideration at the meeting. The shareholder proposal is discussed in the
attached proxy statement. Your Board believes this proposal is not in the best
interests of the Company and its shareholders and recommends that you vote
against it.
It is important that your shares be represented at the meeting whether or
not you plan to attend. Please note that this year you may vote your shares by
telephone, online or by mail. The toll-free telephone number, Internet address
and instructions are shown on the enclosed proxy card. Alternatively, you can
vote by signing and dating the proxy card and returning it in the envelope
provided.
An admission ticket is required for attendance at the Annual Meeting.
Please see page 1 of the proxy statement for instructions about obtaining
tickets.
Thank you for your continued support.
Cordially,
/s/ Douglas H. McCorkindale
Douglas H. McCorkindale
7950 Jones Branch Drive, McLean, Virginia 22107 (703) 854-6000
[Gannett Logo]
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 7, 2002
------------------------
To Our Shareholders:
The Annual Meeting of Shareholders of Gannett Co., Inc. will be held at the
Company's headquarters, 7950 Jones Branch Drive, McLean, Virginia, at 10:00 a.m.
on May 7, 2002 for the following purposes:
(1) to elect two directors;
(2) to act upon a proposal to elect PricewaterhouseCoopers as the
Company's independent auditors for the 2002 fiscal year;
(3) to consider a shareholder proposal; and
(4) to transact such other business, if any, as may properly come before
the meeting.
The Board of Directors has set the close of business on March 8, 2002 as
the record date to determine the shareholders entitled to notice of and to vote
at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED
PROXY CARD TO VOTE USING THE INTERNET OR BY TELEPHONE, OR VOTE BY SIGNING AND
DATING THE PROXY CARD AND RETURNING IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON IF YOU DECIDE TO ATTEND THE MEETING.
By Action of the Board of Directors
/s/ Thomas L. Chapple
Thomas L. Chapple
Secretary
McLean, Virginia
March 22, 2002
[Gannett Logo]
PROXY STATEMENT
2002 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Gannett for the Annual Meeting of
Shareholders to be held on May 7, 2002.
The Board set March 8, 2002 as the record date. Shareholders of record on
that date may attend and vote at the Annual Meeting or have their votes by proxy
counted if they do not attend in person. On that date, there were 266,457,262
shares of Common Stock outstanding and entitled to vote. Each share is entitled
to one vote. The presence, in person or by proxy, of the holders of a majority
of the shares of Common Stock outstanding on March 8, 2002 will constitute a
quorum to conduct business. Proxies received but marked as abstentions will be
included in the calculation of the number of shares considered to be present at
the meeting. Proxies held in a broker's account that are not voted by the broker
or other nominee ("broker non-votes") on some but not all matters will be
treated as shares present for purposes of determining the presence of a quorum,
but will not be treated as shares present and entitled to vote at the Annual
Meeting with respect to those matters for which no vote was cast.
Admission to the meeting is by ticket only. We will provide each
shareholder with one admission ticket. Either you or your proxy are allowed to
use your ticket. If you are a shareholder of record and plan to attend the
meeting, please complete and mail the enclosed post card to request a ticket. If
you vote using the Internet or by telephone, you can request a ticket when you
vote. If you hold shares through an intermediary, such as a bank or broker, and
you plan to attend the meeting, you will need to send a written request for a
ticket, along with proof of share ownership, such as a bank or brokerage firm
account statement or a letter from the broker, trustee, bank or nominee holding
your shares, confirming ownership, to: Secretary, Gannett Co., Inc., 7950 Jones
Branch Drive, McLean, VA 22107. Requests for admission tickets will be processed
in the order in which they are received and must be received by no later than
April 30, 2002. If you decide not to attend the meeting, please return your
ticket to the Secretary, Gannett Co., Inc. at the above address.
To assist the Company in reducing costs related to the Annual Meeting, we
ask all shareholders who vote via the Internet to consent to electronic delivery
of mailings related to future annual shareholder meetings. Companies may make
their proxy statements and annual reports available online and eliminate mailing
hard copies of these documents to those shareholders who consent in advance to
electronic distribution. If you hold shares in your own name and you are voting
via the Internet, you can consent online when you vote. If you hold shares
through an intermediary such as a bank or broker, please refer to the
information provided by your bank or broker for instructions on how to consent
to electronic distribution.
You may grant a proxy either by signing a proxy card, by telephone or using
the Internet. Shares represented by proxies will be voted as directed by the
shareholder. Unless you direct otherwise, your shares will be voted for the
Board's nominees for the Board of Directors, for the election of auditors and
against the shareholder proposal. If you deliver a proxy by mail, by telephone
or via the
Internet, you have the right to revoke it in writing (by another proxy bearing a
later date), by phone (by another call at a later time), via the Internet (by
voting online at a later time), by attending the meeting and voting in person,
or by notifying the Company before the meeting that you want to revoke it. Votes
submitted via the Internet or by telephone must be cast by 10:00 a.m., Eastern
time on May 6, 2002. Votes submitted by mail must be received prior to 10:00
a.m., Eastern time on May 7, 2002.
If you participate in the Company's Dividend Reinvestment or 401(k) Plans,
your Gannett stock in those plans can be voted on the proxy card accompanying
this Proxy Statement, by telephone or via the Internet. If no instructions are
given by you, shares held in the Dividend Reinvestment Plan will not be voted.
All shares in the 401(k) Plan for which no instructions are received will be
voted by the trustee of the 401(k) Plan in the same proportion as shares for
which the trustee receives instructions.
This Proxy Statement and the enclosed proxy card are being furnished to
shareholders on or about March 22, 2002.
PROPOSAL 1--ELECTION OF DIRECTORS
YOUR BOARD
The Board of Directors is composed of 8 directors, only one of whom is a
member of management. The By-laws of the Company provide that each director must
own at least one thousand shares of Gannett stock, and each director meets or
exceeds this requirement. The Board is divided into three classes, as equal in
number as possible. At each Annual Meeting of Shareholders, one class of
directors is elected for a three-year term.
The Board of Directors conducts its business through meetings of the Board
and five committees: the Audit Committee, the Executive Committee, the Executive
Compensation Committee, the Management Continuity Committee, and the Public
Responsibility and Personnel Practices Committee.
The Audit Committee reviews the Company's auditing practices and procedures
and recommends independent auditors to be elected by the shareholders. The Audit
Committee members are Karen Hastie Williams, Chair, H. Jesse Arnelle, Stephen P.
Munn and Samuel J. Palmisano. None of the members of the Committee is an
employee of the Company. This Committee met three times during 2001.
The Executive Committee may exercise the authority of the Board between
Board meetings, except as limited by Delaware law. The Executive Committee
members are Douglas H. McCorkindale, Chair, James Johnson, and Karen Hastie
Williams. This Committee met once during 2001.
The Executive Compensation Committee makes recommendations concerning the
compensation and benefits of elected officers and senior executives and
administers the Company's executive incentive plans. The Committee members are
James A. Johnson, Chair, Stephen P. Munn, Samuel J. Palmisano and Karen Hastie
Williams. None of the members of the Committee is an employee of the Company.
This Committee met five times during 2001.
The Management Continuity Committee develops long-range management
succession plans and recommends to the Board candidates for nomination as
directors and for election as officers. In making recommendations for directors
for the 2003 Annual Meeting, the Committee will consider any written suggestions
of shareholders received by the Secretary of the Company by February 5, 2003.
