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 12, 2011

 

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 12, 2011, at 10:00 a.m., local time, for the following purposes:

 

1. to elect directors;

 

2. to hold an advisory (non-binding) vote on executive compensation (a “say-on-pay vote”);

 

3. to hold an advisory (non-binding) vote on the frequency of say-on-pay votes; and

 

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

 

The board of directors has fixed the close of business on March 15, 2011, 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 29, 2011, 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 2010 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.

 

Julie L. McGehee, Esq.
Secretary and Vice President

 

March 29, 2011

 

 

The E. W. Scripps Company

 

312 Walnut Street

Cincinnati, Ohio 45202

 

 

PROXY STATEMENT

 

2011 ANNUAL MEETING
May 12, 2011

 

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 12, 2011, at the Queen City Club, 331 East Fourth Street, Cincinnati, Ohio, at 10:00 a.m. local time.

 

The close of business on March 15, 2011, 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 29, 2011, 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 15, 2011, the Company had outstanding 47,963,832 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.

 

To have a quorum necessary to conduct business at the meeting, it is necessary to have shares that represent (in person or by proxy) the holders (i) of a majority of our shares of Class A Common Shares outstanding on the record date, and (ii) of a majority of our shares of Common Voting Shares outstanding on the record date, which is the close of business on March 15, 2011. Shares represented in person or by proxy (including shares that abstain or do not vote with respect to a particular proposal to be voted upon and “broker non-votes” for proposals of routine matters) will be counted for the purpose of determining whether a quorum exists at the meeting for that proposal. If a quorum is not present, the meeting will be adjourned until a quorum is obtained.

 

If you are a shareholder of record (i.e., you directly hold your Common Shares through an account with our transfer agent, BNY Mellon Shareowner Services), you can vote your shares using one of the

following three methods. If you are a beneficial owner (i.e., you indirectly hold your Common Shares through a nominee such as a bank or broker), you can vote your shares using the methods provided by your nominee.

 

 

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

(Item 1 on the Proxy Card)

 

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 2012 Annual Meeting of Shareholders. Directors are elected by the shareholders for terms of one year and hold office until their successors are elected and qualify.

 

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.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES FOR WHICH YOU ARE ENTITLED TO VOTE FOR ELECTION AS A DIRECTOR.

 

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, 2010, 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, 2011, by each director and each nominee for election as a director of the Company, by each named executive officer, 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

 

2010 Board Meetings

 

During 2010, 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, 2010.

 

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 “Investor Relations,” 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 2010, 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 review of the Company’s 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 2010, 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. The committee has delegated to the chief executive officer the authority to grant equity awards having a value of $50,000 or less that are then reported to the committee at the next meeting.

 

With respect to any funded employee benefit plan covering employees of the Company subject to the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974, 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 2010, 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 2010, the compensation committee held five 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 2010, the nominating & governance committee held four 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 “Investor Relations,” 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 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 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 at www.scripps.com (click on “Investor Relations” and then on “Corporate Governance”) and to any shareholder who requests a printed copy from the Company’s secretary at secretary@scripps.com or at 312 Walnut Street, Suite 2800, Cincinnati, Ohio 45202.

 

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 2010 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 the nominating & corporate governance and compensation committees 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 entirely 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 not having audit, compensation, and nominating committees comprised entirely of independent directors. 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 consider 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. Julie McGehee, 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 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 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, gender, skills, and experience in the context of the needs of the board. The board does not have a formal diversity policy. The nominating & governance committee makes recommendations to the board regarding the selection of director nominees.

 

For each director nominee at the Company’s 2011 annual meeting of shareholders, the board considered each of the factors highlighted in the preceding paragraph, and the nominees’ biographical information and work experience on pages 4 & 5, 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 a retired 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.

 

Risk Oversight — the Board’s Role

 

Risk oversight is a key responsibility of the board of directors. The board considers risks such as business continuity planning, disaster recovery, and credit card industry data security. The audit committee of the board of directors is responsible for reviewing and discussing the Company’s risk assessment and risk management policies with management. Because this is a dynamic process, the company’s governance, enterprise risk management and compliance (“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 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, 2010, 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, 2010, 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 Audit 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, 2010 and 2009.

 

 

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.

