UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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GRAHAM HOLDINGS COMPANY
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
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1300 NORTH 17TH STREET NW
March 26, 2014
T
OOUR SHAREHOLDERS:You are cordially invited to the 20142016 Annual Meeting of Shareholders of Graham Holdings Company (the “Company”), which will be held in the Auditorium, the Graham Holdings Headquarters Building, 1150 15thCorporate Executive Board Waterview Conference Center, 1919 North Lynn Street, NW, Washington, DC 20071,24th Floor, Arlington, VA 22209, on Thursday, May 8,12, 2016, at 9:008:30 a.m.
At the Company’s 20142016 Annual Meeting of Shareholders (the “Meeting”), there will be a report on the Company’s activities, and Directors will be elected for the ensuing year. In addition, the Class A Shareholders will have an advisory vote on whether to approve the compensation paid to the Company’s named executive officers for 2013.
It is important that your shares be represented at the Meeting. Please sign the accompanying Proxy and return it promptly in the envelope provided. If you plan to attend, kindly so indicate in the space provided on the Proxy. You may also vote your shares by telephone or on the Internet. If you choose to vote your shares by telephone or on the Internet, please follow the instructions in the enclosed Proxy.
Sincerely yours,
DONALD E. Graham
Chairman
GRAHAM HOLDINGS COMPANY
Notice of Annual Meeting of Shareholders — May 8, 2014
The 20142016 Annual Meeting of Shareholders of Graham Holdings Company will be held inat the Auditorium, the Graham Holdings Headquarters Building, 1150 15thCorporate Executive Board Waterview Conference Center, 1919 North Lynn Street, NW, Washington, DC 20071,24th Floor, Arlington, VA 22209, on Thursday, May 8, 2014,12, 2016, at 9:008:30 a.m., Eastern Daylight Saving Time, for the following purposes:
1. | To elect Directors for the ensuing year, as more fully described in the accompanying Proxy Statement. |
2. | For the Class A Shareholders, on an advisory basis, to vote on whether to approve the compensation paid to the named executive officers of the Company for 2015. |
3. | To transact such other business as may properly come before the Meeting or any adjournment thereof. |
The Board of Directors of the Company (the “Board”) has fixed the close of business on March 12, 2014,16, 2016, as the record date for the determination of shareholders entitled to notice of and to vote at the Meeting.
It is important that your shares be represented and voted at the Meeting. Please sign and return your Proxy at your earliest convenience. You may also vote your shares by telephone or on the Internet. If you choose to vote your shares by telephone or on the Internet, please follow the instructions in the enclosed Proxy. You may revoke your Proxy at any time before it has been voted at the Meeting. You may vote in person at the Meeting even if you returned a Proxy, provided that you first revoke your previously voted Proxy.
By Order of the Board of Directors,
NICOLE M. MADDREY, Secretary
March 26, 2014
Arlington, VA
GRAHAM HOLDINGS COMPANY
1300 North 17th Street, NW, Washington, DC 20071
March 26, 2014
This Proxy Statement contains information relating to the 20142016 Annual Meeting of Shareholders of Graham Holdings Company to be held at the Company’s headquarters, 1150 15thCorporate Executive Board Waterview Conference Center, 1919 North Lynn Street, NW, Washington, DC 20071,24th Floor, Arlington, VA 22209, on Thursday, May 8, 2014,12, 2016, at 9:008:30 a.m., Eastern Daylight Saving Time, or any adjournments thereof, for the purposes set forth in the accompanying Notice of the 20142016 Annual Meeting of Shareholders. This Proxy Statement and the accompanying forms of Proxy and voting instructions are being delivered to shareholders on or about March 26, 2014.24, 2016. The Board of Directors of the Company is making this Proxy solicitation.
Important notice regarding the availability of Proxy materials for the Annual Meeting of Shareholders to be held on May 8, 2014.12, 2016. This Proxy Statement and the Annual Report to Shareholders are available at www.ghco.com.
QUESTIONS AND ANSWERS
Q: What am I voting on?
A: You are voting on the election of Directors for a term of one year. A Board of 1112 Directors is to be elected, 7eight by the holders of Class A Common Stock, voting separately as a class, and 4four by the holders of Class B Common Stock, voting separately as a class. All Directors will hold office until the next Annual Meeting or until their respective successors shall have been elected and shall have qualified or as otherwise provided in the bylaws of the Company.
In the event that any nominee withdraws or for any reason is not able to serve as a Director, Donald E. Graham,Timothy J. O’Shaughnessy, Hal S. Jones, Veronica DillonNicole M. Maddrey and Gerald M. Rosberg, acting as your proxies, may vote for such other person as the Board of Directors may nominate.
In addition, if you are a holder of Class A Stock, you are voting on whether to approve the compensation paid to the Company’s named executive officers for 2013.2015. In accordance with rules of the U.S. Securities and Exchange Commission (the “SEC”), these votes are advisory in nature and non-binding.
Each of your shares entitles you to one vote with respect to each matter on which you may vote.
Q: What are the voting recommendations of the Board?
A: The Board recommends voting for each of the nominated Directors listed on the Proxy card. The Board knows of no reason that would cause any nominee to be unable to act or to refuse to accept nomination or election.
The Board recommends voting for the approval of the compensation paid to the Company’s named executive officers for 2013.
Q: Will any other matters be voted on?
A: We are not aware of any matters to be voted on other than the election of Directors and the Class A Shareholder advisory vote on compensation paid to the Company’s named executive officers for 2013.2015. If any other matter is properly brought before the Meeting, Donald E. Graham,Timothy J. O’Shaughnessy, Hal S. Jones, Veronica DillonNicole M. Maddrey and Gerald M. Rosberg, acting as your proxies, will vote for you at their discretion.
Q: How do I vote?
A: There are four ways to vote:
If you vote by Internet or telephone, your vote must be received by 5:00 p.m., Eastern Daylight Saving Time, on the day before the Meeting. Your shares will be voted as you indicate. If you are a Class B Shareholder and do not indicate your voting
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preferences, Donald E. Graham,Timothy J. O’Shaughnessy, Hal S. Jones, Veronica DillonNicole M. Maddrey and Gerald M. Rosberg, acting as your proxies, will vote your shares in favor of the applicable nominated Directors.
If you are a Class A Shareholder and do not indicate your voting preferences, the foregoing persons, acting as your proxies, will vote your shares in favor of the applicable nominated Directors and for approval of the compensation paid to the Company’s named executive officers for 2013.
Q: Who can vote?
A: You can vote if you were a shareholder of record as of the close of business on March 12, 201416, 2016 (the “Record Date”). If you hold shares in street name, your broker, bank or other nominee will instruct you as to how your shares may be voted by proxy, including whether telephonic or Internet voting options are available. You may not vote shares held in street name in person at the Meeting unless you have a Proxy executed in your favor by your broker, bank or other nominee.
In accordance with the Company’s constitutive documents and under Delaware corporate law, only Class A Shareholders are entitled to vote on Proposal 2: Approval of 20132015 Compensation Awarded to Named Executive Officers. If you are a Class B Shareholder, you are entitled to vote on Proposal 1: Election of Directors.
Q: Can I change my vote?
A: Yes. You can change your vote or revoke your Proxy at any time before the Meeting:
Q: What vote is required to approve a proposal?
A: Directors will be elected by a plurality of the votes cast at the Meeting. This means that the 7eight Class A Shareholder nominees receiving the highest number of votes cast and the four Class B Shareholder nominees receiving the highest number of votes cast shall be elected. You do not have the right to cumulate votes in the election of Directors. A properly executed Proxy marked “WITHHELD” with respect to the election of one or more Directors will not be voted with respect to the Director or Directors indicated, although it will be counted for purposes of determining whether a quorum is present at the Meeting.
While the proposal to approve the 20132015 compensation awarded to the Company’s named executive officers is non-binding and advisory in nature, it will be approved only on the favorable vote of a majority of the Class A Shareholders present or represented at the Meeting.
Broker non-votes will have no impact on the voting results for any of the proposals presented at the Meeting, and abstentions will have the effect of a vote against the proposal to approve the 20132015 compensation awarded to the Company’s named executive officers. Broker non-votes and abstentions will be counted for purposes of determining whether a quorum is present.
Q: Who will count the vote?
A: Computershare, the Company’s transfer agent and registrar, will count the vote. One of its representatives will be included among the persons authorized to certify the vote.
Q: Who can attend the Meeting?
A: All shareholders of record as of the close of business on March 12, 2014,16, 2016, can attend.
Q: What do I need to do to attend the Meeting?
A: To attend the Meeting, please follow these instructions:
Seating at the Meeting will be on a first-come, first-served basis upon arrival at the Meeting.
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Q: Can I bring a guest?
A: No. The Meeting is for shareholders only.
Q: What is the quorum requirement of the Meeting?
A: A majority of the outstanding shares on March 12, 2014,16, 2016, constitutes a quorum for voting at the Annual Meeting, except that (i) for purposes of the election of seveneight Directors by the holders of Class A Common Stock (Proposal 1) and the advisory vote on whether to approve the compensation paid to the named executive officers of the Company in 20132015 (Proposal 2), a quorum requires a majority of the outstanding shares of Class A Common Stock on March 12, 2014,16, 2016, and (ii) for purposes of the election of four Directors by the holders of Class B Common Stock (Proposal 1), a quorum requires a majority of the outstanding shares of Class B Common Stock on March 12, 2014.16, 2016. If you vote, your shares will be part of the quorum. Abstentions and broker non-votes will be counted in determining the quorum. On March 12, 2014,16, 2016, there were 1,169,073964,001 shares of Class A Common Stock and 6,232,9264,671,680 shares of Class B Common Stock outstanding and entitled to vote.
Q: Who is soliciting Proxies?
A: Solicitation of Proxies is being made by the Company’s management through the mail, in person, on the Internet or by telephone, without any additional compensation being paid to such members of the Company’s management. The cost of such solicitation will be borne by the Company. In addition, the Company has requested brokers and other custodians, nominees and fiduciaries to forward Proxy cards and Proxy soliciting material to shareholders, and the Company will pay their fees and reimburse them for their expenses in so doing.
Q: When are the shareholder proposals due for the Company’s 20152017 Annual Meeting of Shareholders?
A: Shareholder proposals submitted by shareholders entitled to vote on such matters, meeting the requirements of the SEC’s proxy rules, must be in writing, received by November 26, 2014,24, 2016, and addressed to the Secretary of the Company at 1150 15th1300 North 17th Street, NW, Washington, D.C.
Holders of Class B Stock are entitled to vote for the election of 30% of the members of the Board of Directors (and, if required by the rules of the New York Stock Exchange, on management proposals to reserve shares for stock options or to acquire the stock or assets of other companies under certain circumstances). In accordance with the rules of the Securities and Exchange Commission, proposals submitted on other matters by holders of Class B Stock have not been, and will not be, included in the Company’s Proxy materials for the Meeting.
Q: What other information about Graham Holdings Company is available?
A: The following information is available:
Q: Can I receive materials relating to the Meeting electronically?
A: To assist the Company in reducing costs related to the Annual Meeting, shareholders who vote via the Internet may consent to electronic delivery of mailings related to future annual shareholder meetings. The Company also makes its Proxy Statements and Annual Reports available online and may eliminate mailing hard copies of these documents to those shareholders who consent in advance to electronic distribution. If you hold shares in your own name and you are voting via the Internet, you may consent online when you vote. If you hold shares through an intermediary, such as a bank or broker, please refer to the information provided by the intermediary for instructions on how to consent to electronic distribution.
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PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES FOR BOARD OF DIRECTORS
The Company seeks Directors of the highest personal and professional ethics, integrity and business acumen who are committed to representing the long-term interests of the Company’s shareholders. In considering its composition, the Board considers the skills and experience of prospective nominees in the context of the needs of the Board and seeks Directors who are “independent” under applicable law and listing standards, despite being exempt from such requirement as a “controlled company.” The Company’s Corporate Governance Guidelines do not prescribe specific standards regarding the diversity of the Board, but the Board considers as a matter of practice the diversity of prospective nominees (including incumbent Directors), both culturally and in terms of the range of perspectives that the Board as a whole brings to its work. The following nominees for Director have established records of accomplishment in areas relevant to the Company’s strategy and operations and share characteristics identified in the Company’s Corporate Governance Guidelines and Statement of Ethical Principles as essential to a well-functioning deliberative body: honesty, integrity, independence, competence, diligence and commitment to the interests of all shareholders to build long-term shareholder value.
The Company is a diversified education and media company serving customers in a rapidly evolving, highly regulated, competitive and technological environment. The Directors’ expertise and experience encompass the areas of education, media, technology, marketing, international business and finance, journalism, law and public policy. All of the Directors have held senior positions as leaders of complex organizations (both for-profit and non-profit) and gained expertise in core management skills, such as strategy and business development, innovation, line operations, brand management, finance, compensation and leadership development, compliance and risk management. They have significant experience in corporate governance and oversight through their positions as senior executives and as Directors (or Trustees) of public companies and other institutions, and many have served as members of audit, compensation and governance committees at such companies or institutions, as well as at the Company. These skills and experience are pertinent to the Company’s current and evolving business strategies, as well as to the Board’s oversight role, and enable the Company’s Directors to provide diverse perspectives about the complex issues facing the Company.
The following biographies highlight specific qualifications, skills and experience of each of the Director nominees.
NOMINEES FOR ELECTION BY CLASS A SHAREHOLDERS
Lee C. Bollinger
Mr. Bollinger, age 67,69, has served as the 19th President of Columbia University since June 2002. Prior to becoming President of Columbia University, where he also serves as a member of the Law School faculty, Mr. Bollinger served as President of the University of Michigan for five years and as Dean of the University of Michigan Law School for seven years. Mr. Bollinger is a member of the Board of Columbia University and certain of its affiliates. He is a Trustee of the Kresge Foundation and the Institute of International Education and was Chairman of the Board of the Federal Reserve Bank of New York until December 2012. Mr. Bollinger is the recipient of numerous honorary degrees and awards, most notably for his national leadership in defending affirmative action, for his service in higher education and for his scholarship and leadership in defense of freedom of speech and the press. He has served as a Director of the Company since May 2007 and is a member of the Compensation Committee of the Board. Mr. Bollinger’s experience in higher education and at a variety of educational institutions facing differing challenges and opportunities is of particular relevance to the Company’s higher education business segment and other education-related initiatives, but also reflects his commitment to principles. In his former role as a Director of the Federal Reserve Bank of New York, Mr. Bollinger gained experience in financial matters, particularly those affecting national economies and financial and market systems.