The Committee members are Meredith A. Brokaw, Chair, James A. Johnson, Douglas
H. McCorkindale and Donna E. Shalala. This Committee met five times during 2001.
2
The Public Responsibility and Personnel Practices Committee monitors the
Company's performance in meeting its obligations of fairness in internal and
external matters and under its equal employment opportunity programs. The
Committee's members are H. Jesse Arnelle, Chair, Meredith A. Brokaw, Douglas H.
McCorkindale and Donna E. Shalala. This Committee met twice during 2001.
The Company's By-laws provide that a director must retire on or before the
annual meeting following his or her 70th birthday or, in the case of directors
who are also employees, his or her 65th birthday.
The Board of Directors held six meetings during 2001, and all of the
directors attended all of the meetings of the Board and any committee on which
they served, with the exception of Mr. Palmisano, who missed one meeting. Mr.
Palmisano has decided not to stand for re-election to the Board at the upcoming
meeting. He was named Chief Executive Officer of IBM in January 2002 and
believes he must devote his full time and attention to that company.
NOMINEES
The Board intends to nominate Meredith A. Brokaw and Donna E. Shalala for
election this year. Both nominees are currently directors. If they are elected,
their term will run until the Annual Meeting in 2005 or until their successors
are elected.
The Board believes that both nominees will be available and able to serve
as directors. If either nominee is unable to serve, the Board may do one of
three things. The Board may recommend a substitute nominee, reduce the number of
directors to eliminate the vacancy, or fill the vacancy later. The shares
represented by all valid proxies may be voted for the election of a substitute
if one is nominated.
The two nominees receiving the highest number of votes will be elected. If
a shareholder, present in person or by proxy, withholds a vote from one or both
directors, the shareholder's shares will not be counted in determining the votes
for those directors. If a shareholder holds shares in a broker's account and has
given specific voting instructions, the shares will be voted as the shareholder
directs. If no instructions are given, under New York Stock Exchange rules the
broker may decide how to vote on the Board nominees.
The principal occupations and business experience of the management
nominees and of the continuing directors are described below.
THE FOLLOWING HAVE BEEN NOMINATED FOR ELECTION AT THE 2002 ANNUAL MEETING:
MEREDITH A. BROKAW
Mrs. Brokaw, 61, is the founder of Penny Whistle Toys, Inc., in New York
City, and is the author of children's books. She is a director of Conservation
International, Washington, D.C. She has been a director since 1983.
DONNA E. SHALALA
Ms. Shalala, 61, is President of the University of Miami. She was Secretary
of the United States Department of Health and Human Services from 1993 to 2001.
Ms. Shalala is a director of UnitedHealth Group and Lennar Corporation. She
joined the Board in June, 2001.
3
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT
THE 2003 ANNUAL MEETING:
H. JESSE ARNELLE
Mr. Arnelle, 68, is of counsel to Womble, Carlyle, Sandridge & Rice,
Winston-Salem, North Carolina. He was senior partner at the law firm of Arnelle,
Hastie, McGee, Willis & Greene from 1985 to 1995, and was of counsel to that
firm from 1995 to 1997. He is the Immediate Past Chairman of the Board of
Trustees of Pennsylvania State University and is a director of FPL Group, Inc.,
Textron Corporation, Eastman Chemical Co., Armstrong World Industries, Waste
Management, Inc. and the Metropolitan Life Series Fund. He has been a director
since 1999.
KAREN HASTIE WILLIAMS
Ms. Williams, 57, is a Partner at the law firm of Crowell & Moring,
Washington, D.C. Ms. Williams is a director of The Chubb Corporation,
Continental Airlines, Inc., SunTrust Banks, Inc. and Washington Gas Light
Company and a trustee of the Fannie Mae Foundation. She has been a director
since 1997.
THE FOLLOWING DIRECTORS ARE SERVING ON THE BOARD FOR A TERM THAT ENDS AT
THE 2004 ANNUAL MEETING:
JAMES A. JOHNSON
Mr. Johnson, 58, is Vice Chairman of Perseus LLC. He served as Chairman of
the Board of Directors of Fannie Mae in 1999 and was Chairman and Chief
Executive Officer of Fannie Mae from February 1991 through 1998. He is a
director of Cummins Engine Company, Target Corporation, The Goldman Sachs Group,
Inc., Temple-Inland Corporation, United Health Group and KB Home Corporation. He
also is Chairman of the John F. Kennedy Center for the Performing Arts and
Chairman of the Board of Trustees of The Brookings Institution. He has been a
director since 2000.
DOUGLAS H. MCCORKINDALE
Mr. McCorkindale, 62, is Chairman, President and CEO of Gannett. He was
Vice Chairman, President and CEO from June 2000 to January 2001 and Vice
Chairman and President from 1997 to June 2000. He was Vice Chairman and Chief
Financial and Administrative Officer from 1985 to 1997. He has served the
Company in various other executive capacities since 1971. He is a director of
Continental Airlines, Inc., Lockheed Martin Corporation and a director or
trustee of a number of investment companies in the family of Prudential Mutual
Funds. He has been a director since 1977.
STEPHEN P. MUNN
Mr. Munn, 59, is Chairman of Carlisle Companies, Inc. and serves on
Carlisle's Board of Directors. He was Chairman and Chief Executive Officer of
Carlisle from 1988 to February 2001. He is a director or trustee of a number of
investment companies in the family of Prudential Mutual Funds. He became a
director in 2001.
4
SECURITIES OWNED BY GANNETT MANAGEMENT
The following table shows the number of shares of Gannett common stock
beneficially owned by all directors and by the five most highly compensated
executive officers. The table is correct as of March 8, 2002:
NAME OF OFFICER OR DIRECTOR TITLE SHARES OWNED
--------------------------- ----- ------------
Douglas H. McCorkindale....................... Chairman, President and CEO 1,561,414
Gary L. Watson................................ President/Newspaper Division 429,073
Cecil L. Walker............................... Retired Chairman/ 174,393
Broadcasting Division
Larry F. Miller............................... Executive Vice
President/Operations and CFO 141,777
Thomas Curley................................. President and Publisher, 198,987
USA TODAY and Senior Vice
President/Administration of
Gannett
H. Jesse Arnelle.............................. Director 3,226
Meredith A. Brokaw............................ Director 10,641
James A. Johnson.............................. Director 3,058
Stephen P. Munn............................... Director 1,875
Samuel J. Palmisano........................... Director 5,198
Donna E. Shalala.............................. Director 1,701
Karen H. Williams............................. Director 1,875
4,344,245
All directors and executive officers as a
group (36 persons including those named
above)......................................
Each person listed owns less than 1% of Gannett's outstanding shares. All
directors and executive officers as a group beneficially owned 4,344,245 shares
on March 8, 2002. This represents 1.6% of the outstanding shares. The following
shares are included because they may be acquired under stock options by May 7,
2002: Mr. McCorkindale--1,112,750; Mr. Watson--368,355; Mr. Walker--127,575; Mr.
Miller--126,475; Mr. Curley--146,595; all directors and executive officers as a
group--3,321,335. For all shares owned, each director or executive officer
possesses sole voting power and sole investment power.
