Washington, D.C. 20549

SCHEDULE 14A INFORMATION

 

THE E. W. SCRIPPS COMPANY

 

Scripps Center
312 Walnut Street
Cincinnati, Ohio 45202

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

TO BE HELD MAY 13, 2010

 

TO THE SHAREHOLDERS OF THE E. W. SCRIPPS COMPANY

 

The Annual Meeting of the Shareholders of The E. W. Scripps Company (the “Company”) will be held at the Queen City Club, 331 East Fourth Street, Cincinnati, Ohio, on Thursday, May 13, 2010, at 10:00 a.m., local time, for the following purposes:

 

1. to elect directors;

 

2. to adopt The E. W. Scripps Company’s 2010 Long-Term Incentive Plan; and

 

3. to transact such other business as may properly come before the meeting.

 

The board of directors has fixed the close of business on March 19, 2010, as the record date for the determination of shareholders who are entitled to notice of and to vote at the meeting and any adjournment thereof.

 

If you plan to attend the meeting and need special assistance because of a disability, please contact the secretary’s office at secretary@scripps.com.

 

We are furnishing our proxy materials to you under Securities and Exchange Commission rules that allow companies to deliver proxy materials to their shareholders on the Internet. On or about March 24, 2010, you were provided with a Notice of Internet Availability of Proxy Materials (“Notice”) and provided access to our proxy materials over the Internet. The proxy materials include the 2009 Annual Report to Shareholders and the Proxy Statement.

 

We encourage you to attend the Annual Meeting. However, it is important that your shares be represented whether or not you are personally able to attend. Even if you plan to attend the Annual Meeting, please vote as instructed on the Notice, via the internet or the telephone as promptly as possible to ensure that your vote is recorded. Alternatively, you may follow the procedures outlined in the Notice to request a paper proxy card to submit your vote by mail. If you attend the meeting and your shares are registered in your name, you may withdraw your proxy at that time and vote your shares in person.

 

Your proxy is being solicited by the board of directors.

 

Mary Denise Kuprionis, Esq.
Vice President, Secretary,
Chief Ethics & Compliance Officer

 

March 24, 2010

 

 

The E. W. Scripps Company

 

312 Walnut Street

Cincinnati, Ohio 45202

 

 

PROXY STATEMENT

 

2010 ANNUAL MEETING
MAY 13, 2010

 

This Proxy Statement is being furnished in connection with the solicitation of proxies by the board of directors of The E. W. Scripps Company, an Ohio corporation (the “Company”), for use at the Company’s Annual Meeting of Shareholders (the “Annual Meeting”) which will be held on Thursday, May 13, 2010, at the Queen City Club, 331 East Fourth Street, Cincinnati, Ohio, at 10:00 a.m. local time.

 

The close of business on March 19, 2010, has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the meeting.

 

INTERNET AVAILABILITY OF PROXY MATERIALS

 

We are furnishing proxy materials to our shareholders primarily via the Internet under rules adopted by the U.S. Securities and Exchange Commission, instead of mailing printed copies of those materials to each shareholder. On March 24, 2010, we mailed to our shareholders (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our Proxy Statement and our Annual Report to Shareholders. The Notice of Internet Availability of Proxy Materials also instructs you on how to access your proxy card to vote via the Internet or by telephone.

 

This process is designed to expedite shareholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources. If you would prefer to continue to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.

 

VOTING PROCEDURES

 

On March 19, 2010, the Company had outstanding 44,876,258 Class A Common Shares, $.01 par value per share (“Class A Common Shares”), and 11,932,735 Common Voting Shares, $.01 par value per share (“Common Voting Shares”). Holders of Class A Common Shares are entitled to elect the greater of three or one-third of the directors of the Company but are not entitled to vote on any other matters except as required by Ohio law. Holders of Common Voting Shares are entitled to elect all remaining directors and to vote on all other matters requiring a vote of shareholders. Each Class A Common Share and Common Voting Share is entitled to one vote upon matters on which such class of shares is entitled to vote.

 

SOLICITATION OF PROXIES

 

The solicitation of proxies is made by and on behalf of the board of directors. The Company will pay the cost of the solicitation of proxies, including the cost of printing and mailing proxy materials. In addition to the solicitation of proxies by mail, solicitation may be made by directors, officers and other employees of the Company by personal interview, telephone or facsimile. No additional compensation will be paid to such persons for such solicitation. The Company will reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation materials to beneficial owners of shares. The Company has retained Georgeson Inc., at an estimated cost of $2,000, to assist the Company in the solicitation of proxies from brokers, nominees, institutions and individuals.

 

PROPOSAL 1

 

Election of Directors

 

A board of nine directors is to be elected, three by the holders of Class A Common Shares voting separately as a class and six by the holders of Common Voting Shares voting separately as a class. The nominating & governance committee recommended to the board of directors each of the nominees set forth below. In the election, the nominees receiving the greatest number of votes will be elected. Each director’s term lasts until the 2011 Annual Meeting of Shareholders.