Barry Diller
Mr. Diller, age 72,74, has served as Chairman and Senior Executive of IAC/InterActiveCorp, an interactive commercea leading media and Internet company, since December 2010; Chairman and Chief Executive Officer of IAC/InterActiveCorp (and its predecessor companies) from August 1995 to November 2010; Chairman and Senior Executive of Expedia, Inc., an onlineone of the world’s leading travel company,companies, since August 2005; and Chairman and Senior Executive of TripAdvisor, Inc., an online travel site, from December 2011 through December 2012. He has served as a Director of the Company since September 2000 and is a member of the Finance, Executive and Compensation Committees of the Board. Prior to his service at IAC/
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InterActiveCorp (and its predecessor companies), which commenced in from August 1995 through November 2010, Mr. Diller was Chairman of the Board and Chief Executive Officer of QVC, Inc., from December 1992 through December 1994. From October 1984 to April 1992, Mr. Diller served as Chairman of the Board and Chief Executive Officer of Fox, Inc. and was responsible for the creation of Fox Broadcasting Company, in addition to Fox’s motion picture operations. Prior to joining Fox, Inc., he served for ten years as Chairman of the Board and Chief Executive Officer of Paramount Pictures Corporation. Mr. Diller previously served
Donald E. Graham
Mr. Graham, age 68,70, has served as Chairman of the Board of the Company since September 1993 and served as Chief Executive Officer of the Company sincefrom May 1991.1991 until November 2015. Mr. Graham served as President of the Company between May 1991 and September 1993. He also was Publisher of The Washington Post newspaper for 21 years, a position he held between 1979 and 2000. Mr. Graham has been a Director of the Company since 1974 and is Chairman of the Executive Committee and a member of the Finance Committee of the Board. By virtue of his ownership of 62.7%73.6% of the outstanding Class A Stock of the Company and his right to control the vote as a trustee of certain family trusts of an additional 27.7%14.2% of such stock, Mr. Graham effectively votes a total of 90.4%87.8% of the Class A shares. Mr. Graham has beenwas a Director of Facebook, Inc. sincefrom December 2008 where he is Chairman of the Governance Committee and serves on the Compensation Committee.until June 2015. Mr. Graham is a Trustee of the Federal City Council the College Success Foundation, the Philip L. Graham Fund, the Summit Fund of Washington and KIPP-DC. He serves as Chairman of the Board and as a Director of the DC College Access Program, where he stepped down as Chairman of the Board in January 2015, and he is a Co-Founder of TheDream.US. As a result of his substantial and long-standing shareholdings in the Company and his tenure in various executive roles at the Company, Mr. Graham provides a unique perspective to the Board about the strategic and operational opportunities and challenges, economic and industry trends, and competitive and financial positioning of the Company and its businesses. Mr. Graham is the father-in-law of Timothy J. O’Shaughnessy and an uncle of Katharine Weymouth, whoboth of whom also servesserve as a membermembers of the Board.
Ronald L. Olson
Mr. Olson, age 72,74, has been a partner since 1970 in the law firm of Munger, Tolles & Olson LLP, which is one of several law firms that were retained by a subsidiary of the Company in 20132015 and which may again be retained in 2014.2016. He has served as a Director of the Company since September 2003 and serves onis a member of the Executive Committee. Mr. Olson is a Director of Berkshire Hathaway Inc., Edison International and City National Corporation and is a Trustee of Western Asset Funds. He is a Director and serves on the Audit Committee of the non-profit RAND Corporation and Norton Simon Museum and is a Director
Timothy J. O’Shaughnessy
Mr. O’Shaughnessy, age 34, is President and Chief Executive Officer of Graham Holdings Company. He has served as a Director of the Company since November 2014 and is a member of the Finance and Executive Committees of the Board. Previously, he served as Chief Executive Officer of LivingSocial, which he co-founded in 2007. During his tenure, the e-commerce and marketing company grew sales to nearly $2 billion. Following his graduation from
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Georgetown University in 2004 with a BSBA in Marketing, Operations and Information Management, Mr. O’Shaughnessy joined AOL as a product manager. In 2006, he moved to Revolution Health, where he rose to Vice President of Product Development. During that time, he and three others developed a successful series of apps for Facebook. That company grew into LivingSocial, where Mr. O’Shaughnessy was CEO for seven years. Mr. O’Shaughnessy is a member of the Executive Committee of the Federal City Council and is a Director of Framebridge, Inc. He is married to Laura Graham O’Shaughnessy, a daughter of Donald E. Graham. She is President and CEO of SocialCode, a social-media marketing technology and services company, wholly owned by the Company.
James H. Shelton
Mr. Shelton, age 48, has been the President and Chief Impact Officer since January 6, 2016, of 2U, Inc., a provider of cloud-based software-as-a-service, or SaaS, technology fused with technology-enabled services, that enables non-profit colleges and universities to deliver education online. Mr. Shelton joined 2U in 2015 as its Chief Impact Officer to oversee day-to-day management responsibility for university program implementation, research and university relations. He has served as a Director of the Company since November 2015. Before joining 2U, Mr. Shelton served as Deputy Secretary at the U.S. Department of Education, which he joined in 2009 as head of the Office of Innovation and Improvement. His responsibilities included managing programmatic and policy operations of the U.S. Department of Education. Prior to his tenure with the Department of Education, he was Program Director for Education at the Bill & Melinda Gates Foundation, managing portfolios from $2 billion to $3 billion in nonprofit investments. Mr. Shelton serves on the boards of Revolution Foods, Inc., a private company providing healthy meals to families and students, and the My Brother’s Keeper Alliance. He is a senior Fellow with Results for America and the Bridgespan Group. Mr. Shelton’s significant experience in education, management, government and business is of particular relevance to the Company’s education business segment.
G. Richard Wagoner, Jr.
Mr. Wagoner, age 61,63, retired from General Motors Corporation (“GM”) in August 2009 after a 32-year career. He has served as a Director of the Company since June 2010 and is a member of the Audit Committee. Mr. Wagoner served as Chairman and Chief Executive Officer of GM from May 2003 through March 2009 and had been President and Chief Executive Officer since June 2000. Other positions he held at GM include Executive Vice President and President of North American Operations,Operations; Executive Vice President, Chief Financial Officer and Head of Worldwide Purchasing,Purchasing; and President and Managing Director of General Motors do Brasil. On June 1, 2009, GM and its affiliates filed voluntary petitions in the United StatesU.S. Bankruptcy Court for the Southern District of New York, seeking relief under Chapter 11 of the U.S. Bankruptcy Code. Mr. Wagoner was not an Executive Officer or Director of GM at the time of that filing. Mr. Wagoner is a member of the Board of Directors of Invesco, Aleris Corporation and several privately held companies. In addition, he advises several investment and finance firms, startup'sstart-ups and early-stage ventures. Mr. Wagoner is former Chaira member of the Virginia Commonwealth University Board of TrusteesVisitors, the Duke University Health Systems Board of Directors and the Duke Kunshan University Advisory Board. He is a Trustee Emeritus of Duke University and a former Board Chair and continues as a member of Duke’s FuquaDuke Fuqua’s School of Business Advisory Board and a member of the Board of Visitors of Virginia Commonwealth University.Board. He is also a member of the Mayor of Shanghai, China’s International Business Leaders Advisory Council.Council and a member of the Council of Chief Executives. Through his leadership roles at GM and other activities, Mr. Wagoner has significant experience in general management, global business, marketing and advertising, finance, technology, procurement and management development, as well as with public company financial reporting obligations and corporate governance matters affecting organizations of comparable size and scope as the Company.
Katharine Weymouth
Ms. Weymouth, age 47,49, is former Publisher of The Washington Post and Chief Executive Officer of The Washington Post and its affiliated publishing businesses: Express Publications, The Gazette Newspapers, Comprint Military Publications, Southern Maryland Newspapers, Fairfax County Times, Greater Washington Publishing, El Tiempo Latino and Robinson Terminal Warehouse.Post. She was named CEO and Publisher infrom February 2008.2008 to October 2014. Ms. Weymouth became a Director of the Company in September 2010, and she currently serves on the Finance Committee of the Board. She joined The Washington Post in 1996 as Assistant General Counsel and has held various positions within that organization over the past 18 years. Ms. Weymouth has held several positions within the Post’s advertising department, including Director of the department’s jobs unit, Director of Advertising Sales and Vice President of Advertising. She also served as Associate Counsel of Washingtonpost.Newsweek Interactive, then the online publishing subsidiary of The Washington Post Company. She is a Director of Cable One, Inc. (Cable ONE). She serves as a DirectorTrustee of the Philip L. Graham Fund and of The Associated Press.Field School and is a Trustee of The Economic Club of Washington, D.C. Ms. Weymouth is a niece of the Chairman of the Board and Chief Executive Officer of the Company, Mr. Graham.
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NOMINEES FOR ELECTION BY CLASS B SHAREHOLDERS
Christopher C. Davis
Mr. Davis, age 48,50, has served as Chairman of Davis Selected Advisers, Inc., an investment counseling firm, since 1998. He has served as a Director of the Company since January 20062006. He is Chairman of the Finance Committee and is a member of the Audit Finance and Executive Committees of the Board. Mr. Davis became lead Director in May 2011. Mr. Davis is also a Director and officer of a number of mutual funds advised by Davis Selected Advisers, L.P.,LP, as well as other entities controlled by Davis Selected Advisers, L.P.LP. Mr. Davis is a Director of the Hudson Highland Land Trust and a Trustee of the American Museum of Natural History and the Shelby Cullom Davis Charitable Fund. Mr. Davis brings financial and investment experience to the work of the Board, including particular experience in evaluating strategic opportunities, transactions and investments. Mr. Davis also has experience in public company financial reporting, accounting and compliance matters, as well as significant leadership and institutional organizational experience from his service on the boards of several non-profit organizations.
Thomas S. Gayner
Mr. Gayner, age 52,54, has served as President and Chief InvestmentCo-Chief Executive Officer of Markel Corporation, a publicly traded financial holding company headquartered in Glen Allen, VA, since January 2016, and prior to that, he served as President and Chief Investment Officer of Markel Corporation since May 2010. Mr. Gayner has served as a Director of the
Anne M. Mulcahy
Mrs. Mulcahy, age 61,63, served as Chairman of the Board of Xerox Corporation from 2002 until 2010 and served as Chief Executive Officer from 2001 through June 2009. From May 2000 through July 2001, she was President and Chief Operating Officer of Xerox. Mrs. Mulcahy has served as a Director of the Company since January 2008. She is Chairman of the Compensation Committee and also serves on the Executive Committee. Mrs. Mulcahy began her Xerox career as a field sales representative and assumed positions with increasing responsibility in sales and senior management. She was Vice President for Human Resources before becoming Chief Staff Officer and later Corporate Senior Vice President. She is a Director of Target Corporation, Johnson & Johnson, LPL Financial and the non-profit organization Save the Children, where she serves as Board Chairman. Mrs. Mulcahy was a Director of Citigroup, Inc. until May 2010. As a result of the various leadership roles in which she has served at Xerox Corporation, Mrs. Mulcahy has experience in the core management skills relevant to a global branded organization, including matters relating to strategic oversight and execution. Her experience in compensation, benefits, human resource strategy and management development provides an important perspective to the Board’s deliberations about those matters, particularly given the significant size of the Company’s workforce. As a Director of other public companies, Mrs. Mulcahy also has experience in governance matters affecting organizations of comparable size and scope as the Company.
Larry D. Thompson
Mr. Thompson, age 68, has served as Executive Vice President, Government Affairs, General Counsel and Corporate Secretary of70, is retired from PepsiCo, Inc., a global food and beverage company, sincewhere he served as Executive Vice President–Government Affairs, General Counsel and Corporate Secretary from June 2012.2012 to November 2014. From October 2004 to May 2011, when he initially retired, from the position, Mr. Thompson served as a Senior Vice President, President–Government Affairs, General Counsel and Corporate Secretary of PepsiCo, Inc. Mr. Thompson has served as a Director of the Company since June 2011 and is a member of the Compensation Committee. Mr. Thompson serves as a Trusteeon the Advisory Boards of The Brookings Institution and asthe Georgia Justice Project and is a Director of Practicing Law Institute and the National Center for State Courts andSouthern Company, as well as various Franklin, Templeton and Mutual Series Funds and is Honorary Chairman of the Georgia Justice Project.Funds. His government career included serving in the U.S. Department of Justice as Deputy Attorney General and leading the Department’s National Security Coordination Council. In 2002, President George W. Bush named Mr. Thompson to head the
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Corporate Fraud Task Force. Previously, Mr. Thompson had been a partner in the Atlanta law firm of King & Spalding, where he practiced in the antitrust and litigation departments. He served as the U.S. Attorney for the Northern District of Georgia and was later appointed Independent Counsel for the Department of Housing and Urban Development Investigation by the Special Panel of the U.S. Circuit Court Judges appointed by the U.S. Supreme Court. He is an elected Fellow of the American Board of Criminal Lawyers. Mr. Thompson is a recipient of the Edmund Jennings Randolph Award for outstanding contributions to the accomplishment of the Department of Justice’s mission, the Outstanding Litigator Award by the Federal Bar Association and the A. T. Walden Award for outstanding accomplishments to the legal profession by the Gate City Bar Association in Atlanta. Through his previous roles inat the U.S. Department of Justice and at PepsiCo, Mr. Thompson brings to the Board extensive legal experience in both a governmental and corporate setting. As a Director of other public companies, he also has significant experience with corporate governance matters and reporting obligations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINATED DIRECTORS.
Board Committees
The standing committees of the Board includeare the Audit Committee, Compensation Committee, Finance Committee and Executive Committee.
Given the ownership structure of the Company and its status as a “controlled company” (see page 12), the Board does not have a nominating committee. Decisions on nominees to the Board are made through consultation among the Chairman of the Board and the other members of the Board. The Company has not utilized the services of any third party to assist in identifying and evaluating nominees.
Audit Committee
The functions of the Audit Committee include overseeing (i) management’s conduct of the Company’s financial reporting process (including the development and maintenance of systems of internal accounting and financial controls); (ii) the integrity of the Company’s financial statements; (iii) the Company’s compliance with legal and regulatory requirements; (iv) the qualifications and independence of the Company’s outside auditor; (v) the performance of the Company’s internal audit function; (vi) the outside auditor’s annual audit of the Company’s financial statements; and (vii) the preparation of certain reports required by the rules and regulations of the Securities and Exchange Commission. A current copy of the Audit Committee’s Charter is available on the Company’s website, www.ghco.com; a copy of such Charter will be furnished without charge to any shareholder upon written request addressed to the Treasurer, Graham Holdings Company at 1150 15th1300 North 17th Street, NW, Washington, DC 20071.
Christopher C. Davis, Thomas S. Gayner (Chairman) and G. Richard Wagoner, Jr. served on the Audit Committee in 2013.2015. The Board of Directors has determined that all members of the Audit Committee are non-employee, “financially literate,” “independent” Directors within the meaning of the New York Stock Exchange listing standards. None of the members of the Audit Committee has accepted, other than in his capacity as a Committee or Board member, any consulting, advisory or other compensatory fee from the Company or its affiliates, and none of the members of the Audit Committee has a material relationship with the Company.
The Board has determined that Thomas S. Gayner has the requisite background and experience to be (and is) designated an “audit committee financial expert” within the meaning of Item 407(d)(5)(ii) of Regulation S-K due to his extensive experience, as discussed under “Proposal 1: Election of Directors.” In addition, the Board has determined that all of the members of the Audit Committee are well grounded in financial matters and are familiar with generally accepted accounting principles. All of the members of the Audit Committee have a general understanding of internal controls and procedures for financial reporting, as well as an understanding of audit committee functions. To the extent that matters come before the Audit Committee that involve accounting issues, the members of the Audit Committee consult with and rely on management, in addition to external experts, such as the Company’s independent registered public accountants, PricewaterhouseCoopers LLP. In addition, the Audit Committee has authority to obtain advice from internal or external legal or other advisors.
The Audit Committee held sixseven meetings in 2013.