Some shares have not been listed above because the director or executive
officer has disclaimed beneficial ownership. Ownership of the following shares
is disclaimed because they are held in the names of family members or in trust:
Mr. McCorkindale--874; Mr. Watson--24; Mr. Miller--1,834; all directors and
executive officers as a group--35,417.
Also included among the shares listed above are the following shares which
are held for individual deferred compensation accounts by The Northern Trust
Company, as Trustee of the Gannett 1987 Deferred Compensation Plan: Mr.
McCorkindale--86,028; Mr. Watson--21,138; Mr. Walker--18,442; Mr.
Miller--14,243; Mr. Curley--16,757; Mr. Arnelle--1,315; Mrs. Brokaw--7,766; Mr.
Johnson--1,183; Mr. Palmisano--3,323; Ms. Shalala--701; all directors and
executive officers as a group--309,646.
The shares reported above do not include 1,242,254 shares owned on March 8,
2002 by the Gannett Retirement Plan Trust. The following officers of the Company
serve on the Benefit Plans Committee, which has the power to direct the voting
of those shares: Douglas H. McCorkindale, Richard L. Clapp (Senior Vice
President/Human Resources), Larry F. Miller and Gracia C. Martore (Senior Vice
President/Finance and Treasurer).
5
COMPENSATION OF DIRECTORS
The Company pays its directors an annual fee and meeting fees. The annual
fee is $45,000. Each director receives $1,500 for each Board meeting attended.
Each committee chair also receives an annual fee of $5,000 and each committee
member, including the chair, receives $1,000 for each committee meeting
attended. Mr. McCorkindale, the only director who also is an employee of the
Company, receives no director fees. Directors may elect to defer their fees
under the 1987 Deferred Compensation Plan, which provides for eleven investment
options, including mutual funds and a Gannett Common Stock fund. Under the 2001
Omnibus Incentive Compensation Plan approved by the Company's shareholders last
year, directors Arnelle, Brokaw, Johnson, Munn, Palmisano and Williams were
granted options to purchase 3,500 shares of Gannett common stock in 2001. The
Company intends to grant other awards to directors in the future.
In 1987, the Company established a Retirement Plan for Directors in which
non-employee members of the Board of Directors could participate. In 1996, the
Board terminated this Plan as to any new directors. Only one current director,
Meredith Brokaw, participates in the Plan, and her annual benefit under the Plan
is equal to 100% of her highest annual cash compensation during the ten years of
service preceding her retirement from the Board. The annual benefit will be paid
each quarter for 10 years except for lump sum payments in the event of death.
COMPENSATION OF GANNETT MANAGEMENT
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the "Committee") is responsible for
compensation and stock ownership programs for executive officers. The Committee
is composed entirely of independent outside directors. In 2001, the Committee
consisted of James A. Johnson, Chair, Stephen P. Munn, Samuel J. Palmisano and
Karen Hastie Williams.
THE ELEMENTS OF COMPENSATION AT GANNETT
The compensation program for executive officers is composed of three
elements: salaries, annual bonuses and long-term stock awards under the 2001
Omnibus Incentive Compensation Plan (the "2001 Plan").
The following Compensation Policy guides the Committee in its compensation
decisions:
COMPENSATION POLICY
The Board of Directors of Gannett believes that compensation of employees
should be fair to both employees and shareholders, externally competitive,
and designed to align very closely the interests of employees with those of
the shareholders.
The Gannett executive compensation program is designed to attract,
motivate, reward and retain superior management talent.
The Executive Compensation Committee places heavy emphasis on pay for
performance. We believe substantial portions of total compensation should
be at risk. Likewise, outstanding performance should lead to substantial
increases in compensation.
COMPENSATION DECISIONS IN 2001
In making its compensation decisions for 2001, the Committee considered the
Company's performance in the following areas: earnings per share, operating
income as a percentage of sales, return on assets, return on equity, operating
cash flow, stock price, and market value--all in light of very adverse economic
conditions. In addition, the Committee considered management's recom-
6
mendations for individual compensation awards. The Committee also compared the
Company's performance to that of its competitors and noted that the Company
achieved one of the best year-over-year earnings per share performances in the
newspaper industry, despite the year-over-year decline in profits and earnings
per share. The Company's newspaper and broadcasting segment cash flow margins
were among the best in the industry. Companies with comparable revenues or
profits in other industries also were surveyed to ensure that executive
compensation was competitive in the overall marketplace. The Committee believes
that the Company should compensate its executives better than its competitors in
order to continue attracting and retaining the most talented people. (References
to "competitors" are to the S&P 500 Publishing and Printing Index companies
named on page 11.)
While the Committee considered these individual and Company performance
factors in making individual compensation decisions, the Committee applied its
own subjective good judgment in making final determinations.
In 2001, the Committee continued to emphasize key executives' ownership of
Gannett common stock as a component of their compensation. Stock compensation
includes (i) minimum stock ownership guidelines for all executive officers, (ii)
long-term awards under the 2001 Plan, and (iii) payment of 25% of an executive's
bonus in Gannett stock. In July, 2000 the Committee increased the executive
stock ownership guidelines for the five highest-paid officers from three to five
times their salary range midpoint and increased the guideline for other key
executives from one to two times their salary range midpoint. Most executives
exceed these guidelines, with the exception of executives who either recently
have been promoted and, consequently, are subject to a higher minimum ownership
threshold or executives who exceeded the original guidelines and are working
towards fulfilling the revised ones.
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on
the amount of compensation that may be deducted by the Company in any year with
respect to each of the Company's five most highly paid executive officers.
Historically, the loss of deductibility under Internal Revenue Code Section
162(m) of certain portions of executive compensation has not been a
determinative factor in setting compensation levels. With the shareholders'
approval last year of the 2001 Plan, the Company can structure bonuses for the
five highest paid executive officers so that they are fully deductible under
Section 162(m).
BASE SALARIES: TO ATTRACT AND RETAIN MANAGEMENT TALENT
Base salaries are designed to help attract and retain management talent. To
ensure that salary ranges are competitive in the overall marketplace, salary
ranges are periodically compared to the salaries paid for comparable positions
by the Company's competitors, with other companies of comparable size in the
media industry and with companies with comparable revenues or profits in other
industries. The Company is significantly larger than its competitors, and in
2001 it achieved one of the best year-over-year earnings and earnings per share
performances in the newspaper industry, despite lower profits and earnings per
share. These factors and general compensation practices in the media industry
have led the Company to attempt to place its management salaries above the
median for the comparative companies.
In establishing 2001 salaries for executive officers, the Committee also
considered the Company's performance, individual performance and experience, and
the chief executive officer's recommendations. The most important factor,
however, was the Committee members' judgment about the appropriate level of
salary to retain, motivate and reward individual executives. The
7
salaries for the five highest paid officers of the Company, including Cecil L.
Walker, the former Chairman of Gannett's Broadcast Division who retired as of
December 31, 2001, were as follows:
NAME 2000 SALARY 2001 SALARY
---- ----------- -----------
Douglas H. McCorkindale..................... $1,058,000 $1,600,000
Gary L. Watson.............................. $ 585,000 $ 660,000
Cecil L. Walker............................. $ 500,000 $ 530,000
Larry F. Miller............................. $ 495,000 $ 560,000
Thomas Curley............................... $ 475,000 $ 500,000
Mr. McCorkindale's 2001 salary reflects his promotion in January, 2001 to
Chairman, President and Chief Executive Officer of the Company.