 

Each proxy for Class A Common Shares executed and returned by a holder of such shares will be voted for the election of the three directors hereinafter shown as nominees for such class of shares, unless otherwise indicated on such proxy. Each proxy for Common Voting Shares executed and returned by a holder of such shares will be voted for the election of the six directors hereinafter shown as nominees for such class of shares, unless otherwise indicated on such proxy. Although the board of directors does not contemplate that any of the nominees hereinafter named will be unavailable for election, in the event that any such nominee is unable to serve, the proxies will be voted for the remaining nominees and for such other person(s), if any, as the board may propose.

 

REPORT ON THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS

 

The following table sets forth certain information as to each of the nominees for election to the board of directors.

 

 

 

REPORT ON THE SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

The following table sets forth certain information with respect to persons known to management to be the beneficial owners, as of December 31, 2009, of more than 5 percent of the Company’s outstanding Class A Common Shares or Common Voting Shares. Unless otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares shown therein as being beneficially owned by them.

 

 

 

REPORT ON THE SECURITY OWNERSHIP OF MANAGEMENT

 

The following information is set forth with respect to the Company’s Class A Common Shares and Common Voting Shares beneficially owned as of January 31, 2010, by each director and each nominee for election as a director of the Company, by each named executive, and by all directors and executive officers of the Company as a group. Unless otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares shown therein as being beneficially owned by them. Also included in the table are shares owned by The Edward W. Scripps Trust, the trustees of which are directors of the Company.

 

 

 

 

REPORT ON THE BOARD OF DIRECTORS AND ITS COMMITTEES

 

2009 Board Meetings

 

During 2009, the board held four regularly scheduled meetings and two special meetings. All directors attended at least 75 percent of the meetings of the board and of the committees on which they served during the year ended December 31, 2009.

 

Executive Sessions of Directors

 

Executive sessions of nonmanagement directors are held regularly. The director who presides at these meetings is the chair of the board of directors or another director selected by the board at the time of such meeting.

 

Committee Charters

 

The charters of the audit, compensation and nominating & governance committees are available for review on the Company’s Web site at www.scripps.com by first clicking on “Shareholders,” and then on, “Corporate Governance,” and then on “Highlights.” Copies are available in print to any shareholder who requests a copy by contacting the Company’s secretary at secretary@scripps.com or by mail at 312 Walnut Street, Suite 2800, Cincinnati, Ohio, 45202.

 

Committees of the Board of Directors

 

Executive Committee.  Nackey E. Scagliotti (chair), Richard A. Boehne and John W. Hayden are the members of the executive committee. This committee may exercise all of the powers of the board in the management of the business and affairs of the Company between board meetings except the power to fill vacancies on the board or its committees. The executive committee meets only as necessary. During 2009, it did not hold any meetings.

 

Audit Committee.  J. Marvin Quin (chair), John W. Hayden and Kim Williams are the members of the audit committee. The purpose of the committee is to assist the board in fulfilling its oversight responsibility relating to (1) the integrity of the company’s financial statements and financial reporting process and the company’s systems of internal accounting and financial controls; (2) the performance of the internal audit services function; (3) the annual independent audit of the Company’s financial statements, the engagement of the independent auditors and the evaluation of the independent auditors’ qualifications, independence, performance and fees; (4) the compliance by the company with legal and regulatory requirements, including the Company’s disclosure controls and procedures; (5) the evaluation of enterprise risk issues; and (6) the fulfillment of all other responsibilities as outlined in its charter. The internal and independent auditors have unrestricted access to the audit committee. The committee meets privately with each of the independent auditors, the internal auditors and management. During 2009, the audit committee held seven meetings.

 

Compensation Committee.  Roger L. Ogden (chair), John H. Burlingame and Kim Williams are the members of the compensation committee. The committee is appointed by the board of directors to discharge the board’s responsibilities relating to compensation of the company’s directors and officers. The committee reviews and approves the company’s goals and objectives relevant to compensation of senior management and evaluates the performance of senior management in light of those goals and objectives. With respect to the senior managers, the committee establishes base compensation levels, the

terms of incentive compensation plans and equity-based plans and post-service arrangements. The committee approves all awards under the Company’s Long-Term Incentive Plan and approves awards under the Company’s Executive Annual Incentive Plan. The committee reviews all of the components of the chief executive officer’s compensation, including goals and objectives and makes recommendations to the board of directors.