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Compensation Committee
The functions of the Compensation Committee include (i) reviewing and approving the compensation of the Company’s Chief Executive Officer;Officer and President and other members of senior management (including, among other elements of compensation, annual base salary, annual incentive opportunities and long-term incentive opportunities); (ii) consulting with the Chief Executive Officer with respect to the compensation of the Company’s other executives (including, specifically, approving all salaries of $300,000 or more per year; all incentive compensation awards and all other bonuses, other than sales bonuses, of $75,000 or more for employees of all business units, including Corporate; and awards of restricted stock and stock options); (iii) overseeing the administration and determination of awards under the Company’s compensation plans; and (iv)(iii) preparing any report on executive compensation required by the rules and regulations of the SEC. A current copy of the Compensation Committee’s Charter is available on the Company’s website, www.ghco.com; a copy of such Charter will be furnished without charge to any shareholder upon written request addressed to the Treasurer, Graham Holdings Company at 1150 15th1300 North 17th Street, NW, Washington, DC 20071.
Lee C. Bollinger, Barry Diller, Anne M. Mulcahy (Chairman) and Larry D. Thompson served on the Compensation Committee in 2013.2015. All members of the Compensation Committee are non-employee Directors and have been determined to be “independent” Directors within the meaning of the listing requirements of the New York Stock Exchange.
The Compensation Committee held sevensix meetings in 2013.
Finance Committee
The functions of the Finance Committee include (i) reviewing with management the capital needs of the Company and (ii) considering and making recommendations to the Board related to dividend policy, major acquisitions and dispositions of businesses, incurrence of indebtedness, selection of managers of defined benefit plan assets, stock repurchase programs and certain other financial matters.
Christopher C. Davis (Chairman), Barry Diller, Thomas S. Gayner, David Goldberg (until May 2015), Donald E. Graham, Timothy J. O’Shaughnessy and Katharine Weymouth served on the Finance Committee in 2013.
The Finance Committee held one meeting in 2013.
Executive Committee
The Executive Committee has and may exercise all of the powers of the Board that may be delegated by law in the management of the business and affairs of the Company and exercises the authority of the Board between meetings.
Christopher C. Davis, Barry Diller, Donald E. Graham (Chairman), Anne M. Mulcahy, and Ronald L. Olson and Timothy J. O’Shaughnessy serve on the Executive Committee.
The Executive Committee held twono meetings in 2013.
Meeting Attendance
The Board held a total of five regular meetings and onethree special meetingmeetings in 2013.2015. Each Director attended at least 75% of the meetings of the Board and the committees of the Board on which the Director served.
The Board does not have a policy of requiring Directors to attend annual meetings of shareholders and leaves it at the discretion of each Director as to whether he or she will attend the meeting. In addition to the Chairman, twoeight Directors attended the 20132015 Annual Meeting of Shareholders.
Director Compensation
During 2013,2015, non-employee Directors received the following annual payments:
Each non-employee Chair of a committee of the Board received an additional $10,000.$20,000. Members of the Audit Committee received an additional $12,000$20,000 annually for their service on that committee. Employee Directors received no compensation for serving on the Board.
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The total 20132015 compensation of non-employee Directors is shown on the following table:
DIRECTOR COMPENSATION
Name (a) | Fees Earned or Paid in Cash ($) (b) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f) | All Other Compensation ($) (g) | Total ($) (h) |
Lee C. Bollinger | $80,000 | — | — | $80,000 |
Christopher C. Davis | 102,000 | — | — | 102,000 |
Barry Diller | 80,000 | — | — | 80,000 |
Thomas S. Gayner | 102,000 | — | — | 102,000 |
David Goldberg | 80,000 | — | — | 80,000 |
Anne M. Mulcahy | 90,000 | — | — | 90,000 |
Ronald L. Olson | 80,000 | — | — | 80,000 |
Larry D. Thompson | 80,000 | — | — | 80,000 |
G. Richard Wagoner, Jr. | 92,000 | — | 4,000 (2) | 96,000 |
Katharine Weymouth | 20,000 (1) | — | — | 20,000 |
Name | Fees Earned or Paid in Cash ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||
Lee C. Bollinger | $150,000 | — | — | $150,000 | ||||
Christopher C. Davis | 190,000 | — | — | 190,000 | ||||
Barry Diller | 150,000 | — | — | 150,000 | ||||
Thomas S. Gayner | 190,000 | — | — | 190,000 | ||||
David Goldberg (1) | 75,000 | — | — | 75,000 | ||||
Anne M. Mulcahy | 170,000 | — | — | 170,000 | ||||
Ronald L. Olson | 150,000 | — | — | 150,000 | ||||
James H. Shelton (2) | — | — | 30,417 (3) | 30,417 | ||||
Larry D. Thompson | 150,000 | — | — | 150,000 | ||||
G. Richard Wagoner, Jr. | 170,000 | — | 4,000 (4) | 174,000 | ||||
Katharine Weymouth | 150,000 | — | — | 150,000 |
(1) | Mr. Goldberg served as a Director until his death on May 1, 2015. |
(2) | Mr. Shelton served as a Special Advisor to the Chairman of the Board from May 18, 2015, to August 24, 2015, and was subsequently elected to the Board of Directors on November 12, 2015. Mr. Shelton waived his fourth quarter cash retainer. |
(3) | Represents compensation received by Mr. Shelton for services as a Special Advisor to the Chairman of the Board. |
(4) | Charitable contribution made pursuant to the Company’s matching gift program. |
The Company has in place a voluntary Deferred Compensation Plan for Directors of the Company. Amounts deferred pursuant to the Planthis plan are reflected in the “Fees Earned or Paid in Cash” column in the table above. The PlanThis plan provides an opportunity for participants to elect to defer the receipt of either all or a portion of the fees received for service as a Director. Elections to defer must be filed in advance of earning such fees. Deferred amounts will earn investment credits in accordance with participant elections from a choice of investment funds (based on the funds available under the Company’s 401(k) plan). None of the deferred amounts was credited with above-market interest. Deferred amounts are payable upon separation offrom service or such other future date as specified by the participant at the time of election. The Company closed the Deferred Compensation Plan to new participants as of December 2015. The Company does not provide stock awards, option awards or other non-equity compensation to non-employee Directors.
“Controlled Company”
The descendants of Katharine Graham (including the Company’s Chief Executive Officer and Chairman of the Board) and trusts for the benefit of those descendants own the majority of the shares of Class A Common Stock and have the right to vote for 70% of the Board of Directors; thus the Company is a “controlled company” for purposes of Section 303A.00 of the New York Stock Exchange Listed Company Manual. As a “controlled company,” the Company is exempt from certain governance requirements, including the requirement that it have a nominating/corporate governance committee, and the Company does not deem it necessary to have such a committee. The Company does not have a procedure by which shareholders may recommend nominees to the Board, given the Company’s ownership structure. Notwithstanding the fact that as a “controlled company,” the Company is not required to have a Board of Directors that comprises a majority of “independent” directors, the Board has determined that current members Lee C. Bollinger, Christopher C. Davis, Barry Diller, Thomas S. Gayner, Anne M. Mulcahy, Ronald L. Olson, James H. Shelton, Larry D. Thompson and G. Richard Wagoner, Jr. (who, together, constitute a majority of the Board) are “independent” within the meaning of Section 303A.02 of the New York Stock Exchange Listed Company Manual. In reaching this conclusion, the Board considered commercial relationships with companies at which Directors or their family members served as outside directors or executive officers. These relationships involved the Company’s purchases of services in the ordinary course of business that were made on arm’s-length terms under circumstances and in amounts that did not affect the relevant Directors’ independence.
Meetings of the Non-Management Directors
The listing requirements of the New York Stock Exchange call for the non-management Directors of the Company to meet regularly in executive session without management. The Board has appointed Christopher C. Davis as lead Director and has authorized him to preside at the executive sessions. The non-management Directors met in executive session in November 2013May and September 2015 and expect to meet in executive session in 20142016 as appropriate.
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Compensation Committee Interlocks and Insider Participation
Lee C. Bollinger, Barry Diller, Anne M. Mulcahy and Larry D. Thompson served as members of the Compensation Committee in 2013.2015. No member of the Compensation Committee has ever been an employee of the Company. No executive officer of the Company serves on the compensation committee of any other entity that has, or has had, one or more of its executive officers serving on the Company’s Board of Directors.
Board Leadership Structure and Role in Risk Oversight
Until November 2015, Donald E. Graham servesserved as Chairman of the Board of the Company, as well as Chief Executive Officer of the Company. TheIn November 2015, Timothy J. O’Shaughnessy became President and Chief Executive Officer, and Mr. Graham continued to serve as Chairman of the Board of Directors. Mr. O’Shaughnessy had been named President of the Company and served as a Director of the Company since November 2014. Until the separation of the roles in 2015, the Board of Directors believesbelieved that Mr. Graham’s service as both Chairman of the Board and Chief Executive Officer iswas in the best interests of the Company. This structure iswas appropriate, given the significant shareholdings in the Company of Mr. Graham and the Graham family, and also servesserved other purposes. Mr. Graham possesses in-depth strategic and operational knowledge of the opportunities and challenges facing the Company and iswas best positioned to develop agendas that focusfocused on matters that meritmerited Board attention. At his request, Mr. Graham has not received a raise in his annual salary nor received an annual bonus in 2325 years in his current non-Board roles. BecauseIn connection with his shareholdings represent his main financial interest in the Company, the Board believes thatresignation as Chief Executive Officer, Mr. Graham’s interests are well aligned with those of shareholderssalary was reduced from $400,000 to $100,000, and that his dual role promotes decisive leadership, accountability and clarityhe no longer participates in the overall direction of the Company’s business strategy. The Board also believes that this approach facilitates clear and consistent communication of the Company’s strategy to all stakeholders.
While as a “controlled company,” the Company is not legally required to have a majority of independent Directors, the majority of the Board, in fact, comprises independent Directors who act as an effective counterbalance to Mr. Graham, in his dual role.Chairman of the Board, and Mr. O’Shaughnessy, as President and Chief Executive Officer. The Board also appoints a lead independent Director. Christopher C. Davis serves in this capacity. The lead independent Director typically chairs executive sessions of Board meetings and consults with Mr. Graham and Mr. O’Shaughnessy and senior management regarding issues to be included in Board meeting agendas. The lead independent Director is also expected to collaborate with Mr. GrahamO’Shaughnessy in reviewing key operational and other matters and to act as a liaison between Mr.Messrs. Graham and O’Shaughnessy and the independent Directors.
The Board as a whole actively considers strategic decisions proposed by management, including matters affecting the business strategy and competitive and financial positions of the Company, and monitors the Company’s risk profile. Board meetings are focused on strategic matters affecting major areas of the Company’s business, including operational, execution and competitive risks and risk management initiatives. The Board fulfills certain risk oversight functions through its standing committees. For example, the Finance Committee reviews and makes recommendations to the Board related to major acquisitions or dispositions, including with respect to attendant risks, and the Compensation Committee addresses the risk profile of the Company’s compensation program and arrangements. The Audit Committee also plays a key role in risk oversight, particularly with respect to financial reporting, accounting and compliance matters.
Risk oversight activities are supported by internal reporting structures that aim to surface directly to the Board key matters that can affect the Company’s risk exposures. For example, the head of the Company’s internal audit function reports directly to the Audit Committee. The Company has also established a management-level compliance committeeCompliance Committee that reports periodically to the Audit Committee about regulatory risks affecting the Company’s education businesses, as well as a Disclosure Controls Committee, chaired by the General Counsel, that reports directly to the Audit Committee on certain matters relating to the Company’s public disclosures.
Communicating With Directors
Interested parties may communicate concerns to the lead Director or to the other Directors of the Company through Navex Global, Compliance Services, the Company’s third-party-managed hotline, via telephone at 1-866-687-8972 or online at https://www.compliance-helpline.com/GHCO.jsp.
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STOCK HOLDINGS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in the following two tables relates to each person who, on February 3, 2014,1, 2016, was a “beneficial owner” (as defined under the proxy rules of the Securities and Exchange Commission) of more than 5% of the Company’s Class A or Class B Stock and to the stock holdings of Directors and officers. Under the proxy rules, a person is deemed to be the “beneficial owner” of stock if such person has (or shares) either investment power or voting power over such stock or has (or shares) the right to acquire such stock within 60 days by any of a number of means, including the conversion of another security that is convertible into such stock. A substantial number of shares of the Company’s Class A and Class B Common Stock are held in trusts or subject to other agreements that provide for the sharing of investment power, voting power or both among several persons, each of whom is deemed by the Securities and Exchange Commission to be a “beneficial owner” of the shares so held. Furthermore, in many cases, such persons do not include the beneficiary of the trust who, although not deemed to be a “beneficial owner” in the absence of voting or investment power over the shares, is nevertheless shown below as a “beneficial owner” because of the beneficiary’s economic interest in the shares. In addition, since all of the shares of Class A Stock are convertible at the option of the holder into Class B Stock on a share-for-share basis, each “beneficial owner” of shares of Class A Stock is deemed by the Securities and Exchange Commission to be a “beneficial owner” of the same number of shares of Class B Stock. In indicating below a person’s “beneficial ownership” of shares of Class B Stock, it has been
Principal Holders of Stock
Shares (%) | ||||||
Name and Address of Beneficial Owner | Class A Stock | Class B | ||||
Donald E. Graham (a) | 959,776 (99.6%) | |||||
1,123,833 (19.5%)* | ||||||
1300 North 17th Street, Suite 1700 | ||||||
Arlington, VA | ||||||
Elizabeth G. Weymouth (b) | 237,625 (24.6%) | ** | ||||
1300 North 17th Street, Suite | ||||||
Arlington, VA | ||||||
George J. Gillespie III (c) | 178,575 (18.5%) | ** | ||||
825 Eighth Avenue | ||||||
New York, NY | ||||||
Daniel L. Mosley (d) | 696,597 (72.3%) | 747,366 (13.0%)* | ||||
825 Eighth Avenue | ||||||
New York, NY | ||||||
Southeastern Asset Management (e) | ||||||
— | 703,052 (14.4%) | |||||
6410 Poplar Avenue, Suite 900 | ||||||
Memphis, TN | ||||||
The Vanguard Group (f) | — | 302,147 (6.19%) | ||||
100 Vanguard Boulevard | ||||||
Malvern, PA | ||||||
Capital Research Global Investors (g) | — | 336,981 (6.9%) | ||||
333 South Hope Street | ||||||
Los Angeles, CA 90071 | ||||||
BlackRock, Inc. (h) | — | 277,852 (5.7%) | ||||
55 East 52nd Street | ||||||
New York, NY |
* The calculations set forth in this table relating to percentage ownership of Class B Stock include 1,169,073964,001 shares of Class B Stock issuable upon conversion of shares of Class A Stock beneficially owned, with the exception of Southeastern Asset Management and International Value Advisers. The percentage calculation for Southeastern Asset Management and International Value Advisers does not include the conversion of Class A shares to Class B shares.
** Less than 5%.
(a) | According to information as of February 1, |
Mr. Graham also has voting and investment power with respect to shares of Class B Stock as follows: sole voting and investment power, 3,600 (<1%112,662 (2.0%) shares; shared voting and investment power 26,380 (<1%164,057 (2.9%) shares; and 1,139,453 (15.4%960,276 (16.7%) shares issuable upon conversion of shares of Class A Stock deemed to be beneficially owned by Mr. Graham.
The holdings of Class B Stock recorded for Mr. Graham also include shares of 107,575 Class B Stock owned by subsidiaries of Berkshire Hathaway Inc. (“Berkshire”), which have the sole investment power of the shares; sole voting power is held by Mr. Donald Graham under an agreement dated February 25, 1977, and amended and extended on September 13, 1985, May 15, 1996, and July 6, 2006, which has a termination date (which may be extended) of February 24, 2017.