In recognition of the challenges the Company has been and continues facing
due to the recent economic downturn, management recommended and the Committee
agreed that it was appropriate not to increase base salaries for 77 of the
Company's top executives, including the five highest paid executives, for 2002.
In lieu of a salary increase, the Committee elected to award these executives
nominal stock option grants that were vested at the time of the grant. The
Committee honored Mr. McCorkindale's request not to receive such a grant. Mr.
McCorkindale's salary for 2001 was the minimum amount payable under his
employment agreement.
EXECUTIVE INCENTIVE BONUSES: TO MOTIVATE YEAR-TO-YEAR
Annual bonuses motivate executive officers and reward them for good
performance. The goal of the 2001 Plan is to reward higher performing operating
units and individuals with a greater percentage of the total available bonus
pool. The performance bonuses for the chief executive officer, the other four
highest paid executive officers, and other senior executives are based on
individual and Company performance.
For other executives, the bonuses for 2001 were determined on the basis of
individual and operating unit performance in the areas of profit, product and
people. The Committee's review of the bonuses was based on its knowledge of the
Company, its contact with the executives throughout the year and a review of
performance. No relative ranking of these various factors was applied.
To further the Committee's goal of increasing the stock ownership by key
executives, 25% of the bonuses for 2001 for 27 senior executives were paid to
them in the form of Gannett common stock rather than cash. This continues a
practice established in 1994. Mr. McCorkindale and Mr. Miller received all of
their bonus in cash in exchange for their commitment to otherwise acquire
Gannett stock in an amount equal to 25% of their bonus during 2002. Each of them
has committed to defer a portion of his 2002 salary to fulfill this commitment.
Mr. McCorkindale's salary deferral will substantially increase the portion of
his 2002 compensation that is deductible by the Company under Section 162(m).
Due to the recent economic downturn, Mr. McCorkindale recommended and the
Committee agreed that, despite the Company's strong performance in 2001, it was
appropriate to decrease the overall bonuses for 2001 paid to the Company's top
executives, including the five highest paid executives. The pre-tax value of the
bonuses awarded to the five highest paid officers of the Company are as follows:
2000 BONUS 2001 BONUS
----------------------- -----------------------
NAME CASH GCI SHARES CASH GCI SHARES
---- ---------- ---------- ---------- ----------
Douglas H. McCorkindale...... $1,500,000 7,407 $1,850,000 -0-
Gary L. Watson............... $ 468,750 2,315 $ 423,750 1,899
Cecil L. Walker.............. $ 397,500 1,963 $ 480,000 -0-
Larry F. Miller.............. $ 375,000 1,852 $ 465,000 -0-
Thomas Curley................ $ 382,500 1,888 $ 350,000 1,479
8
LONG-TERM STOCK GRANTS: TO PROMOTE LONG-TERM GROWTH
Long-term stock awards are based on the performance of Gannett common stock
and are designed to align the executives' interests with those of the Company's
shareholders. Until 2000, the Committee used two kinds of long-term stock
awards: non-qualified stock options and restricted stock awards. A non-qualified
stock option is the right to purchase shares of common stock of the Company
within a fixed period of time (eight years for grants through 1995 and ten years
thereafter) at the fair market value on the date of grant. A restricted stock
award is the right to receive shares of common stock of the Company outright
conditioned on continued employment throughout a specified period (typically
four years). In 2000, and again in 2001, the Committee decided not to award
restricted stock and instead awarded stock options to those executives who
previously received restricted stock. This change is intended to place heavier
emphasis on long-term stock price growth.
The Committee decides whether to grant individual long-term stock awards
and determines the amount of the awards. Long-term stock awards are based on the
grade level of the executive, after an annual examination of the competitive
marketplace. As is the case with annual bonuses, the Committee relies in large
part on the recommendations of senior management as to the appropriate level of
individual awards to lower level executives. Awards are based on past and
expected performance as subjectively evaluated by management in making
recommendations and by the Committee in approving them. Executives who can more
directly influence the overall performance of the Company are the principal
recipients of long-term awards. In 2001, pursuant to recent amendments to
Delaware law, the Board and the Committee authorized Mr. McCorkindale to award a
pool of stock options to employees with salaries below a certain threshold.
The following chart shows the number of stock options awarded in 2001 to
the five highest paid officers of the Company.
NAME 2000 OPTIONS 2001 OPTIONS
---- ------------ ------------
Douglas H. McCorkindale............................ 346,000 375,000
Gary L. Watson..................................... 110,000 119,200
Cecil L. Walker.................................... 91,000 -0-
Larry F. Miller.................................... 81,000 93,600
Thomas Curley...................................... 70,000 75,200
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. McCorkindale became Chairman on February 1, 2001. As discussed on page
13, the Committee negotiated a renewal of Mr. McCorkindale's employment contract
in 2000, and the renewed contract became effective on January 1, 2001. During
the term of his new contract, Mr. McCorkindale will receive an annual salary of
$1.6 million or such greater amount as the Board of Directors determines and an
annual bonus at the discretion of the Board. In determining Mr. McCorkindale's
compensation for 2001, the Committee reviewed the performance of the Company and
its earnings per share, return on assets, return on equity, operating cash flow,
operating income as a percent of sales, stock price, and market value. For the
2001 fiscal year, diluted earnings per share from continuing operations were
$3.12, a decline of 14% from 2000 results of $3.63 (which excludes a
non-operating gain from the Company's sale of the assets of Multimedia
Cablevision, Inc.). After-tax cash flow per diluted share from continuing
operations (after-tax income from continuing operations plus depreciation and
amortization expense) was $4.78 in 2001 versus $5.03 in 2000, a 5% decline.
Operating income from continuing operations as a percent of sales was 29.2% in
2000 and 25.1% in 2001. However, the Company's operating income margins for its
newspaper and broadcasting segments were among the best in the industry. These
9
results were achieved despite the fact the Company was operating in the worst
advertising recession since World War II.
The Company's stock price, excluding dividends, increased 6.6% from $63.06
to $67.93, despite the very difficult operating environment. The S&P 500 index
for the same period, excluding dividends, declined 13.0%. The stock price of the
Company's peer group, consisting of the S&P 500 Publishing and Printing Index,
excluding dividends, increased 2.1%. Cumulatively, over the last five years,
excluding dividends, the Company's stock price increased 79.6%, the S&P 500
increased 55.0%, and the peer group increased 95.7%. These and other factors
were subjectively evaluated by the Committee members when determining chief
executive officer compensation, without giving particular weight to any one or
more factors.
Mr. McCorkindale's compensation was above the median for the chief
executive officers surveyed. The Committee determined that the level of Mr.
McCorkindale's compensation was appropriate given his performance, the Company's
size and performance, and the industries in which it operates. As a general
matter, media industry companies, particularly broadcasting companies, tend to
compensate executives at a higher level than industrial or commercial
enterprises. In particular, the Committee noted that the Company's revenues are
significantly larger than that of its competitors listed on page 11. The
Company achieved the best year-over-year earnings and earnings per share
performance in the newspaper industry, despite a decline in year-over-year in
profits and earnings per share. Mr. McCorkindale's bonus and salary reflect
these results.