 

With respect to any funded employee benefit plan covering employees of the Company, the Committee has the definitive authority to appoint and terminate the named fiduciary or named fiduciaries of such plan(s). On an annual basis, the committee reviews the operation of the Company’s compensation program to evaluate its coordination and execution and reviews any management perquisites. The committee reviews succession planning relating to positions held by senior officers of the Company and reviews director compensation and makes recommendations with respect thereto to the board of directors. The committee has the authority to engage outside consultants to assist in determining appropriate compensation levels for the chief executive officer, other senior managers or directors. In 2009, the committee did not engage any consultants but received survey data from a consultant engaged by management. The committee is also responsible for producing an annual report for inclusion in the Company’s proxy statement and reviewing and approving the Compensation Discussion and Analysis and related compensation disclosures included in the Company’s proxy statement. During 2009, the compensation committee held six meetings.

 

Nominating & Governance Committee.  John W. Hayden (chair), Mary McCabe Peirce, Nackey E. Scagliotti and Paul K. Scripps are the members of the nominating & governance committee. The purpose of the committee is (1) to assist the board by identifying individuals qualified to become board members and to recommend director nominees to the board; (2) to recommend to the board corporate governance principles that might be applicable to the Company; (3) to lead the board in its annual review of the board’s performance; and (4) to recommend to the board nominees for each committee of the board. During 2009, the nominating & governance committee held three meetings.

 

CORPORATE GOVERNANCE

 

The board of directors is committed to good corporate governance, good business practices and transparency in financial reporting. The nominating & governance committee annually reviews the Company’s corporate governance principles, a copy of which is available on the Company’s Web site by first clicking on “Shareholders,” and then on, “Corporate Governance,” and then on “Highlights.” Copies are available in print to any shareholder who requests a copy by contacting the Company’s secretary at secretary@scripps.com or at 312 Walnut Street, Suite 2800, Cincinnati, Ohio, 45202.

 

Board Leadership

 

The board of directors has not combined the positions of its principal executive officer and board chairman and believes this leadership structure is appropriate and allows it to fulfill its duties effectively. The separation of duties allows the board to benefit from the current chair’s industry experience while allowing the CEO to devote undivided attention to a business that is undergoing dramatic changes.

 

Charitable Contributions

 

The Company has not made any charitable contributions, where the amount has exceeded $1 million or two percent of such charity’s consolidated gross revenues, to any charitable organization of which a director is an executive officer.

 

Code of Ethics

 

The Company demonstrates its commitment to operate at the highest ethical standards by enforcing the principles in its Code of Ethics which is applicable to all employees. The Company’s chief ethics and compliance officer is responsible for implementation and oversight of the ethics program. Additionally, the Company has in place a Code of Business Conduct and Ethics for the Chief Executive Officer and the

Senior Financial and Accounting Officers. It is the responsibility of the audit committee and the chief financial officer to make sure that this policy is operative and has effective reporting and enforcement mechanisms. Both the Code of Business Conduct and Ethics for the Chief Executive Officer and Senior Financial Officers and the Code of Ethics are available for review on the Company’s Web site and to any shareholder who requests a printed copy.

 

The Company believes it has an obligation to provide employees with the guidance and support needed to ensure that the best, most ethical choices are made at work. To support this commitment, the Company established a means for employees to submit confidential and anonymous reports of suspected or actual violations of the Company’s Code of Ethics relating, among other things, to: accounting and auditing matters; antitrust activity; confidentiality and misappropriation; conflict of interest; discrimination or harassment; diverting of product or business activity; embezzlement; employee relations; falsification of contracts, reports or records; gifts or entertainment; improper supplier or contractor activity; leadership or management issues; securities violations; sexual harassment; substance abuse; theft; or unsafe working conditions; violence or threat. To submit a report, an employee may call a toll-free number that is answered by a trained professional of EthicsPoint, an independent firm. This number (888-397-4911) is operational 24 hours a day, seven days a week. Employees may also raise questions online through the Internet (www.ethicspoint.com). The Company also provides employees a direct phone number to contact its chief ethics officer.

 

Communications with Directors

 

Shareholders and other interested parties wishing to communicate with the board of directors may do so by addressing letters to the secretary of the Company at secretary@scripps.com or by mail at 312 Walnut Street, Suite 2800, Cincinnati, Ohio, 45202. The board has instructed the secretary to review all communications so received (via e-mail or regular mail), and to exercise her discretion not to forward to the directors correspondence that is not germane to the business affairs of the Company. Correspondence not forwarded, will be retained for one year and any director may request the secretary to forward any and all such communications to the directors.

 

Director Attendance at Annual Meetings of Shareholders

 

The Company does not have a policy with regard to attendance by board members at the Annual Meeting of Shareholders. Ms. Scagliotti, Mr. Hayden and Mr. Boehne attended the Company’s 2009 annual meeting of shareholders.

 

Director Education

 

New directors attend a training session that introduces them to the Company’s operations and to the members of management. Thereafter, directors are informed on a regular basis of various director educational programs offered by governance and director organizations. The Company pays for the continuing education of its directors. The director orientation policy is reviewed by the nominating & governance committee annually.