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(b) | According to information as of February 1, |
According to information as of February 1, |
According to information as of February 1, |
According to a Schedule 13G filed on February |
(f) | According to a Schedule 13G filed on February 10, 2016, The Vanguard Group (“Vanguard”), an investment advisor, was deemed to be the beneficial owner of 302,147 (6.19%) shares of Class B Stock. According to the Schedule 13G, Vanguard has sole voting power over 3,094 (<1%) shares, shared dispositive power over 3,094 (<1%) shares, and sole dispositive power over 299,053 (6.2%) shares. |
(g) | According to a Schedule 13G filed on February 16, 2016, Capital Research Global Investors, an investment advisor, was deemed to be the beneficial owner of 336,981 (6.9%) shares of Class B Stock. |
(h) | According to a Schedule 13G filed on January 26, 2016, BlackRock, Inc. (“BlackRock”), an investment advisor, was deemed to be the beneficial owner of 277,852 (5.7%) shares of Class B Stock. According to the Schedule 13G, BlackRock has sole voting power over 264,603 (5.4%) shares and sole dispositive power over 277,852 (5.7%) shares. |
The table below, which is based on information furnished to the Company by its Directors and officers, shows as of February 1, 2014,2016, for each person nominated for election as a Director, each named executive officer and for all Directors and executive officers of the Company as a group, the number of shares of each class of Common Stock “beneficially owned” (as defined in the Securities and Exchange Commission’s proxy rules) and, in the case of each nominee for election as a Director, the nature of such “beneficial ownership.” For the reasons set forth in the first paragraph of this section of the Proxy Statement, there is very substantial duplication in the numbers of shares and percentages shown in the following table.
Holdings of Directors and Officers*
Shares (%) | ||||||
Class A | Class B(a) | |||||
Lee C. Bollinger^ | — | — | ||||
Christopher C. Davis^ | — | 5,000 (b) | ||||
Barry Diller^ | — | 4,000 (b) | ||||
Thomas S. Gayner^(c) | — | |||||
5,300 (b) | ||||||
Donald E. Graham^+(d) | 959,776 (99.6%) | 1,123,833 (19.5%) | ||||
Hal S. Jones+(e) | — | 6,065 (b) | ||||
Nicole M. Maddrey+ | — | 1,650 (b) | ||||
Anne M. Mulcahy^ | — | — | ||||
Ronald L. Olson^ | ||||||
— | ||||||
— | ||||||
Timothy J. O’Shaughnessy^+(f) | 8,593 (b) | 37,544 (b) | ||||
Gerald M. Rosberg+(g) | — | 7,070 (b) | ||||
Andrew S. Rosen+(h) | — | 84,433 (1.5%) | ||||
James H. Shelton^ | — | — | ||||
Larry D. Thompson^ | — | |||||
76 (b) | ||||||
G. Richard Wagoner, Jr.^ (i) | — | 1,000 (b) | ||||
Katharine Weymouth^ | — | 14,721 (b) | ||||
All Directors, named executive officers and remaining executive officers as a group, eliminating duplications | 968,369 (100.5%) | 1,296,093 (22.5%) |
* Unless otherwise indicated, the Directors and officers listed have sole voting and investment power with respect to such securities. None of the securities has been pledged as security.
^ Director.
+ Named Executive Officer.
(a) |
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(b) | Less than 1%. |
(c) |
Includes 5,200 shares of Class B Stock held for the account of a number of beneficial owners in which Mr. Gayner disclaims beneficial ownership. |
See Table of “Principal Holders of Stock” on page 14. |
Includes |
(f) | |
Class A shares held in a trust for Mr. O’Shaughnessy’s spouse. Class B stock include 16,075 shares held in trusts for the benefit of Mr. O’Shaughnessy’s spouse and children. He is neither a trustee nor a beneficiary of such trusts and disclaims beneficial ownership. Includes |
Includes |
(h) | Includes 77,258 shares Mr. Rosen has the right to purchase, pursuant to stock options. In addition to the stock set forth above, Mr. Rosen holds 7,206 shares of Kaplan stock, which represents less than 1% of the total outstanding stock of Kaplan, Inc. |
(i) | Shares are held in a revocable trust. |
(j) | Includes |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors, officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with SEC initial reports of ownership and reports of changes in ownership of Class B Stock. During the fiscal year ended December 31, 2013, the Company isBased upon information furnished by these persons, we believe that all required filings for 2015 were made in a timely manner, except that a Form 4 on behalf of Mr. Graham was not awarefiled on a timely basis to report 66 shares owned by his wife of any deficiency in reporting.
PROPOSAL 2: APPROVAL OF 20132015 COMPENSATION AWARDED TO NAMED EXECUTIVE OFFICERS
As required by ScheduleSection 14A of the Securities Exchange Act of 1934 and the corresponding SEC rules, the Company is seeking an advisory, non-binding shareholder vote from its Class A Shareholders with respect to compensation awarded to its named executive officers for
Resolved, that the compensation paid to the Company’s named executive officers for 2013,2015, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, narrative discussion and related material included in this Proxy Statement, is hereby APPROVED.
THE BOARD OF DIRECTORS RECOMMENDS THAT CLASS A SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE FOREGOING RESOLUTION.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes the Company’s executive compensation principles and programs, with a focus on the decisions of Compensation Program
Name | Position with the Company | |
Donald E. Graham | Chairman of the Board of Directors | |
Timothy J. O’Shaughnessy | President and Chief Executive Officer | |
Hal S. Jones | Senior Vice President–Finance and Chief Financial Officer | |
Nicole M. Maddrey | Senior Vice President, General Counsel and Secretary | |
Gerald M. Rosberg | Senior Vice President–Planning and Development | |
Andrew S. Rosen | Executive Vice President and Chairman and Chief Executive Officer, Kaplan, Inc. |
Key Leadership Changes
In November 2015, Donald E. Graham, Chairman of the Board and Chief Executive Officer of the Company, resigned from his position as Chief Executive Officer but remained Chairman of the Board. Timothy J. O’Shaughnessy was elected Chief Executive Officer in addition to his role as President by the Board of Directors. In August 2015, Andrew S. Rosen, Executive Vice President of the Company and Chairman of Kaplan, Inc., assumed the role of Chief Executive Officer of Kaplan, Inc. in addition to his role as Chairman of Kaplan, Inc. Additionally, effective April 2015, Nicole M. Maddrey was named Senior Vice President, General Counsel and Secretary.
Overview of Compensation Program
The Committee has responsibility for establishing and continually monitoring adherence to the Company’s compensation philosophy—philosophy–a philosophy designed to attract, retain and motivate qualified and talented employees who are enthusiastic about the Company’s mission and culture. The Committee, which is composed entirely of independent directors, is chaired by Anne M. Mulcahy and includes Lee C. Bollinger, Barry Diller and Larry D. Thompson, seeks to establish total compensation packages that are attractive to employees and comparable to, but not dramatically different from, those offered by peer companies with comparable revenue in the education and mediasimilar industries. Through regular meetings and discussions with management, the Committee ensures that the total compensation paid to all executives, including named executive officers of the Company, and all employees earning more than $300,000 in salary, is fair, reasonable and based on performance goals established to increase value for Shareholdersshareholders by facilitating the long-term growth of the Company. The Committee considers both the Company’s short-term and long-term plans in determining compensation. Annual plans are used to motivate and reward management for achieving specific yearly goals. Long-term plans, typically three or four years in duration, are designed to reward cumulative long-term goals. All performance criteria, however, including those in annual or relatively short-term plans, are designed to reward executives for making decisions that will enhance the long-term value of the Company. Except in the case of sales executives or executives in high-growth revenue-focused business units, no targets are based on quarterly or partial-year results. Some ofCompensation paid pursuant to these plans reward withmay be cash and others reward withor stock-based compensation. The Company has nohistorically favored cash compensation over non-cash compensation, as management and the Committee believe that cash incentives provide more targeted rewards for specific performance. However, the Company does not apply a specific formula for allocating between cash and non-cash compensation or betweenshort- and long-term and current compensation. ManagementInstead, management and the Committee select the method of compensation thought most likely to lead to achievement of the particular goal; however, the Company has historically favored cash compensation over non-cash compensation. Management and the Committee believe that cash incentives provide more targeted rewards for specific performance.
The named executive officers receive an annual salary and, except Donald E. Graham, Chairman of the Board, and Chief Executive Officer, receive an annual salary and restricted stock awards every other year and participate in performance-based annual bonus plans and four-year cash-based Performance Unit Plans. Named executive officersPlans and, others occasionally receivein certain circumstances, have received restricted stock or stock option grants in off-cycle yearsoptions, as a reward for past performancedetermined by the Committee on an individual basis. With the exception of Mr. O’Shaughnessy and incentive for future performance. TheyMs. Maddrey, the named executive officers also receive the benefits ofpursuant to the Supplemental Executive Retirement Plan (the “SERP”). Mr. Graham receives an annual salary and participates, which was closed to new participants in the Performance Unit Plans and the defined benefit portion of the SERP as described below.
Compensation Committee Charter
The Board has delegated to the Committee the responsibility of overseeing the administration of the Company’s compensation plans and the preparation of all reports and documents required by the rules and regulations of the SEC. To meet this responsibility, the Committee is required to meet at least once a year. The Committee annually reviews and approves the corporate goals and objectives upon which the compensation of the President and Chief Executive Officer and senior management, including the named executive officers, is based. The Committee evaluates the President and Chief Executive Officer’s performance in light of these goals and objectives. Furthermore, the Committee reviews and makes recommendations to the Board with respect to any incentive compensation plans, including equity-based plans, to be
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adopted or submitted to the Company’s shareholders for approval. The Committee reviews the Company’s succession plans, including (i) the ChairmanPresident and Chief Executive Officer’s recommendations as to a successor, should he bebecome disabled or unable to perform his duties for an extended period of time, and, annually, (ii) annually, the Company’s efforts at management development.
The Committee may request that any officer or employee of the Company, includingor any of its affiliates, or the Company’s outside counsel or an independent auditor, attend meetings of the Committee or meet with any members of, or consultants to, the Committee. The Committee has authority to retain or terminate any compensation consultant used to assist in the evaluation of Director, President and Chief Executive Officer or senior management compensation and has sole authority to approve the consultant’s fees and other retention terms. The Committee did not retain any consultant for such purpose in 2013. The Committee also has authority to obtain advice and assistance from internal or external legal, accounting or other advisors.
During 2013,2015, the Committee met sevensix times. A copy of the Company’s Compensation Committee Charter is available under the “Investor Relations” tab at www.ghco.com.
Role of Executive Officers in Compensation Decisions
Mr. Graham, Chairman of the Board of Directors, Mr. O’Shaughnessy, President and Chief Executive Officer, and Ms. McDaniel, Senior Vice President through March 2015, and currently a consultant and secretary of the Committee (also a named executive officer),in 2015, attended all six Committee meetings during 2013. Veronica Dillon, Senior2015. Denise Demeter, Vice President and
Messrs. Graham and O’Shaughnessy and Ms. McDaniel recommend to assist the Committee in determiningthe size of each component of compensation terms related to the salefor each of most of the Company’s newspaper publishing and affiliated businesses.
At his request, Mr. Graham has not received a raisean increase in his annual salary nor has he receivedor an annual bonus award since 1991. He stopped acceptingIn connection with his resignation as Chief Executive Officer in November 2015, Mr. Graham requested that his annual salary be decreased to $100,000. Beginning in 2004, he no longer accepted grants of restricted stock in the Company, in 2004 and requested that he receive no payment forwaived rights to payments pursuant to his performance units beginning with the 2007–2010 award cycle. Allperformance cycle and, beginning in 2015, he no longer receives performance units. Mr. O’Shaughnessy was not present at Committee meetings when his compensation, for Ms. McDaniel is determined solely by theor that of his wife (Laura O’Shaughnessy, President and Chief Executive Officer andof Social Code LLC, a subsidiary of the Committee. The Chief Executive Officer andCompany) was discussed by the Committee use the same performance-based criteria to set Ms. McDaniel’s compensation as they do for all other named executive officers and other senior staff (other than Mr. Graham). Ms. McDaniel is asked to leave the Committee meetings when her performance is discussed.
Setting Executive Compensation
To meet the Committee’s objectives, at its objectives,request, the Committee asks thePresident and Chief Executive Officer and the secretary of the Committee to draft annual and long-term incentive-based cash and non-cash executive compensation plans. The Committee reviews and, in its sole discretion, modifies the formula and goals established for various awards under the plans before the plans take effect, which is typically no later than the end of the first quarter of the first year covered by the plan.
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The Company adopts a holistic view on executive compensation. The Company compares its executive salaries, annual bonuses, and long-term incentives to those of companies in similar industries and with comparable revenues and generally considers the programscompensation structures maintained by similarly situated companies, but does not target its executive compensation at a certain level or percentage based upon other companies’ arrangements. At least once a year, the Committee evaluates the individual compensation of the Company’s senior executives (including the named executive officers) against market data provided by outside surveys or public information (such as the proxy filings of peer companies). The Committee defines its peer group as companies operating in the same industries (Conglomerates, Education, and Media) with one-half to two times the Company’s prior fiscal year revenue. In 2015, the Committee reviewed data from the Equilar Executive Compensation Survey and the U.S. Mercer Benchmark Database (MBD): Executive Survey. Where public data for comparable roles were available, the Committee also considered the compensation of its senior executives (including the named executive officers) in relation to the following peer companies:
Apollo Education Group | iHeartMedia, Inc. | |
BEAM | Informa plc | |
Bridgepoint Education, Inc. | ITT Corporation | |
Cablevision Systems Corporation | John Wiley & Sons Inc. | |
Carlisle Companies Incorporated | Liberty Media Corporation | |
Clear Channel Outdoor Holdings | McGraw Hill Financial, Inc. | |
Cogeco Cable Inc. | Regal Entertainment Group | |
Cogeco Inc. | Scholastic Corporation | |
Crane Co. | Scripps Networks Interactive, Inc. | |
Daily Mail and General Trust plc | Sirius XM Holdings Inc. | |
DeVry Education Group Inc. | Starz | |
Discovery Communications, Inc. | Technicolor SA | |
Education Management | Teleflex Incorporated | |
Gannett Co., Inc. | Transcontinental, Inc. | |
Harsco Corporation | Tribune Media |
As described below, a significant portion of the Company’s executive compensation is linked directly to business unit and corporate performance and stock price appreciation. The Committee intends to continue the policy of linking executive compensation to corporate performance and returns to shareholders and deems it desirableshareholders. The Committee intends to provide that certainsuch compensation be paid under the 2012 Incentive Compensation Plan meet(the “2012 ICP”), which provides for the payment of compensation in accordance with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), concerning the deductibility of executive compensation. However, theThe Committee reserves the right to put in place certainmay, however, establish compensation programs or grant compensation that do not meet thosethe requirements under Section 162(m) of the Code and which, therefore, may result in compensation payments that are not be deductible to the Company, if the Committee determines that such programs or the payment of such compensation are otherwise in the best interests of the Company.
Risk Assessment of Compensation Program
During 2015, the Compensation Committee met with Donald E. Graham and Ann L. McDaniel to review and discuss the impact of executive compensation programs on organizational risk. The Compensation Committee determined that compensation programs have sufficient risk mitigation features in each of the plans and do not encourage or reward employees for taking excessive or unnecessary risk. The Compensation Committee believes that the Company’s compensation programs constitute an appropriate mix of short- and long-term incentive compensation that rewards employees while balancing risks through the delayed payment of long-term awards. As a result of the compensation risk review, the Compensation Committee determined that the overall risk of compensation programs exposing the organization to unnecessary or excessive risks that threaten the value of the Company is low.