In recognition of Mr. McCorkindale's superior performance and consistent
with the Committee's goal of increasing the ownership of Gannett Common Stock by
key officers as discussed above, the Committee awarded Mr. McCorkindale 375,000
stock options in 2001. It is the Committee's view that the award of these stock
options is an effective way of continuing to tie Mr. McCorkindale's financial
interests to those of the Company's shareholders, since the value of these stock
options is directly linked to increases in shareholder value.
Executive Compensation Committee
James A. Johnson, Chair
Stephen P. Munn
Samuel J. Palmisano
Karen Hastie Williams
10
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the performance of the Company's Common Stock
during the period December 31, 1996 to December 31, 2001 with the S&P 500 Index
and the S&P 500 Publishing and Printing Index. Last year, the Company compared
its stock's performance with that of a "peer group" combining the companies in
the S&P Publishing/Newspaper Index and in the S&P Publishing Index. As S&P
merged these two Indices together this year into the new S&P 500 Publishing and
Printing Index (which consists of Dow Jones Co., Inc., Gannett Co., Inc.,
Knight-Ridder, Inc., The McGraw-Hill Corporation, Inc., Meredith Corporation,
The New York Times Company and Tribune Company), the Company is using this new
Index.
The S&P 500 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 and Printing Index also is weighted by
market capitalization.
The graph depicts the results of investing $100 in the Company's Common
Stock, the S&P 500 Index, and the S&P 500 Publishing and Printing Index at
closing prices on December 31, 1996. It assumes that dividends were reinvested
quarterly with respect to the Company's Common Stock, daily with respect to the
S&P 500 Index and monthly with respect to the S&P 500 Publishing and Printing
Index.
What the graph does not reflect is that Gannett's annual return for 2001
including reinvested dividends was 8.14% compared with -11.88% for the S&P 500
Index and 3.39% for the S&P 500 Publishing and Printing Index.
[PERFORMANCE GRAPH]
1996 1997 1998 1999 2000 2001
---- ------ ------ ------ ------ ------
Gannett Co., Inc. ...................... 100 167.50 176.92 226.33 177.48 191.92
S&P 500 Index........................... 100 133.36 171.48 207.56 188.66 166.24
S&P 500 Publishing and Printing......... 100 157.16 168.85 226.17 202.88 209.75
11
SUMMARY COMPENSATION TABLE
The following table summarizes compensation paid to the CEO and the four
other most highly compensated executive officers of the Company for services
rendered to the Company over the past three fiscal years.
LONG-
TERM
COMPEN-
SATION
ANNUAL COMPENSATION AWARDS(3)
---------------------------------------- ----------
OTHER
ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND SALARY BONUS(1) SATION(2) OPTIONS SATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------ ---- --------- --------- --------- ---------- ---------
Douglas H. McCorkindale........................ 2001 1,600,000 1,850,000 15,245 375,000 109,082
(Chairman, President and CEO) 2000 1,058,000 2,000,000 7,731 346,000 78,268
1999 900,000 1,725,000 8,608 225,000 70,974
Gary L. Watson................................. 2001 660,000 565,000 5,870 119,200 45,750
(President/Newspaper Division) 2000 585,000 625,000 4,800 110,000 39,900
1999 560,000 550,000 4,800 84,000 36,709
Cecil L. Walker................................ 2001 530,000 480,000 5,870 0 37,100
(Retired Chairman/Broadcasting Division) 2000 500,000 530,000 4,800 91,000 44,500
1999 475,000 475,000 5,187 68,000 41,245
Larry F. Miller................................ 2001 560,000 465,000 14,401 93,600 36,300
(Executive Vice President/Operations and CFO).. 2000 495,000 500,000 4,800 81,000 33,300
1999 450,000 405,000 5,826 55,000 29,482
Thomas Curley.................................. 2001 500,000 440,000 5,870 75,200 38,241
(Senior Vice President/Administration of
Gannett 2000 475,000 510,000 4,800 70,000 36,692
and President and Publisher/USA TODAY) 1999 450,000 475,000 4,800 53,000 26,252
---------------
(1) Bonus awards may be in the form of cash or shares of Gannett Common Stock.
Bonuses to executive officers typically are paid 25% in Gannett Common Stock
and 75% in cash, both of which could be deferred.
(2) This column includes amounts paid by the Company under the Medical
Reimbursement Plan and amounts paid in cash to reimburse the five named
officers for the tax impact of certain perquisites.
(3) Under the Company's 2001 Omnibus Incentive Compensation Plan, stock awards
in the form of stock options may be granted to key members of management who
are in a position to make a substantial contribution to the long-term
success of the Company.
(4) This column includes the annual premiums paid by the Company on life
insurance policies which are individually provided for the five named
officers, as follows: Mr. McCorkindale--$103,982; Mr. Watson--$40,650; Mr.
Walker--$32,000; Mr. Miller--$31,200 and Mr. Curley--$33,141. The column
also includes a matching contribution of $5,100 in Gannett Common Stock
received by each of the five named officers under the Company's 401(k) plan.
12
OPTION GRANT TABLE
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANT GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME DATE (#) IN FISCAL YEAR ($/SH) DATE PRESENT VALUE ($)
---- ----- ---------- -------------- -------- ---------- -----------------
Douglas H. McCorkindale....... 12/4/01 375,000 6.8% $69.35 12/2/11 $8,647,500
Gary L. Watson................ 12/4/01 4,200 .08% $69.35 12/2/11 $ 94,836
12/4/01 115,000 2.08% $69.35 12/2/11 $2,596,700
Cecil L. Walker............... -- -- 0.00% -- -- --
Larry F. Miller............... 12/4/01 3,600 .07% $69.35 12/2/11 $ 81,288
12/4/01 90,000 1.63% $69.35 12/2/11 $2,032,200
Thomas Curley................. 12/4/01 3,200 .06% $69.35 12/2/11 $ 72,256
12/4/01 72,000 1.31% $69.35 12/2/11 $1,625,760
This table shows stock options awarded to the five named officers in 2001.
Except for the stock option granted to Mr. McCorkindale, the first set of stock
options granted on December 4, 2001 was vested as of the grant date. The stock
option granted to Mr. McCorkindale and the second set of options granted on that
date are exercisable with respect to 25% of the covered shares on each of the
first four anniversaries of the grant date. Executive officers may transfer
stock options to family members.
"Grant Date Present Value" has been calculated using the Black-Scholes
model of option valuation. The assumptions used in calculating these values for
all of the options are: a dividend yield of 1.33%, expected volatility of
26.37%, a risk-free interest rate of 4.60%, and a 7-year expected life. The
calculated value of the options on the grant date was determined to be $22.58
per option.
On December 30, 2001, 6,392,105 shares of Gannett common stock were
available for grants under the 2001 Omnibus Incentive Compensation Plan. At that
time, there were 20,526,064 options outstanding with a weighted average exercise
price of $59.57. The expiration dates range from December 13, 2002 to December
4, 2011.
STOCK OPTION TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
SHARES (#) ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Douglas H.