 

Director Independence

 

The Company has determined that the following directors are independent under the standards established by the NYSE: John H. Burlingame, John W. Hayden, Roger L. Ogden, Mary McCabe Peirce, J. Marvin Quin, Nackey E. Scagliotti, Paul K. Scripps, and Kim Williams. Richard A. Boehne is the president and chief executive officer of the company and is the only non-independent member of the board of directors. All of the members of its nominating & corporate governance and compensation committee are independent under such standards.

 

Director Independence — Audit Committee

 

The board of directors of the Company has determined that none of the current members of the audit committee has any relationship with the Company that could interfere with his or her exercise of

independence from management and the Company. Each of the members satisfies the definitions of independence set forth in the rules promulgated under the Sarbanes-Oxley Act and in the listing standards of the New York Stock Exchange. The board determined that each member of the committee is financially literate as defined under the current NYSE rules and that Mr. Quin is an audit committee financial expert as defined in the SEC rules adopted under the Sarbanes-Oxley Act.

 

Director Independence — Controlled Company Status

 

The New York Stock Exchange requires listed companies to have a majority of independent directors on their boards and to ensure that their audit committee, compensation committee and governance committee are composed of a majority of independent directors as well. A company that qualifies as a “controlled company” does not have to comply with these independence rules so long as it discloses to shareholders that the company qualifies as a “controlled company” and is relying on this exemption in not having a majority of independent directors on the board or a majority of independent directors on any of the aforementioned committees. A “controlled company” is a listed company of which more than 50 percent of the voting power is held by an individual, a group, or another company. The Edward W. Scripps Trust holds a majority of the Company’s outstanding Common Voting Shares, and as such the Company qualifies as a “controlled company” and may rely on the NYSE exemption. The Company is not relying at present on that exemption.

 

Director — Nominations

 

The nominating & governance committee will review any candidate recommended by the shareholders of the Company in light of the committee’s criteria for selection of new directors. If a shareholder wishes to recommend a candidate, he or she should send the recommendation, with a description of the candidate’s qualifications, to: Chair, Nominating & Governance Committee, c/o Ms. Mary Denise Kuprionis, The E. W. Scripps Company, 312 Walnut Street, Suite 2800, Cincinnati, Ohio 45202 or at secretary@scripps.com. In the past, the committee has hired an independent consultant to assist with the identification and evaluation of director nominees and may do so in the future.

 

Director Qualifications and Diversity

 

When selecting new director nominees, the nominating & governance committee considers requirements of applicable law and listing standards, as well as the director qualification standards highlighted in the Company’s corporate governance principles. The committee is responsible for reviewing with the board the requisite skills and characteristics of new board candidates as well as the diversity and composition of the board as a whole. A person considered for nomination to the board must be a person of high integrity. Other factors considered are independence, age, skills, and experience in the context of the needs of the board. The nominating & governance committee makes recommendations to the board regarding the selection of director nominees.

 

For each director nominee at the Company’s 2010 annual meeting of shareholders, the board considered each of the factors highlighted in the preceding paragraph, and in the descriptions of the nominees’ biographical information and work experience on pages 3 & 4, and determined that, if elected, the nominees would enable the board as a whole to perform its duties in an efficient and effective manner. Among other things, all of the nominees bring integrity and good business judgment to board discussions. More specifically, Mr. Ogden, Ms. Williams, Mr. Boehne, Ms. Peirce, Ms. Scagliotti and Mr. Scripps bring a working knowledge of the industry and/or have direct newspaper or television experience, Mr. Burlingame has legal experience, Mr. Hayden is an active chief executive officer and Mr. Quin brings financial expertise to the discussions.

 

Director Service on Other Audit Committees

 

None of the Company’s directors currently serves on the audit committees of more than three public companies.

NYSE Annual Written Affirmation

 

On May 26, 2009, the Company filed with the New York Stock Exchange the Annual Written Affirmation and the CEO Certification required under NYSE rules.

 

Risk Oversight — the Board’s Role

 

Risk oversight is a key responsibility of the board of directors. The audit committee of the board of directors manages this risk oversight function and monitors management’s guidelines and policies which assess and manage the Company’s potential risk exposures. Because this is a dynamic process, the company’s governance, enterprise risk management, compliance and ethics (“GRC”) committee reports quarterly to the audit committee and the GRC written report is included with the board’s quarterly meeting materials. The GRC committee is chaired by the Company’s chief ethics and compliance officer and members are division leaders and leaders of key function areas such as finance, human resources and information technology.

 

AUDIT COMMITTEE MATTERS

 

Responsibilities

 

The audit committee is comprised solely of independent directors and, among other things, is responsible for the following reviews, approvals and processes. Additionally, the audit committee members have reviewed the Company’s Code of Ethics and have established guidelines for receiving and reviewing reports on issues raised by employees using the Company’s HelpLine.