 

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, 2010, the Audit Committee has:

 

 

Based upon these reviews and discussions, the audit committee recommended to the board that the audited financial statements be included in the Company’s annual report on Form 10-K for the year ended December 31, 2010 for filing with the Securities and Exchange Commission.

 

The Audit Committee

 

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

 

COMPENSATION COMMITTEE REPORT

 

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 2010 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; Brian G. Lawlor, our Senior Vice President/Television; and William Appleton, our Senior Vice President/General Counsel. We refer to these individuals as our named executive officers.

 

Overview

 

We made a series of difficult decisions over the past two years 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 are summarized below and were intended to improve the cash flow generated by our media businesses in the face of declining advertising revenue.

 

 

We also have adopted several programs that are intended to enhance our pay-for-performance culture and better align the interests of our named executive officers with those of our shareholders. For example:

 

 

In 2010, we improved our financial performance and exceeded our cash flow targets by more than 90%. As a result, our annual incentive plan paid out at the maximum level and performance-based restricted share units were earned. Our stock price increased by 46% in 2010, more than twice the peer group average.

Summary of Compensation Program

 

Objectives

 

The 2010 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 time-based and performance-based restricted share 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.

 

 

Variable Compensation

 

The Company’s long-term success is based on achieving key strategic, financial and operational goals from year to year. As a result, a part of the named executive officers’ compensation is “variable” or “at risk.” This means that a portion of their compensation is directly contingent upon achieving specific results that are essential to the Company’s long-term success and growth in stockholder value.

 

The variable compensation elements consist of:

 

 

 

As described above, the primary performance goal under our 2010 annual and long-term incentive plans is free cash flow, which, for purposes of the annual incentive opportunity, is defined as consolidated operating income (excluding the results from United Media) plus depreciation, amortization, restructuring costs and bonus accruals, and less capital expenditures. For purposes of the performance-based restricted shares, free cash flow is defined as operating income from continuing operations, plus depreciation, amortization and restructuring costs, and less capital expenditures and excluding extraordinary items. The value of our Company is based on free cash flows generated by the business over time. Since free cash flow is so vital to the success of our business moving forward, we felt that this was the most appropriate measure to use in our incentive compensation programs.

 

Risk Assessment

 

In consultation with the Compensation Committee, members of management from the company’s Human Resources, Legal and Risk Management groups assessed whether the Company’s compensation policies and practices encourage excessive or inappropriate risk taking by our employees, including employees other than our named executive officers. This assessment included a review of the risk characteristics of our business, our internal controls and related risk management programs, the design of our incentive plans and policies, and the impact of risk mitigation features.

 

Although historically a portion of our executive compensation program is variable or performance-based, the Compensation Committee has focused on aligning our compensation policies with the long-term interests of our shareholders and avoiding rewards that could create unnecessary risks to the Company, as evidenced by the following:

 

 

Management reported its findings to the Compensation Committee, and after review and discussion, the Compensation Committee concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on our business.

 

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 2010, however, the Compensation Committee used the market data to establish only long-term incentive awards for our named executive officers and the base salary increase for Mr. Lawlor — as base salary levels remained constant and annual incentive opportunities were reduced in connection with our cost-cutting initiatives.

 

Each year the Committee approves our 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, review a list of possible peer group members based on the Company’s current strategic direction, size and market for competitive talent. Based on that review and the overall strategic direction of the Company, a peer group of 13 companies was selected for 2010. The peer group for 2010 was the same as the group used in 2009, and consisted of the following companies (in alphabetical order):

 

•   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

 

The Committee believes that this peer group is appropriate because it represents a comparable group of public companies with similar business models and of a roughly similar size. For example, the companies in the peer group have revenues between $252 million and $5.6 billion, with median revenue of $656 million. Our Company has revenue of approximately $800 million — or slightly above the median of the peer group. The Committee also believes that this 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.

 

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.

 

Given the continuing uncertain economic environment, the Compensation Committee did not make any base salary adjustments during the 2010 or 2011 performance review of our named executive officers, other than Mr. Lawlor. This salary freeze is part of a program, implemented in 2009, to reduce the base salaries of our senior executives until business conditions improve. As part of that program, in 2009 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.