McCorkindale....... 200,000 $7,719,500 1,112,750 778,250 $22,787,213 $2,243,513
Gary L. Watson....... 22,980 $ 862,068 393,355 260,125 $ 7,236,703 $ 813,540
Cecil L. Walker...... 66,040 $1,924,464 127,575 114,625 $ 409,633 $ 672,848
Larry F. Miller...... 0 $ 0 134,270 190,625 $ 626,744 $ 607,223
Thomas Curley........ 26,600 $1,028,888 206,595 160,625 $ 3,678,200 $ 519,030
EMPLOYMENT CONTRACTS, RETIREMENT AND CHANGE IN CONTROL ARRANGEMENTS
As noted in the Company's proxy statement last year, in 2000, the Company
and Mr. McCorkindale renegotiated his employment contract, following his
promotion to Chairman,
13
President and Chief Executive Officer. The new contract became effective on
January 1, 2001, with a term that continues until July 1, 2004 (his normal
retirement date), and thereafter from year to year until either the Board or Mr.
McCorkindale terminates it on 90 days notice before the end of any term. During
his employment, he will receive an annual salary of $1.6 million or such greater
amount as the Board of Directors determines and an annual bonus at the
discretion of the Board of Directors. The contract also provides for various
executive perquisites prior to and following his retirement, consistent with
those received by prior chief executive officers of the Company. Gannett may
terminate the contract upon death, illness, disability or for "good cause", as
defined in the contract. If the contract is terminated due to death, illness or
disability, Mr. McCorkindale or his estate will be entitled to receive the
present value of his projected salary and bonuses, plus the value of all fringe
benefits, for the balance of the term. Mr. McCorkindale has the right to
terminate his employment for "good reason" as defined in the contract. If Mr.
McCorkindale terminates the contract for good reason, or if Gannett terminates
his employment in any way that constitutes a breach of the contract, he will
receive a payment equal to the greater of (1) his total compensation in the year
preceding the year of termination (comprised of salary, bonuses and the value of
fringe benefits and deferred compensation) or (2) the present value of his
projected salary, bonuses and the deemed value of fringe benefits for the
balance of the term of the contract. Mr. McCorkindale also will have his
benefits under any non-qualified supplemental retirement plan calculated by
assuming his termination date were the normal expiration date of the contract
and by taking into account the full service and compensation that he would have
had if he had continued to work until the expiration of the contract. If Mr.
McCorkindale remains in Gannett's employ to or beyond July 1, 2004, then upon
the expiration of the contract Gannett has agreed to retain him as a consultant
for a period of five years. Mr. McCorkindale also would receive benefits under
the Gannett Retirement Plan and Gannett Supplemental Retirement Plan.
In the event of a change in control of Gannett, as defined in his contract,
Mr. McCorkindale will receive a lump sum cash payment equal to four times his
total annual compensation paid in the calendar year immediately preceding the
change in control. To the extent permitted under the applicable plan, all of his
incentive pay, stock options and any other contingent executive compensation
will be treated as if all targets were achieved on the date of the change in
control and as if all otherwise unvested benefits became fully vested on such
date. He also will receive continued credit toward retirement benefits as in the
case of wrongful termination of the contract. The tax laws deny an income tax
deduction to a company for payments that are contingent upon a change in control
if those payments have a present value of more than three times the employee's
average annual compensation for the last five years and are made under an
agreement like the employment agreement described in this proxy statement.
Further, if this rule disallows an income tax deduction for any portion of these
change in control payments to Mr. McCorkindale, the amount of the disallowance
will increase the portion of his annual compensation that would be nondeductible
under Section 162(m) of the Internal Revenue Code. Mr. McCorkindale also is
entitled to receive payment of an amount sufficient to make him whole for any
excise tax imposed on any severance payment under Section 4999 of the Internal
Revenue Code of 1986.
The Company has a Transitional Compensation Plan that provides certain
payments to key executives of the Company and its subsidiaries who are
terminated without cause or who resign for good reason within two years after a
change in control. All executive officers included in the Compensation Tables
are covered by the Transitional Compensation Plan. Participants who choose to
leave their employment within 30 days after the first anniversary of the change
in control also qualify for payments under the Transitional Compensation Plan. A
participant entitled to compensation will receive (i) all payments and benefits
earned through the date of termination; (ii) a severance payment of two to three
years' salary and bonus compensation, depending on length of service; (iii) life
insurance and medical benefits for the same period; and (iv) extra retirement
plan benefits as though employment had continued for such two-to-three-year
period. Participants also are entitled to receive payment of an amount
sufficient to make them whole for any excise tax
14
imposed on the severance payment under Section 4999 of the Internal Revenue
Code. If there is a change in control of the Company, as defined in the
Transitional Compensation Plan, options become exercisable in full and
restricted stock awards become payable. In addition, the Company's 1978
Executive Long-Term Incentive Plan provided for the grant of option surrender
rights in tandem with stock options. In the event of a change in control, the
holders of any outstanding option surrender rights are entitled to receive a
payment equal to the spread between the option exercise price and the highest
price paid for Company shares in connection with the change in control. If
option surrender rights are exercised, the related options are canceled. To
avoid double payments upon a change in control, any compensation and benefits
received by Mr. McCorkindale under the terms of the Transitional Compensation
Plan will be reduced (but not below zero) by any compensation and benefits
received by him under the terms of his employment contract.
PENSION PLANS
The Company's executive officers participate in the Gannett Retirement
Plan, a defined benefit pension plan which is qualified under Section 401 of the
Internal Revenue Code, and the Gannett Supplemental Retirement Plan, an
unfunded, nonqualified plan. The annual pension benefit under the plans, taken
together, is largely determined by the number of years of employment multiplied
by a percentage of the participant's final average earnings (during the
executive officer's five highest consecutive years) and any supplemental
benefits approved by the Executive Compensation Committee under the Gannett
Supplemental Retirement Plan. The Internal Revenue Code places limitations on
the amount of pension benefits that may be paid under qualified plans. Any
benefits payable above those limitations will be paid under the Gannett
Supplemental Retirement Plan.
The table below may be used to calculate the approximate annual benefits
payable at retirement at age 65 under these two retirement plans to the
individuals named in the above Summary Compensation Table in specified
compensation and years-of-service classifications (subject to a reduction equal
to 50% of the Social Security Primary Insurance Amount payable).
FINAL 15 YEARS 20 YEARS OF 25 YEARS OF 30 YEARS OF 35 YEARS OF
AVERAGE OF CREDITED CREDITED CREDITED CREDITED CREDITED
EARNINGS SERVICE SERVICE SERVICE SERVICE SERVICE
-------- ----------- ----------- ----------- ----------- -----------
700,000 210,000 280,000 350,000 374,500 399,000
800,000 240,000 320,000 400,000 428,000 456,000
900,000 270,000 360,000 450,000 481,500 513,000
1,000,000 300,000 400,000 500,000 535,000 570,000
1,500,000 450,000 600,000 750,000 802,500 855,000
2,000,000 600,000 800,000 1,000,000 1,070,000 1,140,000
2,500,000 750,000 1,000,000 1,250,000 1,330,000 1,415,000
3,000,000 900,000 1,200,000 1,500,000 1,600,000 1,700,000
Final Average Earnings includes salaries and bonuses shown on page 12. The
credited years of service as of the end of the last fiscal year for the five
executive officers named in the Compensation Tables are as follows: Mr.
McCorkindale--30, Mr. Watson--32, Mr. Walker--29, Mr. Miller--40 and Mr.
Curley--31.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is responsible for reviewing
Gannett's auditing practices and procedures and recommends independent auditors
to be elected by the shareholders. The Audit Committee operates under a formal
written charter that has been adopted by the Board of Directors.