 

 

In discharging its oversight responsibility as to the audit process, the audit committee reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2009, with the Company’s management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The committee also discussed with the Company’s internal auditor, and with Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm for the year ended December 31, 2009, the overall scope and plan for their respective audits. The committee meets with the internal auditor and Deloitte, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

 

Independence of the External Auditors

 

The committee has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the committee subject to certain restrictions. The policy sets out the specific services pre-approved by the committee and the applicable limitations, while ensuring the independence of the independent auditors to audit the Company’s financial statements is not impaired.

Service Fees Paid to the Independent Registered Public Accounting Firm

 

The following table sets forth fees for all professional services rendered by Deloitte to the Company for the years ended December 31, 2009 and 2008.

 

 

Services Provided by Deloitte

 

All services provided by Deloitte are permissible under applicable laws and regulations. The Company has adopted policies and procedures for pre-approval of services by Deloitte. The fees paid to Deloitte shown in the table above were all pre-approved in accordance with these procedures and include:

 

Audit Fees — These are fees for professional services performed by Deloitte for the audit of the Company and certain subsidiary companies, review of financial statements included in the Company’s 10-Q filings, and services that are normally provided in connection with statutory and regulatory filings or engagements. For 2008, the amounts also include audit fees associated with the Company’s separation of its networks and interactive media divisions into a separately traded company and the filing of a Registration Statement on Form 10 with the Securities and Exchange Commission.

 

Audit-Related Fees — These are fees for assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review of the Company’s financial statements. This includes: employee benefit and compensation plan audits paid by the Company; due diligence related to mergers and acquisitions; other attestations by Deloitte, including those that are required by statute, regulation or contract; and consulting on financial accounting/reporting standards and controls.

 

Tax Fees — These are fees for professional services performed by Deloitte with respect to tax compliance and tax returns. This includes review of original and amended tax returns for the Company and its consolidated subsidiaries; refund claims, payment planning/tax audit assistance; and tax work stemming from “Audit-Related” items.

 

These services are actively monitored (both spending level and work content) by the Audit Committee to maintain the appropriate objectivity and independence in Deloitte’s core work, which is the audit of the Company’s consolidated financial statements. The Committee also concluded that Deloitte’s provision of audit and non-audit services to the Company and its affiliates is compatible with Deloitte’s independence.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

 

In connection with the financial statements for the fiscal year ended December 31, 2009, the Audit Committee has:

 

(1) reviewed and discussed the audited financial statements with management; and

 

 

Based upon these reviews and discussions, the audit committee approved, and the board of directors ratified, the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, with the United States Securities and Exchange Commission.

 

The Audit Committee

 

J. Marvin Quin, Chair
John W. Hayden
Kim Williams

 

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

 

The compensation committee of the Company’s board of directors (collectively, the “Committee”) has submitted the following report for inclusion in this Proxy Statement:

 

Our Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

The foregoing report is provided by the following directors, who constitute the Committee:

 

The Compensation Committee

 

Roger L. Ogden, Chair
John H. Burlingame
Kim Williams

 

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis explains the Company’s 2009 compensation program for Richard A. Boehne, our President and Chief Executive Officer; Timothy E. Stautberg, our Senior Vice President/Chief Financial Officer and Treasurer; Mark G. Contreras, our Senior Vice President/Newspapers; William Appleton, our Senior Vice President/General Counsel; and Lisa A. Knutson, our Senior Vice President/Human Resources. We refer to these individuals as our named executive officers.

 

Overview

 

We made a series of difficult decisions in 2009 in order to maintain the Company’s financial flexibility and demonstrate management’s leadership in financial discipline during a very challenging economic environment. These decisions, made out of an abundance of caution, were intended to improve the cash flow generated by our media businesses in the face of declining advertising revenue. For example:

 

 

Finally, we adopted a so-called claw-back policy, under which an executive would forfeit certain incentive compensation in the event the executive’s misconduct caused us to restate our financial results.

 

Summary of Compensation Program

 

Objectives

 

The 2009 executive compensation program was designed to meet the following objectives that align with and support our strategic business goals:

 

 

Compensation Elements

 

The key elements of our executive compensation program were base salary, annual incentives, long-term incentives consisting of restricted stock/restricted stock units, and retirement benefits. The named executive officers also received certain perquisites, but these perquisites were not a key element of compensation. The chart below illustrates how each element of compensation fulfills our compensation objectives discussed above.

 

 

Use of Market Survey Data

 

We believe that each element of our compensation program should remain competitive in order to attract and retain key executive talent. To help determine the competitive market, the Committee has relied in the past on market compensation data for comparable executive positions within similarly-sized media companies.