Elements of Compensation
The compensation package offered by the Company to its executive officers comprises the following components:
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Base Salary
The Company pays named executive officers base salaries to compensate them for services rendered during the fiscal year. Salaries for named executive officers are based on their responsibilities, their prior experience and their recent performance and are evaluated against market data provided by outside surveys. In 2013, the Committee reviewed data from Towers Watson surveys of U.S. General Industry and Media executives and the Equilar Top 25 Survey. The Company compares its management salaries to those of companies in similar industries and with comparable revenues in order to get a general understanding of the compensation structures maintained by similarly situated companies, but does not target its executive compensation at a certain level or percentage based upon other companies’ arrangements. Salaries are typically reviewed on a 12-month or longer cycle, except when there is a significant change in an executive’s responsibilities during a shorter period of time.such cycle. Such adjustments are determined by evaluating (i) the scope of the new responsibilities, (ii) the competitive market value of that role, (iii) the performance of the individual and (iv) the performance of the Company.
With respect to the base salary paid to Mr.Messrs. Graham and O’Shaughnessy in 2013,2015, the Committee took into account a comparison ofconsidered the base salaries paid to chief executive officers of peer educationcompanies and media companies, the Company’s results in 2012 and2014. With regard to Mr. Graham’s performance since 1979, when he became publisher of The Washington Post. TheGraham, the Committee noted that Mr. Graham’s base salary was, and has long been, significantly below the median of base salaries paid to chief executive officers of these peer companies: other prominent media companies, including The New York Times Company and Gannett Co., Inc.; and publicly held education companies, including Apollo Group, Inc., DeVry, Inc., Strayer Education, Inc., and Corinthian Colleges, Inc.companies. However, at Mr. Graham’s request, the Committee left his salary at $400,000.$400,000, and further reduced it to $100,000 at Mr. Graham’s request in November 2015 in connection with his resignation from the role of Chief Executive Officer. The Committee does not give significance toweigh Mr. Graham’s below-market salary when reviewing and establishing salaries for other named executive officers.
Performance-Based Incentive Compensation
To supplement base salaries and to reward management (including named executive officers and other employees key to the long-term success of the Company) for meeting specific individual and financial goals, the Class A Shareholders of the Company adopted in December 1981 the Long-Term Incentive Compensation Plan. In 2001, the Annual Compensation Plan, originally approved by the Class A Shareholders in February 1974, was combined with the Long-Term Incentive Compensation Plan to create the Incentive Compensation Plan. In May 2012, the Class A and Class B Shareholders of the Company adopted the 2012 ICP in May 2012. Prior to the adoption of the 2012 ICP, performance-based incentive compensation was awarded under the Incentive Compensation Plan (the “Plan”). The Incentive Compensation Plan was combined with(adopted in 2001) or the Stock Option Plan which the shareholders reauthorized(reauthorized in 2003, to create the Plan. 2003).
The purpose of these plans was and is to provide greater incentives to those employees who have been or will be responsible for the Company’s future growth, profitability and continued success and to strengthen the ability of the Company to attract, motivate and retain such employees. There are at present approximately 167156 employees of the Company who are participants under the Plan2012 ICP and receive annual bonus awards and/or hold restricted stock, and/or stock options and/or grants of Performance Units.performance units granted under the 2012 ICP. Each named executive officer, except Mr. Graham, (who only participates in the Performance Units portion of the Plan), participates in each of these programs.
Annual Bonuses
The Plan calls2012 ICP provides for annual incentive compensation awards based on the Company and its business units’ financial performance compared to goals set immediately prior to or at the beginning of the year in which the award is to be earned. The payout upon the achievement of such goals is equal to a percentage of base salary, which is also set at the beginning of the year. Those percentages are determined on an individual basis, taking into account the responsibilities, prior experience and recent performance of the relevant employee. The 20132015 target percentage of base salaryannual bonus award for each of the named executive officers, as a percentage of base salary, was as follows: Mr. O’Shaughnessy, 100%; Mr. Rosen, 100%; Mr. Jones, 50%; Mr. Rosberg, 40%; Ms. McDaniel, 70% (to reflect additional responsibilities relating to the management of Slate, Post–Newsweek Media and The Herald); and Ms. Dillon,Maddrey, 40%. Mr. Graham has asked the Committee not to grant him an annual bonus award.
In 2014, Ms. McDaniel's bonus target was reduced to 50% of base salary to reflect the sales of Post–Newsweek Media and the Herald, which both occurred in 2013.
In addition, for Mr. Rosen, 50% of his bonus was based on the diluted earnings per share target for the Company, and the remaining 50% was tied to Kaplan’s enterprise operating income target of $114 million weighted at 80% and Kaplan’s enterprise revenue target of $1,943 million weighted at 20%. The potential payouts for the Kaplan component of Mr. Rosen’s
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bonus amount range from 0% to 200% of target, with the maximum potential payout available in the event 125% of the operating income target is attained. Due to continued operating environment challenges in the U.S. higher education industry, Kaplan engaged and completed a number of unplanned restructuring activities in 2015 with the objective and result of significantly reducing its expenses to be more in line with current revenue levels. In addition, Kaplan disposed of certain loss-making businesses. Given the impact and importance of these restructuring charges and discontinued operations, in calculating the 50% of Mr. Rosen’s bonus based on Kaplan’s enterprise operating income and enterprise revenue, the Committee excluded these restructuring charges and discontinued operations as they are not tied to Kaplan’s continuing operations. On this basis, Kaplan achieved adjusted operating income of $133.1 million versus a target of $165.5 million, or 80% achievement, which resulted in payout of the portion of Mr. Rosen’s bonus attributable to Kaplan’s enterprise operating income of 25% of target. Kaplan enterprise revenue totaled $1,778.1 million versus a target of $1,882.0 million, which did not result in a payout under the bonus plan. Thus, the total percentage achievement of the Kaplan portion of Mr. Rosen’s bonus totaled 21% of target, or $169,579.
The original diluted earnings per share goal for 20132015 was $20.12; however$37.53. However, in connection with the spin-off of Cable ONE, the Company’s cable systems and related operations division, completed as of July 1, 2015, the Committee established that the 2015 goal would be adjusted for the goal to excludeperiod that the impact of discontinued operations,Company did not own Cable ONE, resulting in a revised diluted earnings per share goal, as approved by the Committee, of $23.54.$29.72. In setting the original goal, the Committee established a formula for bonus purposes that included adjustments for certain items, to the extent that actual amounts varied from those in the 20132015 annual budget. Specifically, these adjustments included creditsadditions for unbudgeted divestitures and a pension budget variance,variance; foreign exchange losses; unbudgeted new acquisitions, investments and divestitures; and unbudgeted costs associated with the Cable ONE spin-off; these were offset by additionscredits for foreign exchange losses, acquisitions and a Kaplan stock compensation expense budget variance.
In calculating the Company’s achievement of 20132015 diluted earnings per share for purposes of making its final bonus determinations for the named executive officers, the Committee also exercised its discretion to exclude certain unusual and unbudgeted items, in addition to the adjustments included in the diluted earnings per share formula. Specifically, the adjustments included unbudgeted intangible and long-lived asset impairment charges, unbudgeted restructuring charges at Kaplan a non-cash intangible and other long-lived assets impairment chargecorporate, unbudgeted stock compensation expense due to award modifications, LTIP expense variance from budget at one of the Kaplan businesses, a write-down of a marketable equity security, other investment write-downs andSocialCode, unbudgeted costs related toat the broadcasting division and Forney, and a gain on the sale of certain publishing businesses.land. The Committee adjusted for these items as they do not relate to the regular operating results that are customarily considered by the Committee in determining bonus amounts. The
Taking into account these adjustments, the Company’s 20132015 diluted earnings per share, as adjusted for purposes of the bonus determination, was $30.14$32.29 (compared to reported diluted earningslosses per share from continuing operations of $25.78)$17.87), resulting in the Company’s achievement of 128%108.6% of its revised earnings per share goal for 2013. Annual bonuses are paid at a maximum of 175% of target for earnings per share performance of 135% of budget.2015. As a result, the annual bonus payout was approximately 165%121% of target, based on the established annual formula.
In addition to the annual bonus based on a pre-established formula,awards, in 2013,2015, the Committee exercised its discretion to award special bonus payments to certain individuals, including three of the named executive officers,Mr. Jones and Ms. Maddrey, who were integral to the closingcompletion of the sale of mostCable ONE spin-off. In recognition of the Company’s newspaper publishing and affiliated businesses, which is defined below asextraordinary efforts of each executive in connection with the WPM Transaction. Specifically,spin-off, the Committee awarded each of Mr. Jones and Ms. Maddrey a special paymentsbonus payment in the amount of $500,000 to each of Ms. Dillon$200,000 and Mr. Jones and $200,000 to Ms. McDaniel in recognition of their extraordinary efforts in connection with the WPM Transaction.
Restricted Stock
To align the interests of Shareholdersthe Company’s shareholders and management and to ensure that the full potential of an executive’s compensation package cannot be realized unless stock appreciation occurs over a number of years, the Plan2012 ICP also provides for grants of restricted stock inof the Company. To determine the number of shares to be granted, the Committee considers on an individual basis the likelyestimated value of shares already held, the level of contribution the employee has previously made and the potential of the employee to bring additional value to the Company. The shares are vestedgenerally cliff vest at the endconclusion of the restrictiona four-year vesting period usually four years, and accelerate vesting does not accelerate under their terms, exceptonly at the discretion of the Committee.
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Performance Units
To highlight specific long-term financial goals, the Plan2012 ICP provides for the grant of performance-based compensation, which the Company grants pursuant to its Performance Unit Plans. AllThe named executive officers, other than Mr. Graham, participate in these plans, in which performance-based goals are determined at the beginning of each four-year award cycle. The goals consider operating income, peer company performance, cash flow, earnings per share, measures of economic value added, and/or quantitative revenue growth or profitability measurements of the Company as a whole or of individual business units. Management and the Committee believe that they have designed the performance-based goals to be challenging, but achievable. In three of the past four award cycles, the Company achieved or exceeded its goals and paid out at or above target. In one of the past four award cycles, the targeted performance goals were not met, and the plan paid out below target. Each performance unit has a nominal value of $100. The$100 and a maximum potential payout of performance units is $200 per unit, and the$200. The payment of a total award to any individual at the end of an award cycle may not exceed $5 million.
For each cycle under a Performance Unit Plan, the Committee establishes a valuation formula atwithin 90 days of the startbeginning of the cycle and no later than prior to the completion of the first quarter of the cycle. At the end of the cycle, the unit value is calculated, based on application of the formula, and payments are made to named executive officers in the year following the end of the cycle. The formula used to calculate the payouts is determined by (i) a weighted combination of factors that relate to individual business unit performance of the Company’s operating divisions and (ii) the discretion of the Committee. A new four-year cycle commences every two years, with the result that there are always two overlapping cycles in progress.
In connection with the sale of Washington Post Media (“WPM”) was comprised of most of the Company’s former newspaper publishing and affiliated businesses, sold to Nash Holdings LLC (“Nash”). WPM comprised the following subsidiaries: WP Company LLC, Express Publications Company, LLC and El Tiempo Latino LLC. Post–Newsweek Media LLC, Greater Washington Publishing, LLC and Robinson Terminal Warehouse LLC were also sold to Nash. The sale to Nash was, completed in October 2013 (the “WPM Transaction”). As a result of the WPM Transaction,, the Committee, in January 2014, revised the valuation formulas ofwith respect to the 2011–2014 and 2013–2016 cycles.
Awards under the 2011–20142013–2016 cycle arewere initially based on a three-prongedtwo-pronged formula. The 2011–20142013–2016 cycle formula consistsconsisted of an average of the value of the performance units allocable to (1) the 2011–20142013–2016 performance of WPM, Cable ONE Inc.and Graham Media Group (“Cable ONE”GMG”) and Post–Newsweek Stations, Inc. (“PNS”) (49%(65%); plus (2) an amount based on Kaplan’s achievement of cumulative operating income goals during the four-year period, excluding Kaplan stock compensation expense and restructuring charge (35%). In light of the Cable ONE spin-off, the Committee in January 2015 revised the valuation formula of the 2013–2016 cycle to take effect on the closing date of the transaction, which was July 1, 2015. Specifically, the Committee determined that if Cable ONE were no longer held by the Company for the final year-and-one-half of the performance period, then the weighting of performance units attributable to an average of Cable ONE and GMG should be reduced and the weighting of performance units attributable solely to GMG should make up for the reduction. Accordingly, as of July 1, 2015, awards under the 2013–2016 cycle are based on a three-pronged formula consisting of the average of the value of the performance units allocable to 2011–2014(1) the performance of Cable ONE through June 30, 2015 and PNSthe 2013–2016 performance of GMG (49%); plus (2) the value of the performance units allocable to the 2013–2016 performance of GMG (16%); plus (3) an amount based on Kaplan’s achievement of cumulative operating income goals during the four-year period, excluding Kaplan stock compensation expense and restructuring charges (35%).
Awards under the 2013–20162015–2018 cycle are based on a two-pronged formula. The 2013–2016 cyclethree-pronged formula consistsconsisting of anthe average of (1) the value (up to $200) of a Kaplan Performance Unit paid to Kaplan in accordance with the final unit valuation of the 2014–2017 Kaplan Long-Term Incentive Plan (35%); plus (2) the value of a Performance Unit under the performance units allocable to performance of Cable ONE and PNS (65%Broadcasting valuation (35%),; plus (3) an amount based on Kaplan’s achievement of cumulative operating income goals during the four-year period excluding Kaplan stock compensation expensefor SocialCode, Slate, Celtic Healthcare, Residential Healthcare Group, Forney Corporation and restructuring charge (35%Joyce/Dayton Corporation (30%).
The Committee selected these targets because they reflected the key priorities for the Company on the grant date for the applicable time periods. The values of Performance Unitsperformance units in the 2011–20142013–2016 and 2013–20162015–2018 cycles are determined at the conclusion of those cycles, based on the performance criteria described below.