The Audit Committee members are Karen Hastie Williams, Chair, H. Jesse
Arnelle, Stephen P. Munn, and Samuel J. Palmisano, who are all independent
outside directors. The Audit Committee
15
members are not professional accountants or auditors, and their role is not
intended to duplicate or certify the activities of management and the
independent auditor, nor can the Committee certify that the independent auditor
is "independent" under applicable rules. The Committee serves a board-level
oversight role, in which it provides advice, counsel and direction to management
and the auditors on the basis of the information it receives, discussions with
management and the auditors, and the experience of the Committee's members in
business, financial and accounting matters.
The Audit Committee has received from PricewaterhouseCoopers ("PwC")
written disclosures regarding its independence as set forth in Independence
Standards Board Standard No. 1, including a detailed statement of the
relationships between PwC and the Company that might bear on PwC's independence,
and has discussed with PwC its independence. The Audit Committee has considered
whether the provision of information technology services or other non-audit
services by PwC is compatible with maintaining PwC's independence. PwC believes
that it is in full compliance with all of the independence standards established
under generally accepted auditing standards and the rules of the Securities and
Exchange Commission. The Audit Committee concurs. The Audit Committee also has
discussed with PwC the matters required to be discussed by Statements on
Auditing Standards No. 61 and No. 90, including the selection of and changes in
the Company's significant accounting policies, the basis for management's
accounting estimates, the auditors' conclusions regarding the reasonableness of
those estimates, and the disclosures included in the financial statements. The
Audit Committee has reviewed and discussed the Company's audited financial
statements with the internal auditors, PwC and management. The Audit Committee
also recommended the appointment, subject to shareholder approval, of PwC as the
Company's independent auditors for the 2002 fiscal year, and the Board concurred
in such recommendation.
Fees billed to the Company by PwC in fiscal year 2001 were:
Audit fee.--$1,279,000
Financial information systems design and implementation fees.--None
All Other fees--$2,102,000
*All other fees relate to additional attest services, tax services and employee
benefit services. Approximately $1,488,000 of all other fees relates to
contracts that PwC had with entities prior to their acquisition by Gannett.
These contracts have since been or will be terminated by Gannett.
In connection with its activities, the Audit Committee has advised the
Board as follows:
The Audit Committee met with management, the Company's internal auditors
and representatives of PwC in connection with its review of the Company's
audited financial statements for the year ended December 30, 2001. Based on such
review and discussion, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Form 10-K and
the Board has done so.
The Audit Committee of the Board:
Karen Hastie Williams
H. Jesse Arnelle
Stephen P. Munn
Samuel J. Palmisano
16
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS
The Company's independent auditors are PricewaterhouseCoopers, independent
accountants. At the Annual Meeting, the shareholders will vote on a proposal to
elect independent auditors for the Company's fiscal year ending December 29,
2002. The Audit Committee of the Board has recommended that
PricewaterhouseCoopers be re-elected as independent auditors for 2002. The Board
unanimously recommends that shareholders vote FOR this proposal. Proxies
solicited by the Board will be voted FOR PricewaterhouseCoopers unless otherwise
indicated. Representatives of PricewaterhouseCoopers will be present at the
Annual Meeting to make a statement, if they wish, and to respond to appropriate
questions from shareholders.
SHAREHOLDER PROPOSAL
The Company has received the following shareholder proposal. The Board of
Directors recommends a vote AGAINST this proposal, and your proxy will be so
voted unless you specify otherwise.
PROPOSAL 3--EEO REPORTING AND AMERICAN INDIANS
Trinity Health, 34605 Twelve Mile Road, Farmington Hills, Michigan
48331-3221, beneficial owner of 2,800 shares of Gannett Common Stock, has
notified the Company that it intends to present the following proposal for
consideration at the meeting. Other shareholders co-sponsoring this proposal
are: The Charitable Trust of the Sisters of Mercy Regional Community of Detroit,
29000 Eleven Mile Road, Farmington Hills, Michigan 48336, beneficial owner of
900 shares of Gannett Common Stock; Sisters of The Holy Names of Jesus & Mary,
2911 West Fort Wright Drive, Spokane, Washington 99224, beneficial owner of
2,000 shares of Gannett Common Stock; and Catholic Healthcare West, 1700
Montgomery Street, Suite 300, San Francisco, CA 94111-1024, beneficial owner of
27,900 shares of Gannett Common Stock.
RESOLVED: The company prepare at reasonable cost a report, omitting where
appropriate confidential information, that includes the following:
1. A report shall include the EEO-1 report in the standard federal
government categories according to their gender and races in each
of the nine major EEOC defined job categories for the previous
three years.
2. A description of how the company is working to increase its
business with female and minority suppliers and service providers.
3. Report any federal audit, Corporate Management Review, and Letter
of Compliance with corrective measures enacted to protect the
company's government contracts and legal penalties.
Statement by Shareholder in Support of the Resolution
Equal Employment Opportunity is a key issue for many shareholders. The 1995
bipartisan Glass Ceiling Commission study explains that a positive diversity
record has a positive impact on the bottom line. While women and minorities
comprise 57 percent of the U.S. workforce the Commission found that they
represent only 3 percent of executive management positions. By far the most
vulnerable and most excluded from corporate diversity initiatives are American
Indians.
Corporations have discontinued discriminating images and names like Black
Sambo and Frito Bandito while similar discriminatory images and names against
American Indians, like "Redskins" and "chief wahoo," remain in use. "Redskin"
originated from 1800s businessmen who coined the term from their dealing with
animal skins (deerskin and bearskin) and "red" from the dried blood of
17
the scalps of Indian men, women and children. Businesses used actual heads of
Indian men, women and children or images and names to attract their customers.
Every major American Indian organization including the National Congress of
American Indians, National Indian Education Association and Society of American
Indian Psychiatrists has called for an end to American Indian negative
images/names.
Workplace discrimination has created a significant burden for shareholders
because of the high cost of litigation, potential loss of government contracts,
and the financial consequences of a damaged corporate image resulting from
discrimination complaints. For example:
1) In 1996 Texaco settled the largest racial discrimination lawsuit in
U.S. history, costing a reported $170 million to the company and
stockholders. Texaco's public image was tarnished and the company
faced a consumer boycott.
2) In 1997 Denny's reported it was still trying to win back its
minority customers, dating back to the 1992 discrimination
complaints against Denny's.
3) A U.S. Patent and Trademark lawsuit by American Indians resulted in
the Washington football team losing nine corporate patents because
of the offensive name and images.
4) Chicago area American Indian firemen won a 1998 discrimination case
because six supervisors failed to stop offensive negative names and
images about American Indians in the workplace.
5) The Los Angeles School district, largest in the country, banned
derogatory consumer products, names and images of American Indians
from the school system.
We believe negative images and names of American Indians are contrary to
corporate business interests and create a negative social, educational and
working environment for Indian and non-Indian people.
Statement by the Board of Directors Against the Resolution
Your Board of Directors believes that the Company's diversity efforts are
exemplary and that the actions outlined in this proposal are unnecessary. As you
may recall, this same proposal was included in the Company's proxy statement
each of the last two years, and it was overwhelmingly defeated both times. More
than 8 out of 10 shares voting on this proposal during the last two years voted
against it.