 

Typically, the Committee reviews the market levels of compensation for the following components of our executives’ compensation: (i) base salary; (ii) total cash compensation, which is base salary plus annual incentive compensation; (iii) long-term incentive awards; and (iv) total direct compensation, which is total cash compensation plus long-term incentive awards. In 2009, however, the Compensation Committee used the market data to establish only long-term incentive awards — as base salary and annual incentives were reduced or eliminated in connection with our cost-cutting initiatives.

 

In November 2008, the Committee approved a new compensation peer group. The group consists of companies that operate in the broadcast television and/or newspaper industries and whose business models are similar to ours. The Company’s outside compensation consultant, along with our senior executives, reviewed a list of possible peer group members based on the Company’s current strategic direction, size and market for competitive talent. Senior executives, as well as the Chairman of the Committee, were interviewed independently to provide input on the possible peer group. Based on those interviews and the overall strategic direction of the Company, the initial peer group of 15 companies was selected. Two of these companies — GateHouse Media, Inc. and Hearst-Argyle Television, Inc. — have been removed from that initial list because they are no longer traded on an established securities market. The Committee believes that this new peer group is appropriate because: (i) the responsibilities of our executives correspond with the responsibilities of executives working in similar positions at the companies in this peer group and (ii) this peer group reasonably corresponds to the market for executive talent. The following table lists (in alphabetical order) the 13 companies included in the market survey

data that was used to establish the long-term incentive opportunities for our named executive officers in 2009:

 

•   A. H. Belo Corporation		•   The McClatchy Company
•   Belo Corp.		•   Media General, Inc.
•   Gannett Co., Inc.		•   Meredith Corporation
•   Gray Television, Inc.		•   The New York Times Company
•   Journal Communications, Inc.		•   Nexstar Broadcasting Group, Inc.
•   Lee Enterprises, Incorporated		•   Sinclair Broadcast Group, Inc.
•   LIN TV Group

 

Analysis of Each Compensation Element

 

Following is a brief summary of each element of the compensation program for our named executive officers.

 

Base Salary

 

We provide competitive base salaries to attract and retain key executive talent.

 

For 2009, as part of our cost-cutting initiative, we implemented a program to reduce the base salaries of our senior executives until business conditions improve. As a result, Mr. Boehne voluntarily agreed to reduce his base salary by 15% and the other named executive officers voluntarily agreed to reduce their base salaries by 10%. Moreover, our named executive officers voluntarily agreed in May 2009 to take an additional temporary base pay reduction equal to five days.

 

Given the continuing uncertain economic environment, the Compensation Committee did not make any base salary adjustments during the 2010 performance review of our named executive officers.

 

Annual Incentive

 

The Company typically maintains an annual incentive program, under which our named executive officers are eligible to receive annual cash payments based on the extent to which certain operational goals are achieved.

 

In February 2009, the Committee established the 2009 annual incentive program for our named executive officers. The 2009 program focused solely on individual strategic performance goals. These measures were intended to focus our named executive officers on our mid-term and long-term success and position the Company for the future even if short-term financial results were negatively impacted by current economic conditions.

 

In light of the Company’s cost-cutting initiatives, the target annual incentive opportunity for each named executive officer was reduced by 75% from 2008 levels. As a result, the 2009 target incentive opportunity for Mr. Boehne was 23.75% of his reduced base salary and the target incentive opportunity for each of the other named executive officers was 12.5% of his or her reduced base salary.

 

In May, at management’s suggestion, the Committee eliminated the 2009 annual incentive opportunity for the named executive officers. This difficult decision was made as part of a company-wide elimination of annual incentives to protect our financial health.

 

For 2010, the Company will establish an annual incentive program tied to a one-year free cash flow metric set above our free cash flow budget. No annual incentive will be awarded unless the cash flow metric is achieved. The payout is capped at 150% of the incentive opportunity.

 

Long-Term Incentives

 

The Company maintains the 1997 Long-Term Incentive Plan, which was most recently approved by our shareholders in 2008. In 2009, the Committee granted awards of time-based restricted stock units

under this plan to the named executive officers. The Committee believes that a competitive long-term incentive program is an important component of total compensation because:

 

 

Long-Term Incentive Opportunities

 

In February 2009, the Compensation Committee approved the target value of the equity award for each named executive officer based on his or her position and level of responsibility, and the historical equity grants. Decisions regarding long-term incentive grants were based on role, amount of impact and retention objectives. In general, the Committee attempted to target the long-term incentive opportunities of the named executive officers to the median levels of the proxy peer group. Not all of the positions had sufficient corresponding proxy peer group matches, so the Committee used the data for the remaining executive group to adjust for internal pay equity among the executives, and then increased the amount by approximately $50,000 per executive to compensate for the cancellation of the annual incentive that was achieved for the second half of 2008. The Committee also extended the vesting schedule an additional year to four years. The 2009 target value of the long-term incentive opportunities for our named executive officers was as follows:

 

 

The long-term incentive opportunity for each executive was converted into restricted stock units, which vest in equal installments on the first four anniversaries of the date of grant, provided that the executive remains employed with the Company or one of its subsidiaries on the applicable vesting dates. The Committee believed that these time-based restricted units would enhance our retention incentives during the economic downturn in light of the reduction of base salaries and annual incentive.