 

Mr. Lawlor was promoted to his current position in 2009. At the time of his promotion, the Committee decided to implement a plan to increase Mr. Lawlor’s compensation over time, so that it eventually would approximate the market median, based on his performance and growth in his new role. As a result, and despite the general salary freeze that applied to the named executive officers, the Committee authorized

an increase in Mr. Lawlor’s salary for 2010 to bring his salary to the median salaries paid to comparable executives in the compensation peer group.

 

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.

 

The Compensation Committee believes that an annual incentive program is an important component of total compensation because:

 

 

In February 2010, the Committee established the 2010 annual incentive program for our named executive officers. In light of the Company’s cost-cutting initiatives, the target annual incentive opportunity for each named executive officer, other than Mr. Boehne, was reduced from 50% of base salary in 2008 to 25% of base salary in 2010. Mr. Boehne’s target annual incentive opportunity was reduced from 95% of base salary in 2008 to 30% of base salary in 2010.

 

The 2010 program focused solely on attaining an annual free cash flow target, which was set at $10 million above our free cash flow budget of $30.6 million. No annual incentive would be awarded unless the cash flow metric was achieved, and the payout was capped at 150% of the incentive opportunity, as reflected in the following chart:

 

 

As defined for the annual incentive plan, our free cash flow for 2010 was $81.3, meaning that our named executive officers received an annual incentive payout equal to 150% of their target annual incentive. Even though the annual incentive plan paid out at the maximum level, due to the significant decrease in the target incentive opportunities from 2008 levels, the 2010 payout was actually lower than the 2008 target incentive opportunity.

 

For more information on the 2010 annual incentive opportunities for our named executive officers, please refer to the “Grants of Plan-Based Awards” section of this proxy statement. The amount of the 2010 annual incentive payments is set forth in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table of this proxy statement.

 

Long-Term Incentives

 

In 2010, the Committee granted awards of time-based and performance-based restricted share 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 2010, 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. The Compensation Committee attempted to target the long-term incentive opportunities of the named executive officers to the median levels of the proxy peer group and to maintain internal pay equity among the named executive officers. For 2010, the value of the awards was scaled back approximately 25% from 2009 levels to align our awards with the 2010 peer group market median levels. The 2010 target value of the long-term incentive opportunities for our named executive officers was as follows:

 

 

The target value was converted into a number of shares by dividing the applicable dollar value of the long-term incentive opportunity set forth in the table above by the average of the closing per-share price of our Class A common shares for the 30 trading days immediately preceding the effective date of the equity award. The resulting number of shares was allocated 80% to time-based restricted share units and 20% to performance-based restricted share units with a one-year performance period tied to achieving our free cash flow target under the Plan of $40.6 million. As a result of the conversion methodology described above, the grant date fair value of the awards for financial accounting purposes, which is based on the fair market value of the shares on the date of grant and listed in the “Summary Compensation Table” and the “Grants of Plan-Based Awards” table in this proxy statement, differs from the target value listed in the table above.

 

Vesting of the time-based restricted share 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 target is achieved or exceeded.

 

The time-based restricted share units are intended to foster employee stock ownership, align the interests of management with those of our shareholders, and enhance our retention program during the economic downturn in light of the reduction in base salary levels and the annual incentive opportunity. Moreover, the time-based awards, combined with the Company’s stock ownership requirements, were intended to provide a direct incentive for our management to build sustained long-term shareholder value.

 

At the same time, the Committee wanted to tie a portion of the long-term incentive opportunity to performance-based restricted share units, so that our executives would focus on achieving our annual free cash flow goal for 2010. As defined for the long-term incentive plan, our actual free cash flow for 2010 was $79.0 million (compared to a goal of $40.6 million), meaning that our named executive officers received a payout of their performance-based restricted share units. The resulting share units vest in four equal annual installments commencing in March 2011.

 

Equity Grant Practices

 

The Compensation Committee typically approves annual equity awards at its February meeting. This meeting date is usually set two years in advance. In order to mitigate the impact of fluctuations in our stock price, award values are converted into a number of shares by dividing the applicable dollar value of the long-term incentive opportunity by the average of the closing per-share price of our Class A common shares for the 30 trading days immediately preceding the effective date of the equity award. 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 to be coincident with equity award grant dates.