We agree with the shareholder proponent that a positive diversity record
has a positive impact on a company's bottom line. The Company's efforts in
achieving a diverse workforce have been recognized by many, including Fortune,
which has named the Company one of the 50 Best Companies for Asians, Blacks and
Hispanics, and Working Mother magazine, which has included Gannett on its list
of the 100 Best Companies for Working Mothers during all 15 years of this
survey.
With respect to the specific diversity-related actions recommended by the
shareholder proponent:
1. The Company continues to file annual EEO-1 reports on the gender
and race of Company employees with Federal agencies.
2. The Company, through its purchasing subsidiary, Gannett Supply
Corporation, continues to encourage and monitor the efforts of the
Company's operating units to use female and minority suppliers. In
fact, in 2001, the Company purchased goods and services from over
25,000 female- and minority-owned suppliers.
3. Those operating units of the Company that have contracts with the
federal government are obligated to adhere to the applicable
federal compliance regulations.
18
In light of the foregoing, your Board believes that the actions proposed by
the shareholder proponent remain unnecessary and recommends that shareholders
vote against this proposal.
The affirmative vote of a majority of the shares present in person or by
proxy and entitled to vote on the shareholder proposal at the meeting will
constitute approval of such proposal. Proxies solicited by the Board of
Directors will be voted AGAINST the shareholder proposal unless otherwise
indicated. If a shareholder, present in person or by proxy, abstains from
voting, the shareholder's shares will not be voted. An abstention from voting
has the same legal effect as a vote "against" a proposal. If a shareholder holds
shares in a broker's account and has given specific voting instructions, the
shares will be voted in accordance with those instructions. If no voting
instructions are given, the shareholder's shares will not be voted with respect
to the proposal and will not be counted in determining the number of shares
entitled to vote on the proposal.
PRINCIPAL HOLDERS OF COMMON STOCK
As of March 8, 2002, the only person or group known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of Gannett Common
Stock was Wellington Management Company, LLP, 75 State Street, Boston,
Massachusetts 02109. As of December 31, 2001, Wellington Management Company, LLP
exercised investment discretion over various institutional accounts that held
15,374,117 shares of Gannett Common Stock, which then constituted 5.8% of the
total outstanding shares. Wellington Management Company, LLP holds shared power
to dispose of all of these shares, shared power to vote 10,877,579 of these
shares and no voting power with respect to the remainder of the shares.
In February 2002, Wellington Management Company, LLP filed a report with
the Securities and Exchange Commission indicating that the shares were held
solely for investment purposes in the ordinary course of business and not for
the purpose or effect of changing or influencing control of the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board does not intend to
present any matter for action at the Annual Meeting other than as set forth in
the Notice of Annual Meeting. If any other matters properly come before the
meeting, it is intended that the holders of the proxies will act in accordance
with their best judgment.
To be eligible for inclusion in the proxy materials for the Company's 2003
Annual Meeting, shareholder proposals must be received at the Company's
principal executive offices by November 22, 2002. A shareholder who wishes to
present a proposal at the Company's 2003 Annual Meeting, but who does not
request that the Company solicit proxies for the proposal, must submit the
proposal to the Company's principal executive offices by February 5, 2003.
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by mail, certain of the officers and employees of
the Company, without extra compensation, may solicit proxies personally, by
telephone or other means. The Company also will request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting materials to the
beneficial owners of stock held of record and will reimburse them for forwarding
the materials. In addition, Georgeson Shareholder Communications, Inc., New
York, New York, has been retained to aid in the solicitation of proxies at a fee
of $15,000, plus out of pocket expenses.
19
Copies of the 2001 Annual Report have been mailed to shareholders.
Shareholders who hold their shares directly with the Company and who previously
have elected via householding procedures designated by the Securities and
Exchange Commission not to receive an annual report or proxy statement for a
specific account may request that the Company mail its 2001 Annual Report and
proxy statement to that account by writing to the Secretary, Gannett Co., Inc.,
7950 Jones Branch Drive, McLean, Virginia 22107 or by calling the Secretary at
(703) 854-6000.
March 22, 2002
20
GANNETT CO., INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- MAY 7, 2002
The undersigned hereby appoints Douglas H. McCorkindale, Larry F. Miller
and Thomas L. Chapple or any of them, attorneys and proxies each with power
of substitution to represent the undersigned at the Annual Meeting of
Shareholders of the Company to be held on May 7, 2002 and at any adjournment or
adjournments thereof, with all the power that the undersigned would possess if
personally present, and to vote all shares of stock that the undersigned may be
entitled to vote at said meeting, as designated on the reverse, and in
accordance with their best judgment in connection with such other business as
may come before the meeting.
PLEASE CAST YOUR VOTES ON THE REVERSE SIDE, BY TELEPHONE OR ONLINE AS
DESCRIBED ON THE REVERSE SIDE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3. TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS, JUST SIGN THE REVERSE SIDE; NO BOXES NEED TO BE
CHECKED. UNLESS MARKED OTHERWISE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS.
---------------
SEE REVERSE
SIDE
---------------
---------------------
COMPANY #
CONTROL #
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VOTING INSTRUCTIONS FOR GANNETT CO., INC.'S
2002 ANNUAL MEETING OF SHAREHOLDERS
Gannett Co., Inc. shareholders may vote their shares for matters to be covered
at the Company's 2002 Annual Meeting of Shareholders using a toll-free telephone
number, via the Internet or using the attached proxy card. Below are the voting
instructions for all three options.
VOTE BY PHONE -- 1-800-240-6326
Use any touch tone telephone to vote your proxy at any time 24 hours a day, 7
days a week, until 10:00 a.m. on May 6, 2002. Have your proxy card in hand when
you call. You will be prompted to enter the 3-digit Company Number and your
7-digit Control Number which are located above, and then to follow the simple
voting instructions. If you would like to attend the meeting, you will have the
opportunity to request a ticket at the end of the telephone call.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/GCI/
Use the Internet to vote your shares at any time 24 hours a day, 7 days a week,
until 10:00 a.m. on May 6, 2002. Have your proxy card in hand. You will be
prompted to enter the 3-digit Company Number and your 7-digit Control Number
which are located above, and then to follow the simple voting instructions. You
will have the option to access all future materials via the Internet. If you
would like to attend the meeting, you can request a ticket online.
VOTE BY MAIL
Mark, sign and date the attached proxy card and return it in the enclosed
postage-paid envelope.
IF YOU VOTE BY PHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
THANK YOU FOR VOTING.
\/ Please detach here \/
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS: Nominees are: [ ] VOTE FOR all nominees [ ] VOTE WITHHELD
01 Meredith A. Brokaw 02 Donna E. Shalala except those I have from all nominees
listed below
(Instructions: To withhold authority to vote for any individual nominee, -----------------------------------------------
write the number(s) in the box provided to the right.)
-----------------------------------------------
2. PROPOSAL TO ELECT PricewaterhouseCoopers as the Company's Auditors. [ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.
3. SHAREHOLDER PROPOSAL concerning EEO Reporting and American Indians. [ ] FOR [ ] AGAINST [ ] ABSTAIN
THE PROXIES are authorized to vote in their discretion upon such other business, if any, as may properly come before the meeting.
Address Change? Mark Box [ ] Indicate changes below.
Date
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SIGNATURE(s) IN BOX
Please sign EXACTLY as name appears at the left.
Joint owners each should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full related title.