 

In 2010, the Company will convert the 2010 target value for each executive into a combination of 80% time-based restricted stock units and 20% performance-based restricted stock units with a one-year performance period tied to the Company-wide free cash flow budget. The value of the awards will be scaled back approximately 25% from 2009 levels to align our awards with the 2010 peer group market median levels. Vesting of the time-based restricted stock units will occur over a four-year time period and a similar vesting schedule applies to the performance based grant if the free cash flow budget is achieved.

 

Equity Grant Practices

 

The Compensation Committee typically grants annual equity awards at its February meeting. This meeting date is usually set two years in advance. The Committee has the discretion to delay the granting of equity compensation awards, depending on the timing of the release of material nonpublic information. For example, the Committee does not grant equity compensation awards in anticipation of the release of material nonpublic information. Similarly, the Company does not time the release of material nonpublic information based on equity award grant dates. As a result, although the Compensation Committee determined at its February 2009 meeting the value of the restricted stock units to be granted to executives, it delayed the actual grant date until after the release of the Company’s year-end results.

Additional Information

 

For more information on the equity awards granted to our named executive officers in 2009, please refer to the “Grants of Plan-Based Awards” table in this proxy statement. For information about the total number of equity awards outstanding as of the end of 2009 with respect to each named executive officer, please refer to the “Outstanding Equity Awards at Fiscal Year-End” tables of this proxy statement.

 

Incentive Compensation Recoupment Policy

 

In November 2009, the Board of Directors adopted an Incentive Compensation Recoupment Policy (or a so-called claw-back policy). Under this policy, each officer must repay, as directed by the Board of Directors, any annual incentive or other performance-based award received by him or her after November 16, 2009 if:

 

 

This policy supports the accuracy of our financial statements and aligns our executives’ interests with that of our shareholders over the long term.

 

Retirement Plans

 

The Company maintains a defined benefit pension plan and a 401(k) plan, which cover named executive officers along with substantially all other non-union employees of the Company and its subsidiaries.

 

In order to attract and retain key executive talent, the Committee believes that it is important to provide the executive officers, including named executive officers, with retirement benefits that are in addition to those generally provided to its employees. As a result:

 

 

In 2009, the Board of Directors approved the following changes to the Company’s retirement plans as part of an overall cost-savings strategy:

 

 

The Company has not set a firm timetable for reinstatement of a 401(k) match.

 

Health, Welfare and Other Personal Benefits

 

In addition to the principal compensation components described above, the named executive officers are entitled to participate in all health, welfare, fringe benefit and other arrangements generally available to other employees.

The Company may also, as considered reasonable and appropriate on a case-by-case basis, provide its officers, including its named executive officers, with limited additional perquisites and other personal benefits. For example, named executive officers are provided a financial planning benefit; but the tax gross-up for this benefit was eliminated in 2009. We also provide perquisites that facilitate involvement of executive officers in the business community by sponsoring membership in business clubs. Finally, the named executive officers are eligible for an annual executive physical. Typically, the majority of the cost associated with this benefit is covered under the established health care plans; however, if certain tests or procedures are not covered, the Company will pay the difference.

 

For more information about the perquisites provided in 2009 to each named executive officer, please refer to the “All Other Compensation” column of the Summary Compensation Table of this proxy statement.

 

Employment Agreements, Executive Severance Plan and Change in Control Plan

 

The Committee believes that severance protections convey the Company’s commitment to each named executive officer while offering flexibility for any potential changes in compensation or duties. Accordingly, the Company provides severance protections for named executive officers under an employment agreement (for Mr. Boehne only), the Executive Severance Plan and the Change in Control Plan.

 

Employment Agreements

 

Mr. Boehne currently is covered by an employment agreement, and Mr. Contreras was covered by an employment agreement until June 2009. The agreements were established in June 2006. Mr. Boehne’s agreement was revised in 2008 to reflect his promotion to CEO at the time of the spin-off of Scripps Networks Interactive, Inc. (SNI) and in 2009 to reflect the adjustments to base salary and the annual incentive opportunities described above.

 

Mr. Boehne is entitled to severance benefits under his employment agreement in the event of an involuntary termination of employment without “cause” or a termination for “good reason”, death or disability. The severance benefits are generally determined as if he continued to remain employed by the Company through the remainder of the term covered by his employment agreement, consistent with market practices.

 

Mr. Contreras’ contract expired in June 2009. Upon mutual agreement of Mr. Contreras and the Company, his contract was not extended, because the Company has established a policy of not providing contracts to executives other than the CEO. The Company instead provides standard severance benefits to all senior executives, other than the CEO, under the Executive Severance Plan and the Change in Control Plan described below.