 

Although the Compensation Committee determined at its February 2010 meeting the value of the long-term incentive opportunity, the awards were not granted until March 9, 2010, which was 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 2010, 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 2010 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 voluntarily adopted an Incentive Compensation Recoupment Policy (or a “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 goal of accuracy of our financial statements and aligns our executives’ interests with that of our shareholders over the long term.

 

Stock Ownership Requirements

 

In February 2011, the Compensation Committee established stock ownership targets for our named executive officers to achieve by February 2016. For this purpose, stock ownership includes Class A common shares owned directly, in trust, or through any unvested time-based restricted shares or restricted share units (but it excludes shares underlying performance-based restricted share units until these shares are earned).

 

The ownership guidelines were implemented to encourage our senior executives to own a meaningful amount of our Class A common shares. We recognize that our owners (i.e., our shareholders) want us to increase the value of the Company. We want our executives to focus on long-term as well as short-term success, and we want them to think and act as owners when they balance the risks and rewards involved with particular business decisions. We believe the equity ownership interests that result from our stock ownership guidelines will enhance the proper motivation of our executives.

 

 

Retirement Plans

 

The Company maintains a defined benefit pension plan and a safe-harbor 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:

 

 

 

As part of the Company’s retirement program redesign, an enhanced safe harbor 401(k) plan was developed to encourage participation and help employees better manage their financial future. To affect the redesign as of January 1, 2011, the Company amended the 401(k) plan to include the following:

 

 

The Company also (i) amended the Executive Deferred Compensation Plan to provide a Company matching contribution on deferrals of base salary in excess of IRS limitations and on deferrals of bonuses; and (ii) adopted the Scripps Transition Credit Plan to provide “excess” transition credits to participants whose transition credit contributions under the 401(k) plan are subject to IRS limitations.

 

Based on information provided by a consultant to the Compensation Committee, the Compensation Committee believes that our revised retirement program is consistent with the retirement programs and benefit levels offered by many of the companies in our compensation peer group.

 

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 2010 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.

 

Based on information provided by a consultant to the Committee, severance arrangements are used by a majority of the companies in our compensation peer group, and the terms of our severance arrangements, described below, are consistent with prevailing market practices.

 

Employment Agreement

 

On August 7, 2008, the Company approved a new employment agreement for Mr. Boehne, pursuant to which he serves as President and Chief Executive Officer. The employment agreement has a three-year term, which may be extended for an additional year unless the Company provides prior notice of its intention not to extend. The employment agreement sets forth Mr. Boehne’s existing compensation and benefit levels. The agreement also provides for severance benefits 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 Mr. Boehne continued to remain employed by the Company through the remainder of the term covered by his employment agreement, consistent with market practices.

 

On February 15, 2011, the Company approved a new employment agreement for Mr. Boehne. The employment agreement has a three year term, which commences on the expiration of his current contract — i.e., August 7, 2011. The term may be extended for an additional year unless the Company provides prior notice of its intention not to extend. The new employment agreement: (i) continues his current base salary at $680,000 per year; (ii) increases his target annual incentive opportunity from 30% to 50% of base salary; and (iii) confirms that he will continue to receive reimbursement for tax and financial planning up to a maximum of $15,000, the annual member fees and other dues associated with one luncheon club, and the costs of an annual physical examination. It provides severance for two years following his termination.

 

Executive Severance Plan

 

Each of the named executive officers other than Mr. Boehne participates in the Executive Severance Plan. 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 and 2010.

 

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 and approved by the Committee in May 2009 and 2010.

 

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 may 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 public 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 upon certain terminations of employment or in connection with a change in control.

 

Summary Compensation Table

 

The following Summary Compensation Table provides information regarding the compensation earned in 2008, 2009 and 2010 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				6,481				0				0				0				21,481
Mr. Stautberg			10,000				2,056				1,500				1,106				4,985				19,647
Mr. Contreras			10,000				0				1,500				3,763				263				15,526
Mr. Lawlor			1,611				0				0				50				953				2,614
Mr. Appleton			10,000				2,056				2,200				50				2,019				16,325

 

 

 

 

Grants of Plan-Based Awards

 

The following table sets forth information for each named executive officer regarding restricted stock unit awards granted during 2010.

 

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, 2010, and (ii) each award of restricted shares or restricted share units that had not vested and remained outstanding as of December 31, 2010.

 

In connection with the 2008 spin-off of Scripps Networks, Inc. (“SNI”), 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 a 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.