Performance | Unit Value | ||
Greater than $86M | $ | 200 | |
$66M to $85M | $ | 150 | |
$36M to $65M | $ | 100 | |
$0M to $35M | $ | 50 | |
Less than $0M | $ | 0 |
The performance measure used in the formula for the 2013–2016 cycle prior to the Cable ONE for both the 2011–2014 and 2013–2016 cyclesspin-off is cumulative free cash flow of Cable ONE over the applicable four-yearthree-year period relative to a target amount.and the cash flow margin of GMG described below. Free cash flow is defined as operating income, plus depreciation and amortization, less capital expenditures. Valuations of performance units, based on this measure are as follows:
Performance | Unit Value | ||
110% | $ | 200 | |
105% | $ | 175 | |
100% Target | $ | 150 | |
91% | $ | 15 | |
Less than 91% | $ | 0 |
Performance | Unit Value | |||
110% | $ | 200 | ||
105% | $ | 175 | ||
100% Target | $ | 150 | ||
90% | $ | 15 | ||
Less than 90% | $ | 0 |
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The performance measure used for PNSGMG (Broadcasting) for both the 2011–20142013–2016 and 2013–2016the 2015–2018 cycles is PNS’sGMG’s cumulative cash flow margin ranking over the applicable four-year period compared to the cash flow margins of selected peer companies at the end of the award cycle. Cash flow margin is computed based on operating income plus depreciation and amortization, as a percentage of revenue. As soon as practical after the award cycle, the Committee determines PNS’sGMG’s cash flow margin rank among the cash flow margins of the peer companies and determines the payout value of each performance unit. The value of each performance unit is determined as set forth in the following table:
PNS Cash Flow Margin Rank | Unit Value | ||
#1 | $ | 150 | |
#2 | $ | 125 | |
#3 | $ | 50 | |
Below #3 | $ | 0 |
GMG Cash Flow Margin Rank | Unit Value | |||
#1 | $ | 150 | ||
#2 | $ | 125 | ||
#3 | $ | 50 | ||
Below #3 | $ | 0 |
The PNSGMG (Broadcasting) formula for both the 2011–20142013–2016 and 2013–2016the 2015–2018 cycles provides that the payout value will be increased by $12.50 for each of the four years during the award cycle in which PNS’sGMG’s actual cash flow margin is not only number one among peer companies, but is also 2% higher than that of the nearest competitor among the peer companies. The formula also provides that the payout value will be reduced by 50% if PNSGMG does not produce operating income in one of the four years during the award cycle. If PNSGMG does not produce operating income for at least two years in the cycle, then there will be no payout with respect to the portion of performance attributable to PNS.
For the 2013–2016 cycle, the Kaplan performance measure is based on Kaplan’s cumulative operating income for 2013–2016. For the 2015–2018 cycle, the performance measure used for Kaplan for the 2014–2017 Kaplan Long-Term Incentive Plan is Kaplan enterprise operating income growth. A baseline Kaplan enterprise operating income of $75 million was established in 2014 and increases year-over-year by 10%. Provided Kaplan achieves incremental operating income growth above the baseline, the aggregate amount of awards available are calculated as 12% of such growth.
For the 2015–2018 cycle, the performance measure during the four-year period for SocialCode, Slate, Celtic Healthcare, Residential Healthcare Group, Forney Corporation and Joyce/Dayton Corporation is based on cumulative operating income.
Because the performance measures that compose the valuation formula for performance units are cumulative for the measures applicable to Kaplan, WPM, Cable ONE, GMG and PNS,the other applicable business units, it is not possible to calculate with certainty any interim
Stock Options
Pursuant to the Company grants stock options sparingly,terms of the Plan provides that2012 ICP, shares of Class B Stock canmay be issued upon the exercise of stock options that have been granted to key employees of the Company. The Committee, however, does not grant stock options on a consistent basis and grants stock options only when a key employee has made a significant contribution to the Company and demonstrates the ability to contribute more.make additional contributions. The options generally vest 25% per year, over four years, and expire ten years from the grant date. AsIn November 2015, in connection with his assumption of the endrole of Chief Executive Officer in addition to his role as President of the Company’s 2013 fiscal year,Company, Mr. Jones heldO’Shaughnessy received an additional grant of options to acquire 4,00022,742 shares of Class B Stock (3,000 grantedso that as of December 31, 2015, he held 100,000 Company options. For a description of the terms of Mr. O’Shaughnessy’s options, see the section below titled “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table: Stock Options.”
In addition, in 2008 and 1,000 granted in 2010); Mr. Rosberg held options to acquire 1,000 shares of Class B Stock, granted in 2008; Ms. McDaniel held options to acquire 2,000 shares of Class B Stock (1,000 granted in 2004 and 1,000 granted in 2008); and Ms. Dillon held options to acquire 1,000 shares of Class B Stock, granted in 2008. Given Mr. Graham’s significant ownership inconnection with the Cable ONE spin-off, the Company adjusted both the Committee has not granted anynumber of shares underlying, and the exercise price of, outstanding stock options held by employees who remained employed by the Company following the Cable ONE spin-off, including stock options held by each of Messrs. O’Shaughnessy, Jones, Rosen and Rosberg. Such adjustments resulted in incremental stock compensation expense with respect to Mr. Graham.
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Perquisites
The Company provides few perquisites for the named executive officers. In 2013,2015, Ms. McDanielMaddrey received $960 for paid garage parking at the Company’s headquarters in Arlington, VA, and financial and tax advice valued at $10,466. Ms. Dillon received financial planning services$24,920.
Retirement Benefits
Qualified Defined Contribution and reimbursement for living expenses valued at $75,729.
Most employees inof the Company, including certain named executive officers, are eligible to participate in the Company’s qualified defined contribution 401(k) and defined benefit retirement programs. Benefits under these plans are determined on the basis of base salary only, exclusive of all bonuses, deferred compensation and other forms of remuneration.
Eligible Corporate employees hired on or after September 1, 2009, participate in the Cash Balance Retirement Program (“CBRP”). Eligible Corporate employees who were actively employed on or after August 1, 2012, also participate in the Secure Retirement Account (“SRA”). Both the CBRP and the SRA are defined benefit programs in which participant account balances grow through quarterly pay-based credits and quarterly interest credits. Corporate employees hired prior to September 1, 2009, including allcertain named executive officers who are vested and who begin to take their pension benefit at age 65 or whose age and years of service when added together equal 90 (the “Rule of 90”), receive an annual pension equal to 1.75% of their highest average 60-month base salary annualized up to the limits permitted by the Internal Revenue Code, minus Social Security-covered compensation multiplied by the appropriate Social Security offset percentage and early retirement factor, multiplied by the number of years of credited service under the Graham Holdings Retirement Benefits Schedule.
Non-Qualified Supplemental Executive Retirement Plan for Graham Holdings Company (formerly The Retirement Plan for Washington Post Companies) were transferred to the Pension Plan for The Washington Post and Companies.
The Company maintains an unfunded Supplemental Executive Retirement Plan (“SERP”),SERP which is designed to retain and recruit key executives. Participants in the SERP, including certain named executive officers, arewere selected by management as employees whom management most wantswanted to retain because of their superior performance and arewere approved for participation by the Committee.
To offset IRS limitations placed on the income that can be considered in the formulas of retirement plans and benefits that can be payable from the plans, the SERP provides a “supplemental retirement benefit.” This benefit is calculated
The SERP also provides key executives, including thecertain named executive officers, with tax-deferred accruals of amounts proportionate to the benefits available to non-highly compensated participants in the Company’s 401(k) savings plan, to the extent that benefits exceed those under the Company’s basic plans because of the tax law limitations ($52,000 in 2014)(currently $53,000). The executive is required to defer compensation to the SERP savings plan in order to receive the applicable matching company credit each year. Mr. Graham has waived his right to maintain a separate unfunded savings plan account under the SERP.
Non-Qualified Deferred Compensation Plan
The Company also maintains a Deferred Compensation Plan. The Deferred Compensation Plan is an unfunded plan that allowsallowed a select group of senior executives and non-employee Directors the opportunity to voluntarily defer, on a nonqualifiednon-qualified basis, the receipt of certain compensation payments or fees. For employee participants, including thecertain named executive officers, eligible compensation for deferral iswas limited to annual bonus and certain long-term cash awards (including performance unit grants) under the 2012 Incentive Compensation Plan.
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Employment Agreements and Severance Packages
Mr. O’Shaughnessy’s Agreement
The Company entered into a letter agreement with its policy,Mr. O’Shaughnessy in October 2014 to incentivize him to accept the position of President of the Company. Pursuant to his employment agreement, Mr. O’Shaughnessy was entitled to a grant of 5,000 performance units in the 2013–2016 performance cycle, 7,500 performance units in the 2015–2018 cycle, and was granted a new-hire option award of 50,000 stock options. In addition, pursuant to Mr. O’Shaughnessy’s employment agreement, if he is terminated for any reason other than cause while his new-hire option award remains outstanding, subject to the execution of a separation and release agreement within 30 days following his termination, he will vest in the next tranche of options that is scheduled to vest after his termination, and he will have up to three months (or shorter if through the expiration date of the award) following termination to exercise any vested options.
Under the terms of Mr. O’Shaughnessy’s letter agreement, and as consideration for the benefits provided in the agreement, Mr. O’Shaughnessy agreed to non-competition, non-solicitation of customers and employees and no-hire restrictions for a one-year period following termination, as well as to maintain the confidentiality of certain information related to the Company has notand its businesses at all times following termination.
Mr. Rosen’s Agreement
The Company entered into any employment agreementsa letter agreement with or guaranteed severance packagesMr. Rosen in April 2014 to anyincentivize him to accept the position of Chairman of Kaplan and Executive Vice President of the named executive officers.
If Mr. Rosen is terminated for any reason prior to September 1, 2018, the defined benefit portion of his SERP benefit will be calculated as if he satisfied the Rule of 90, provided however that all components of the unrestricted benefit other than the early retirement factor shall be computed using his actual age and years of service (such enhanced benefit, the “Rosen Individual Pension Arrangement”). The Rosen Individual Pension Arrangement would be payable in the same form and at the same time as his benefit under the SERP would otherwise be paid, provided that if his employment with the Company terminates for any reason prior to September 1, 2018, the enhanced benefit will not begin earlier than September 1, 2018.
If Mr. Rosen is terminated by the Company without cause, he will receive a one-time lump-sum cash payment of $3,500,000, payable on the 65th day following termination of employment, and prorated vesting of outstanding restricted stock and stock options held at the time of termination, provided that he signs an irrevocable separation and release agreement no later than 60 days following the date of his termination.
Should Mr. Rosen choose to terminate his employment with the Company prior to April 1, 2016, he will receive a one-time lump-sum cash payment of $2,000,000, payable on the 65th day following termination of employment (the “Rosen Individual Deferred Compensation Arrangement”), provided that he signs an irrevocable separation and release agreement no later than 60 days following the date of his termination.
Under the terms of Mr. Rosen’s letter agreement, and as consideration for the benefits provided in the agreement, Mr. Rosen agreed to non-competition, non-solicitation of customers and employees and no-hire restrictions for a one-year period following termination, as well as to maintain the confidentiality of certain information related to the Company and its businesses at all times following termination.
Mr. Jones’ Agreement
The Company entered into a letter agreement with Mr. Jones in July 2014 to retain him as Chief Financial Officer of the Company. Mr. Jones’ agreement guarantees, subject to his signing an irrevocable separation and release agreement no later than 60 days following the date of termination, a cash payment upon termination from the Company for any reason other than cause and an enhancement to his qualified and non-qualified retirement benefits. The value of the benefit will be equal to the sum of $1,400,000 (the “Jones Individual Deferred Compensation Arrangement”) plus the actuarial present value of 10% of the benefits payable to him under The Retirement Plan and the SERP (the “Jones Individual Pension Arrangement”). These benefits will be payable no later than 70 days following termination of employment, unless such 70-day period would span two different taxable years, in which case it will be paid in the second such taxable year.
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Under the terms of Mr. Jones’ letter agreement, and as consideration for the benefits provided in the agreement, Mr. Jones agreed to non-competition, non-solicitation of customers and employees and no-hire restrictions for a one-year period following termination, as well as to maintain the confidentiality of certain information related to the Company and its businesses at all times following termination.
Mr. Rosberg’s Agreement
The Company entered into a letter agreement with Mr. Rosberg in July 2014 to retain him as Senior Vice President–Planning and Development of the Company. Mr. Rosberg’s agreement guarantees, subject to his signing an irrevocable separation and release agreement no later than 60 days following the date of termination, a cash payment upon termination from the Company for any reason other than cause and an enhancement to his qualified and non-qualified retirement benefits. The value of the benefit will be equal to the sum of $1,000,000 (the “Rosberg Individual Deferred Compensation Arrangement”) plus the actuarial present value of 10% of the benefits payable to him under The Retirement Plan and the SERP (the “Rosberg Individual Pension Arrangement”). These benefits will be payable no later than 70 days following termination of employment, unless such 70-day period would span two different taxable years, in which case it will be paid in the second such taxable year.
Under the terms of Mr. Rosberg’s letter agreement, and as consideration for the benefits provided in the agreement, Mr. Rosberg agreed to non-competition, non-solicitation of customers and employees and no-hire restrictions for a one-year period following termination, as well as to maintain the confidentiality of certain information related to the Company and its businesses at all times following termination.
Results of Shareholder Advisory Votes on Executive Compensation
At the 20132015 Annual Meeting of Shareholders, the Company’s Class A Shareholders unanimously approved the overall 20122014 compensation for its named executive officers, including the policies and practices related thereto. The Company believes this vote reflected Class A Shareholder approval of its pay-for-performance philosophy and the absence of pay practices that shareholders consider problematic. Accordingly, the Compensation Committee generally continued to apply the same principles in determining the amounts and types of executive compensation for 20132015, as outlined in its compensation philosophy and framework. The Compensation Committee values the shareholder feedback provided through the vote and will consider the results of the vote, as well as future votes, in refining the development of our compensation program and goal setting in the future.