 

Executive Severance Plan

 

Each of the named executive officers other than Mr. Boehne participates in the Executive Severance Plan, which was updated in connection with the spin-off transaction.

 

Upon an involuntary termination without “cause”, the covered executives are entitled to: (i) a pro-rated annual incentive, based on actual performance for the entire year, (ii) one times base salary and target annual incentive; (iii) accelerated vesting of Company equity awards (with options remaining outstanding for the remainder of their terms), and (iv) continued payment of monthly health care premiums for up to one year (subject to reduction if the participant becomes re-employed). The Company may amend or terminate the plan at any time, without notice or participant consent. The severance levels were established by the Committee in July 2008 and were reviewed by the Committee in May 2009.

Change in Control Plan

 

Each of the named executive officers is provided change in control protections under the Senior Executive Change in Control Plan.

 

Under this plan, a named executive officer would be entitled to certain severance benefits if a “change in control” were to occur and the Company terminated the executive’s employment without “cause” or the executive terminated his employment for “good reason” within a two-year period following the change in control. The severance levels were established by the Committee in June 2008 and were reviewed by the Committee in May 2009.

 

The Committee believes that the occurrence, or potential occurrence, of a change in control transaction will create uncertainty regarding the continued employment of our named executive officers. The Change in Control Plan allows our named executive officers to focus on the Company’s business and objectively evaluate any future proposals during potential change in control transactions without being distracted by potential job loss. It also enhances retention following a change in control, as the severance benefits are payable only if the executive incurs a qualifying termination within a certain period following a change in control, rather than merely as a result of the change in control.

 

All equity awards held by our named executive officers would immediately vest upon a change in control. Unlike the cash severance described above, the vesting is not contingent upon a qualifying termination within a certain period following a change in control. This “single trigger” is appropriate because the Company’s equity will change in the event of a change in control and the Committee believes our named executive officers should have the same opportunity to realize value in a change in control transaction as common shareholders.

 

Additional Information

 

Please refer to the “Potential Payments Upon Termination or Change in Control” section of this proxy statement for information regarding potential payments and benefits, if any, that each named executive officer is entitled to receive under his or her employment agreement, the Executive Severance Plan or in connection with a change in control.

Summary Compensation Table

 

The following Summary Compensation Table provides information regarding the compensation earned in 2007, 2008 and 2009 by our named executive officers.

 

 

 

										Matching
		Financial				Club				Charitable				Other				Matching
		Planning				Dues				Contributions				Income				Contribution				Total
Name		($)(i)				($)(ii)				($)(iii)				($)(iv)				($)(v)				($)
Mr. Boehne			15,000				6,356				0				2,512				4,473				28,341
Mr. Stautberg			10,000				2,056				2,500				115				2,368				17,039
Mr. Contreras			10,000				514				3,000				0				3,108				16,622
Mr. Appleton			10,000				2,056				1,375				75				0				13,506
Ms. Knutson			8,500				2,056				0				75				1,983				12,614

 

 

 

 

 

Employment Agreements

 

The Company maintains an employment agreement for Mr. Boehne and until June 2009, with Mr. Contreras. The employment agreements enhanced retention incentives for these executives and also protected the Company’s interests by imposing confidentiality, noncompetition, nonsolicitation and other restrictive covenants on the executives. Following is a brief summary of the employment agreements for Mr. Boehne and Mr. Contreras:

 

 

Please refer to the “Potential Payments Upon Termination or Change in Control” section of this proxy statement for information regarding potential payments and benefits, if any, that Mr. Boehne is entitled to receive under his employment agreement in connection with his termination of employment or a change in control, along with a brief description of the applicable non-competition, non-solicitation, confidentiality and other restrictions.

Grants of Plan-Based Awards

 

The following table sets forth information for each named executive officer regarding restricted stock unit awards granted during 2009.

 

Grants of Plan-Based Awards

 

 

 

 

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following tables set forth information for each named executive officer with respect to (i) each option to purchase stock that had not been exercised and remained outstanding as of December 31, 2009, and (ii) each award of restricted stock or restricted stock unit that had not vested and remained outstanding as of December 31, 2009.

 

In connection with the spin-off, all Company stock options and restricted shares held by individuals who remained employed by the Company (including the named executive officers) were adjusted as follows: (i) vested stock options were split 80% — 20% between SNI stock options and Company stock options, (ii) unvested stock options remained unvested Company stock options, and (iii) restricted shares were split between Company restricted shares and SNI restricted shares based on the 1-to-1 distribution ratio. In each case, the number of shares covered by each award and the exercise price of each stock option were adjusted to maintain the award’s economic value. All of the information in the following tables reflects the equitable adjustments to the number and type of shares and the exercise price that occurred in connection with the spin off and the related one-for-three reverse stock split.