COMPENSATION COMMITTEE REPORT
The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management, and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Anne M. Mulcahy, Chairman
Lee C. Bollinger
Barry Diller
Larry D. Thompson
26
The following table shows the compensation paid by the Company during the most recent three years to theeach individual who served as principal executive officer at any time during 2015, the principal financial officer and the three other most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($) (d) 1 | Stock Awards ($) (e) 2 | Non-Equity Incentive Plan Compen-sation ($) (f) 3 | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) (g) 4 | All Other Compen-sation ($) (h) 5 | Total ($) (i) | |||||||
Donald E. Graham | 2013 | 400,000 | — | — | — | — | 2,550 | 402,550 | |||||||
Chairman of the Board and Chief Executive Officer | 2012 | 400,000 | — | — | — | 464,724 | 13,000 | 877,724 | |||||||
2011 | 400,000 | — | — | — | 619,163 | 12,740 | 1,031,903 | ||||||||
Hal S. Jones | 2013 | 725,000 | 500,000 | — | 596,600 | 552,554 | 26,990 | 2,401,144 | |||||||
Senior Vice President–Finance and Chief Financial Officer | 2012 | 700,000 | — | 297,704 | 1,307,848 | 1,239,250 | 67,760 | 3,612,562 | |||||||
2011 | 675,000 | — | 352,680 | 179,700 | 967,167 | 46,380 | 2,220,927 | ||||||||
Gerald M. Rosberg | 2013 | 615,000 | — | — | 404,900 | — | 21,270 | 1,041,170 | |||||||
Senior Vice President–Planning and Development | 2012 | 592,250 | — | 297,704 | 1,009,700 | 294,356 | 64,607 | 2,258,617 | |||||||
2011 | 575,000 | — | 352,680 | 122,500 | 780,214 | 50,580 | 1,880,974 | ||||||||
Ann L. McDaniel | 2013 | 615,000 | 200,000 | — | 466,400 | 433,606 | 31,736 | 1,746,742 | |||||||
Senior Vice President | 2012 | 592,250 | — | 297,704 | 1,068,925 | 1,186,376 | 81,423 | 3,226,678 | |||||||
2011 | 575,000 | — | 352,680 | 122,500 | 1,491,123 | 68,164 | 2,609,467 | ||||||||
Veronica Dillon | 2013 | 615,000 | 500,000 | — | 404,900 | 248,024 | 96,999 | 1,864,923 | |||||||
Senior Vice President, General Counsel and Secretary | 2012 | 592,250 | — | 297,704 | 1,009,700 | 1,019,736 | 144,625 | 3,064,015 | |||||||
2011 | 575,000 | — | 352,680 | 122,500 | 646,458 | 127,854 | 1,824,492 |
Name and Principal Position (a) | Year (b) | Salary ($) (c)1 | Bonus ($) (d)2 | Stock Awards ($) (e)3 | Option Awards ($) (f)3 | Non- Equity | Change in Pension Value and Non- Qualified Deferred Compen- sation Earnings ($) (h)5 | All Other Compen- sation ($) (i)6 | Total ($) (j) | |||||||||||||||||||||||||||
Donald E. Graham | 2015 | 359,524 | — | — | — | — | — | 2,650 | 362,174 | |||||||||||||||||||||||||||
Chairman of the Board and Chief Executive Officer | 2014 | 400,000 | — | — | — | — | 460,724 | 2,600 | 863,324 | |||||||||||||||||||||||||||
2013 | 400,000 | — | — | — | — | — | 2,550 | 402,550 | ||||||||||||||||||||||||||||
Timothy J. O’Shaughnessy | 2015 | 750,000 | — | — | 2,951,507 | 906,000 | 4,972 | — | 4,612,479 | |||||||||||||||||||||||||||
President and Chief Executive Officer | 2014 | 125,000 | — | — | 8,800,000 | 130,600 | — | — | 9,055,600 | |||||||||||||||||||||||||||
Hal S. Jones | 2015 | 785,000 | 200,000 | 610,299 | 398,287 | 474,140 | 469,837 | 45,590 | 2,983,153 | |||||||||||||||||||||||||||
Senior Vice President–Finance and Chief Financial Officer | 2014 | 755,000 | — | — | — | 1,174,200 | 2,280,070 | 1,444,660 | 5,653,930 | |||||||||||||||||||||||||||
2013 | 725,000 | 500,000 | — | — | 596,600 | 552,554 | 26,990 | 2,401,144 | ||||||||||||||||||||||||||||
Andrew S. Rosen | 2015 | 1,625,000 | — | 871,855 | 15,528,977 | 1,151,079 | 550,490 | 112,350 | 19,839,751 | |||||||||||||||||||||||||||
Chairman Kaplan Inc. and Executive Vice President–Graham Holdings Co. | 2014 | 1,625,000 | — | — | — | 1,129,486 | 3,965,652 | 2,099,550 | 8,819,688 | |||||||||||||||||||||||||||
Gerald M. Rosberg | 2015 | 665,000 | — | 610,299 | 347,519 | 321,328 | — | 39,350 | 1,983,496 | |||||||||||||||||||||||||||
Senior Vice President–Planning and Development | 2014 | 642,000 | — | — | — | 1,048,200 | 632,301 | 1,036,184 | 3,358,685 | |||||||||||||||||||||||||||
2013 | 615,000 | — | — | — | 404,900 | — | 21,270 | 1,041,170 | ||||||||||||||||||||||||||||
Nicole M. Maddrey | 2015 | 500,000 | 400,000 | 435,928 | — | 241,600 | 37,118 | 42,840 | 1,657,486 | |||||||||||||||||||||||||||
Senior Vice President, General Counsel & Secretary |
1. | Amounts in this column represent base salary earned for each of the named executive officers in 2015. In connection with his resignation as Chief Executive Officer on November 12, 2015, Mr. Graham’s salary was reduced from $400,000 to $100,000. Mr. O’Shaughnessy joined the Company as President on November 3, 2014, and became President and Chief Executive Officer on November 12, 2015. |
Amounts in this column represent special payments made in recognition of extraordinary efforts in connection with the WPM |
The |
4. | |
Amounts in this column for 2015 represent payments under the 2015 annual bonus plan. Amounts in this column for 2014 represent payments under the 2014 annual bonus plan and the 2011–2014 Performance Unit Plan as follows: Mr. O’Shaughnessy, $130,600 in annual bonus; Mr. Jones, $394,200 in annual bonus, $780,000 in performance units; Mr. Rosen, $1,129,486 in annual bonus; Mr. Rosberg, $268,200 in annual bonus, $780,000 in performance units. Amounts in this column for 2013 represent payments under the 2013 annual bonus plan. |
There were no above-market or preferential earnings on compensation |
Benefits were assumed to commence at the age when theybenefits under the SERP are first unreduced and were discounted to the date as of which they were determined (either 12/31/20132015 or 12/31/2012)2014). Assumed benefit commencement ages are shown below, rounded to the nearest age:
Graham: | age 71 (12/31/2015); age 70 (12/31/2014) | |
Jones: | age 63 (12/31/2015 and 12/31/2014) | |
Rosen: | age 58 (12/31/2015 and 12/31/2014) | |
Rosberg: | age 69 (12/31/2015); age 68 (12/31/2014) |
Mr. Graham and Mr. Rosberg have both reached Normal Retirement Age (age 65). Mr. Jones Ms. McDaniel and Ms. DillonMr. Rosen have allboth met the eligibility requirements for Early Retirement (age 55, with ten years of Company service).
Changes in the present value of benefits in 20132015 are attributable to The Retirement Plan for Graham Holdings Company (“Retirement Plan”) and the corresponding benefit under the SERP as follows: Mr. Graham, Graham–($86,624)65,995) Retirement Plan and ($131,671)104,596) the SERP; Mr. Jones, $42,428Jones–$75,760 Retirement Plan, $326,678 the SERP and $510,126 the SERP;$67,399 under his Individual Pension Arrangement; Mr. Rosberg, ($2,677)O’Shaughnessy–$4,972 Retirement Plan; Mr. Rosen–$20,312 Retirement Plan, $530,178 the SERP and ($112,560) the SERP; Ms. McDaniel, $20,941$0 under his Individual Pension Arrangement; Mr. Rosberg–$9,025 Retirement Plan, ($73,658) the SERP and $412,665$28,788 under his Individual Pension Arrangement; Ms. Maddrey–$37,118 Retirement Plan. For additional detail regarding the SERP; Ms. Dillon, $52,870 Retirement PlanJones Individual Pension Arrangement, the Rosen Individual Pension Arrangement and $195,154 the SERP.
The values of accumulated plan benefits were determined using a discount rate of 4.80%4.30% at 12/31/20132015 and a discount rate of 4.00% at 12/31/2012.
For |
27
ALL OTHER COMPENSATION
Name (a) | Perquisites ($) (b) 1 | 401(k) Company Contributions ($) (c) | SERP Company Contributions ($) (d) | Total ($) (e) | |||
Donald E. Graham | — | 2,550 | — | 2,550 | |||
Hal S. Jones | — | 2,550 | 24,440 | 26,990 | |||
Gerald M. Rosberg | — | 2,550 | 18,720 | 21,270 | |||
Ann L. McDaniel | 10,466 | 2,550 | 18,720 | 31,736 | |||
Veronica Dillon | 75,729 | 2,550 | 18,720 | 96,999 |
Name (a) | Perquisites ($) (b)1 | 401(k) Company (c) | SERP Company (d) | Restricted (e)2 | Individual Deferred Compensation Arrangement (f) | Total ($) (g) | ||||||||||||||||
Donald E. Graham | — | 2,650 | — | — | — | 2,650 | ||||||||||||||||
Timothy J. O’Shaughnessy | — | — | — | — | — | — | ||||||||||||||||
Hal S. Jones | — | 2,650 | 27,040 | 15,900 | — | 45,590 | ||||||||||||||||
Andrew S. Rosen | — | 2,650 | 40,800 | 68,900 | — | 112,350 | ||||||||||||||||
Gerald M. Rosberg | — | 2,650 | 20,800 | 15,900 | — | 39,350 | ||||||||||||||||
Nicole M. Maddrey | 25,880 | 2,650 | — | 14,310 | — | 42,840 |
1. | The amount represents |
2. | The amounts represent dividends attributable to Graham Holdings Company and Cable ONE restricted stock granted under the |
The following table provides information on awards made under the Company’s 2012 Incentive Compensation PlanICP to each of the named executive officers in 2013. The types of awards2015. Awards granted to the named executive officers under the 2012 ICP in 20132015 include annual incentive awards, performance units, stock options and performance units:
GRANTS OF PLAN-BASED AWARDS
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||
Name (a) | Grant Date (b) | Non-equity Incentive Plan Awards: Number of Units or Other Rights (#) (c) | Threshold ($) (d) | Target ($) (e) | Max ($) (f) | Threshold ($) (g) | Target ($) (h) | Max ($) (i) | All Other Stock Awards: Number of Shares of Stock or Units (#) (j) | All Other Option Awards: Number of Securities Underlying Options (#) (k) | Exercise or Base Price of Option Awards ($/share) (l) | Closing Price on Date of Grant for Option Awards, if Different ($) (m) | Grant Date Fair Value of Stock and Option Awards (n) | |
Donald E. Graham | — | — | — | — | — | — | — | — | — | — | — | — | — | |
Performance Units2 | 1/1/2013 | 9,750 | 47,580 | 400,000 | 400,000 | |||||||||
Hal S. Jones | ||||||||||||||
Annual Incentive1 | — | — | 181,250 | 362,500 | 634,375 | — | — | — | — | — | — | — | — | |
Performance Units2 | 1/1/2013 | 6,500 | 31,720 | 650,000 | 1,300,000 | — | — | — | — | — | — | — | — | |
Gerald M. Rosberg | ||||||||||||||
Annual Incentive1 | — | — | 123,000 | 246,000 | 430,500 | — | — | — | — | — | — | — | — | |
Performance Units2 | 1/1/2013 | 6,500 | 31,720 | 650,000 | 1,300,000 | — | — | — | — | — | — | — | — | |
Ann L. McDaniel | ||||||||||||||
Annual Incentive1 | — | — | 215,250 | 430,500 | 615,000 | — | — | — | — | — | — | — | — | |
Performance Units2 | 1/1/2013 | 6,500 | 31,720 | 650,000 | 1,300,000 | — | — | — | — | — | — | — | — | |
Veronica Dillon | ||||||||||||||
Annual Incentive1 | — | — | 123,000 | 246,000 | 430,500 | — | — | — | — | — | — | — | — | |
Performance Units2 | 1/1/2013 | 6,500 | 31,720 | 650,000 | 1,300,000 | — | — | — | — | — | — | — | — |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||
Name (a) | Grant (b) | Non-Equity (c) | Threshold (d) | Target (e) | Max ($) (f) | Threshold (g) | Target (h) | Max (i) | All Other (j) | All Other (k) | Exercise (l) | Closing (m) | Grant Fair and (n) | |||||||||||||
Donald E. Graham | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||
Timothy J. O’Shaughnessy | ||||||||||||||||||||||||||
Annual Incentive1 | — | — | 375,000 | 750,000 | 1,500,000 | — | — | — | — | — | — | — | — | |||||||||||||
Performance Units2 | 1/1/2015 | 7,500 | 65,625 | 750,000 | 1,500,000 | — | — | — | — | — | — | — | — | |||||||||||||
Stock Options3 | 11/12/2015 | — | — | — | — | — | — | — | — | 22,742 | 872.01 | 561.51 | 2,951,507 | |||||||||||||
Hal S. Jones | ||||||||||||||||||||||||||
Annual Incentive1 | — | — | 196,250 | 392,500 | 785,000 | — | — | — | — | — | — | — | — | |||||||||||||
Performance Units2 | 1/1/2015 | 8,000 | 70,000 | 800,000 | 1,600,000 | — | — | — | — | — | — | — | — | |||||||||||||
Stock Options3 | 7/1/2015 | — | — | — | — | — | — | — | — | — | — | — | 398,287 | |||||||||||||
Restricted Stock4 | 1/1/2015 | — | — | — | — | — | — | — | 700 | — | — | — | 610,299 | |||||||||||||
Andrew S. Rosen | ||||||||||||||||||||||||||
Annual Incentive1 | — | — | 812,500 | 1,625,000 | 3,250,000 | — | — | — | — | — | — | — | — | |||||||||||||
Performance Units2 | 1/1/2015 | 7,000 | 61,250 | 700,000 | 1,400,000 | — | — | — | — | — | — | — | — | |||||||||||||
Stock Options3 | 7/1/2015 | — | — | — | — | — | — | — | — | — | — | — | 15,528,977 | |||||||||||||
Restricted Stock4 | 1/1/2015 | — | — | — | — | — | — | — | 1,000 | — | — | — | 871,855 | |||||||||||||
Gerald M. Rosberg | ||||||||||||||||||||||||||
Annual Incentive1 | — | — | 133,000 | 266,000 | 532,000 | — | — | — | — | — | — | — | — | |||||||||||||
Performance Units2 | 1/1/2015 | 6,500 | 56,875 | 650,000 | 1,300,000 | — | — | — | — | — | — | — | — | |||||||||||||
Stock Options3 | 7/1/2015 | — | — | — | — | — | — | — | — | — | — | — | 347,519 | |||||||||||||
Restricted Stock4 | 1/1/2015 | — | — | — | — | — | — | — | 700 | — | — | — | 610,299 | |||||||||||||
Nicole M. Maddrey | ||||||||||||||||||||||||||
Annual Incentive1 | — | — | 100,000 | 200,000 | 400,000 | — | — | — | — | — | — | — | — | |||||||||||||
Performance Units2 | 1/1/2015 | 5,000 | 43,750 | 500,000 | 1,000,000 | — | — | — | — | — | — | — | — | |||||||||||||
Restricted Stock4 | 1/1/2015 | — | — | — | — | — | — | — | 500 | — | — | — | 435,928 |
1. | Amounts |
28
2. | These grants represent performance units granted as part of a four-year award cycle. The |
3. | In connection with his promotion to Chief Executive Officer, Mr. O’Shaughnessy received an option award vesting over a six-year period. In connection with the spin-off of Cable ONE, the Company modified outstanding stock options to add an anti-dilution provision; this resulted in incremental stock compensation expense as follows: Mr. Jones, $398,287; Mr. Rosen, $15,528,977; Mr. Rosberg, $347,519. |
4. | These grants represent shares of restricted stock. These awards will vest on January 1, 2019. Grant date fair value calculated using the average of the high and low price of a share of the Company’s Class B Common Stock as of December 31, 2014 ($871.86). |
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND
GRANTS OF PLAN-BASED AWARDS TABLE
The following describes material features of the compensation disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards Table.
Employment Agreements.
Letter Agreement. As described in “Compensation Discussion and Analysis: Employment Agreements and Severance Packages,” each of Messrs. Jones and Rosberg entered into a letter agreement with the Company in 2014 providing for enhanced retirement benefits upon the termination of their employment with the Company for any reason.
Annual Bonus/Incentive Awards. The Summary Compensation Table and Grants of Plan-Based Awards table provide information regarding the annual bonus or guaranteed severance packagesincentive awards granted to any of the named executive officers.
Restricted Stock.
The Summary Compensation Table reflects the fair value of the restricted stock awards made inPerformance Units.
The Summary Compensation Table includes amounts earned forStock Options. Generally, the value of stock option awards shown in the Summary Compensation Table represents options granted under the 2012 ICP. The options generally vest 25% per year over a four-year period from the date of grant and are exercisable for further details on Performance Units.
29
The following table shows the number of shares covered by exercisable and unexercisable options and unvested restricted stock held by the Company’s named executive officers on December 31, 2013.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards 1 | Stock Awards 2 | ||||||||
Name (a) | Number of Securities Underlying Unexercised Options: Exercisable (#) (b) | Number of Securities Underlying Unexercised Options: Unexercisable (#) (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested ($) (h) 3 | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) |
Donald E. Graham | — | — | — | — | — | — | — | — | — |
Hal S. Jones | 2,000 | — | — | 651.91 | 5/12/2018 | 1,600 | 1,061,312 | — | — |
1,000 | — | — | 368.56 | 12/15/2018 | — | — | — | — | |
750 | 250 | — | 395.67 | 12/7/2020 | — | — | — | — | |
Gerald M. Rosberg | 1,000 | — | — | 368.56 | 12/15/2018 | 1,600 | 1,061,312 | — | — |
Ann L. McDaniel | 1,000 | — | — | 953.50 | 12/13/2014 | 1,600 | 1,061,312 | — | — |
1,000 | — | — | 368.56 | 12/15/2018 | — | — | — | — | |
Veronica Dillon | 1,000 | — | — | 368.56 | 12/15/2018 | 1,600 | 1,061,312 | — | — |
Option Awards1 | Stock Awards2 | |||||||||||||||||
Name (a) | Number of (b) | Number of (c) | Equity (d) | Option (e) | Option (f) | Number of (g)2 | Market (h)3 | Equity (i) | Equity (j) | |||||||||
Donald E. Graham | — | — | — | — | — | — — | — | — | — | |||||||||
Timothy J. O’Shaughnessy | 12,876 | 64,382 | — | 719.15 | 11/3/2024 | — — | — | — | — | |||||||||
22,742 | — | 872.01 | 11/12/2025 | — — | — | — | — | |||||||||||
Hal S. Jones | 3,090 | — | — | 421.91 | 5/12/2018 | GHC 1,500 | 728,640 | — | — | |||||||||
CABO 1,500 | 659,190 | |||||||||||||||||
Andrew S. Rosen | 77,258 | — | — | 325.26 | 2/22/2021 | GHC 6,500 | 3,157,440 | — | — | |||||||||
CABO 6,500 | 2,856,490 | |||||||||||||||||
Gerald M. Rosberg | 1,545 | — | — | 238.53 | 12/15/2018 | GHC 1,500 | 728,640 | — | — | |||||||||
CABO 1,500 | 659,190 | |||||||||||||||||
Nicole M. Maddrey | — | — | — | — | — | GHC 1,350 | 655,776 | — | — | |||||||||
CABO 1,350 | 593,271 |
1. | Stock Options granted under the Company’s Stock Option Plan and the 2012 |
Number of Options | Year 1 Vest Date | Year 4 Vest Date | Vested | Not Vested | ||||||||
Hal S. Jones | 2,000 | 5/12/2009 | to | 5/12/2012 | 2,000 | — | ||||||
1,000 | 12/15/2009 | to | 12/15/2012 | 1,000 | — | |||||||
1,000 | 12/7/2011 | to | 12/7/2014 | 750 | 250 | |||||||
Gerald M. Rosberg | 1,000 | 12/15/2009 | to | 12/15/2012 | 1,000 | — | ||||||
Ann L. McDaniel | 1,000 | 12/13/2005 | to | 12/13/2008 | 1,000 | — | ||||||
1,000 | 12/15/2009 | to | 12/15/2012 | 1,000 | — | |||||||
Veronica Dillon | 1,000 | 12/15/2009 | to | 12/15/2012 | 1,000 | — |
Number of Options | Year 1 Vest Date | Year 4 Vest Date | Year 6 Vest Date | Vested at 12/31/15 | Unvested | |||||||||
Timothy J. O’Shaughnessy | 77,258 | 11/3/2015 | to | 11/3/2020 | 12,876 | 64,382 | ||||||||
22,742 | 11/12/2016 | to | 11/12/2021 | — | 22,742 | |||||||||
Hal S. Jones | 3,090 | 5/12/2009 | to | 5/12/2012 | 3,090 | — | ||||||||
Andrew S. Rosen | 77,258 | 2/22/2012 | to | 2/22/2015 | 77,258 | — | ||||||||
Gerald M. Rosberg | 1,545 | 12/15/2009 | to | 12/15/2012 | 1,545 | — |
2. | Stock Awards have been granted in the form of Restricted Stock under the Company’s Incentive Compensation Plan and the 2012 |
Stock Ticker | Number of Shares | Vest Date | ||||
Hal S. Jones | GHC | 700 | 1/1/2019 | |||
CABO | 700 | 1/1/2019 | ||||
GHC | 800 | 1/4/2017 | ||||
800 | 1/4/2017 | |||||
Andrew S. Rosen | 1,000 | 1/ | ||||
CABO | 1,000 | 1/1/2019 | ||||
GHC | 2,500 | 1/4/2017 | ||||
CABO | 2,500 | 1/4/2017 | ||||
GHC | 3,000 | 1/4/2016 | ||||
CABO | 3,000 | 1/4/2016 | ||||
Gerald M. Rosberg | GHC | 700 | 1/1/2019 | |||
CABO | 700 | 1/1/2019 | ||||
GHC | 800 | 1/4/2017 | ||||
800 | 1/4/2017 | |||||
Nicole M. Maddrey | 500 | 1/ |
CABO | 500 | 1/1/2019 | ||||
GHC | 500 | 2/20/2017 | ||||
CABO | 500 | 2/20/2017 | ||||
GHC | 350 | 1/4/2017 | ||||
CABO | 350 | 1/4/2017 |
3. | Calculated using the |
30
The following table shows the number of Class B shares acquired upon the exercise of stock options and the vesting of stock awards held by the named executive officers in fiscal year 2015 and the value realized upon such exercise or vesting.
OPTION EXERCISES AND STOCK VESTED
Name (a) | Option Awards | Stock Awards | ||||||
Number of Shares Acquired (b) | Value Realized on (c) | Number of Shares Acquired on (d) | Value Realized on Vesting ($) (e) | |||||
Donald E. Graham | — | — | — | — | ||||
Timothy J. O’Shaughnessy | — | — | — | — | ||||
Hal S. Jones | — | — | 800 | 692,128 | ||||
Andrew S. Rosen | — | — | — | — | ||||
Gerald M. Rosberg | — | — | 800 | 692,128 | ||||
Nicole M. Maddrey | — | — | 300 | 259,548 |
PENSION BENEFITS
The Pension Benefits table includes information related to the Company’s tax-qualified defined benefit plan, The Retirement Plan, for Graham Holdings Company (the “Retirement Plan”),
Retirement Plan Benefits Under the Graham Holdings Retirement Benefits Schedule
Mr. Graham, Mr. Jones, Mr. Rosen, Mr. Rosberg Ms. McDaniel and Ms. DillonMaddrey are participants in the Graham Holdings Retirement Benefits Schedule. Benefits payable under thisthe Graham Schedule include the following, subject to the limitations on tax-qualified plans mentioned above:
Vested benefits under theThe Retirement Plan are generally payable in the form of a single life annuity. In addition, several optional forms are available that continue benefits to the employee’s spouse or beneficiary, with the monthly benefit amount reduced so that the resulting pension is actuarially equivalent to the single life annuity. The Retirement Plan’s normal retirement age is 65. The Graham Holdings Retirement Benefits Schedule provides a reduced benefit beginning at age 55. The reduction is a percentage based on age at retirement. For example, at age 55 with ten years of service, the reduction is 60%; at age 58, the reduction is 26%. However, if the employee’s age plus years of service at retirement is at least 90, then there is no reduction for early payment.
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Retirement Plan Benefits Under the Newsweek Retirement Benefits Schedule
A portion of Ms. McDaniel’sMr. Rosen’s pension benefit was earned under the Newsweek Retirement Benefits Schedule. Vested benefits payable under this Schedule include the following, subject to the limitations on tax-qualified plans mentioned above:
The Newsweek Retirement Benefits Schedule permits early retirement with full benefits at various combinations of age and service. Ms. McDaniel is presently entitled toMr. Rosen will be eligible for an unreduced early retirement benefit.
Retirement Plan Benefits Under the Kaplan Cash Balance Retirement Benefit Schedule
A portion of Mr. Jones’s and Ms. Dillon’sJones’ pension benefit was earned under the Kaplan Cash Balance Retirement BenefitsSchedule. A portion of Mr. Rosen’s pension benefit is earned under the Kaplan Schedule. Under this Schedule,both Schedules, each employee has an account (expressed as a lump sumlump-sum amount, rather than as an annuity) that is credited with quarterly pay-based credits and interest credits. Pay-based credits vary from 2.25% of salary to 3.75% of salary, depending on years of service. Interest is credited on these accounts at the greater of 1.41% or 1% plus the average interest rate on one-year U.S. Treasury securities. Upon retirement, the employee may elect various forms of annuities that are actuarially equivalent to the accumulated account balance, or, alternatively, may elect a lump sumlump-sum payment. Vested benefits are payable upon termination of employment at any age.
Retirement Plan Benefits Under the Secure Retirement Account Cash Balance Retirement Program Schedule
A portion of Mr. Graham’s, Mr. Jones’s,Jones’, Mr. O’Shaughnessy’s, Mr. Rosen’s, Mr. Rosberg’s Ms. McDaniel’s and Ms. Dillon’sMaddrey’s pension benefit was earned under the Secure Retirement Account Cash Balance Retirement Program Schedule (“SRA”).SRA Schedule. Under this Schedule, each employee has an account (expressed as a lump sumlump-sum amount, rather than as an annuity) that is credited with quarterly pay-based credits and interest credits. Pay-based credits vary from 4.62% to 7.35% for Mr. Graham, Mr. Jones, Mr. Rosberg and Ms. Maddrey and 2.20% to 3.50% for Mr. O’Shaughnessy and Mr. Rosen, depending on years of service. Interest is credited on these accounts at the greater of 1.41% or 1% plus the average interest rate on one-year U.S. Treasury securities. Upon retirement, the employee may elect various forms of annuities that are actuarially equivalent to the accumulated account balance, or, alternatively, may elect a lump-sum payment. Vested benefits are payable upon termination of employment at any age.
Retirement Plan Benefits Under the CBRP
A portion of Mr. O’Shaughnessy’s pension benefit is earned under the CBRP Schedule. Under this Schedule, an employee has an account (expressed as a lump-sum amount, rather than as an annuity) that is credited with quarterly pay-based credits and interest credits. Pay-based credits vary from 2.25% to 3.75%, depending on years of service. Interest is credited on these accounts at the greater of 1.41% or 1% plus the average interest rate on one-year U.S. Treasury securities. Upon retirement, the employee may elect various forms of annuities that are actuarially equivalent to the accumulated account balance, or, alternatively, may elect a lump sumlump-sum payment. Vested benefits are payable upon termination of employment at any age.
SERP Benefits
As explained above, the SERP provides benefits to each of thecertain eligible named executive officers under the formulas outlined above, countingincluding bonuses in addition to salary, without regard to the limits on compensation and benefits, to the extent that the resulting total benefit exceeds the benefits payable under theThe Retirement Plan. Benefits under the SERP are paid at retirement or age 55, if later, and are payable either in the form of a life annuity or an actuarially equivalent optional form of benefit in theThe Retirement Plan, provided that any benefits otherwise payable before the first day of the seventh month following retirement will be withheld until such date.
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Other Pension Benefits
Name (a) | Plan Name (b) | Number of Years of Credited Service (c)1 | Present Value of Accumulated Benefit ($) (d)2 | Payments During Last FY ($) (e) |
Donald E. Graham | The Retirement Plan for Graham Holdings Company | 43 | 1,932,285 | — |
Graham Holdings Company Supplemental Executive Retirement Plan | 43 | 1,219,465 | — | |
Total Pension Plan Benefits | 43 | 3,151,750 | — | |
Hal S. Jones | The Retirement Plan for Graham Holdings Company | 24 | 924,658 | — |
Graham Holdings Company Supplemental Executive Retirement Plan | 24 | 4,406,463 | — | |
Total Pension Plan Benefits | 24 | 5,331,121 | — | |
Gerald M. Rosberg | The Retirement Plan for Graham Holdings Company | 18 | 868,145 | — |
Graham Holdings Company Supplemental Executive Retirement Plan | 18 | 2,420,391 | — | |
Total Pension Plan Benefits | 18 | 3,288,536 | — | |
Ann L. McDaniel | The Retirement Plan for Graham Holdings Company | 30 | 1,454,585 | — |
Graham Holdings Company Supplemental Executive Retirement Plan | 30 | 4,031,792 | — | |
Total Pension Plan Benefits | 30 | 5,486,377 | — | |
Veronica Dillon | The Retirement Plan for Graham Holdings Company | 23 | 435,194 | — |
Graham Holdings Company Supplemental Executive Retirement Plan | 23 | 3,758,389 | — | |
Total Pension Plan Benefits | 23 | 4,193,583 | — |
As described above, each of Messrs. Jones, Rosen and Rosberg is entitled to enhanced retirement benefits in connection with the terms of each executive officer’s respective employment or letter agreement. For additional information regarding the terms of these benefits, see “Compensation Discussion and Analysis: Employment Agreements and Severance Packages” and “Compensation Discussion and Analysis: Retirement Benefits.”
Pension Benefits
Name (a) | Plan Name (b) | Number of (c)1 | Present Value of (d)2 | Payments (e) | ||||
Donald E. Graham | The Retirement Plan for Graham Holdings Company | 45 | 2,180,311 | — | ||||
Graham Holdings Company Supplemental Executive Retirement Plan | 45 | 1,261,572 | — | |||||
Total Pension Plan Benefits | 45 | 3,441,883 | — | |||||
Timothy J. O’Shaughnessy | The Retirement Plan for Graham Holdings Company | 1 | 4,972 | — | ||||
Total Pension Plan Benefits | 1 | 4,972 | — | |||||
Hal S. Jones | The Retirement Plan for Graham Holdings Company | 26 | 1,254,869 | — | ||||
Graham Holdings Company Supplemental Executive Retirement Plan | 26 | 6,076,349 | — | |||||
Jones Individual Pension Arrangement | N/A | 749,810 | — | |||||
Total Pension Plan Benefits | 26 | 8,081,028 | — | |||||
Andrew S. Rosen | The Retirement Plan for Graham Holdings Company | 29 | 383,909 | — | ||||
Graham Holdings Company Supplemental Executive Retirement Plan | 29 | 19,804,281 | — | |||||
Total Pension Plan Benefits | 29 | 20,188,190 | — | |||||
Gerald M. Rosberg | The Retirement Plan for Graham Holdings Company | 20 | 1,051,857 | — | ||||
Graham Holdings Company Supplemental Executive Retirement Plan | 20 | 2,804,348 | — | |||||
Rosberg Individual Pension Arrangement | N/A | 395,263 | — | |||||
Total Pension Plan Benefits | 20 | 4,251,468 | — | |||||
Nicole M. Maddrey | The Retirement Plan for Graham Holdings Company | 9 | 304,859 | — | ||||
Total Pension Plan Benefits | 9 | 304,859 | — |
1. | Data in this column represent the number of years of credited service earned by the named executive officer as of December 31, |
2. | Amounts in this column represent the actuarial present value of the named executive officer’s accumulated benefits under the plan as of December 31, |
The assumptions used in determining the present value of accumulated benefits are the RP-2015 Fully Generational Mortality Table for males and females and a 4.30% discount rate. The benefits valued reflect service and earnings through December 31, 2015, and are valued as payable on the earliest date at which the SERP benefits are unreduced. There can be no assurance that the amounts listed in this column will ever be fully paid out to the applicable named executive officer.
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NON-QUALIFIED DEFERRED COMPENSATION
The following table includes information related to the SERP and the Deferred Compensation Plan. Among the benefits provided under the SERP is a supplemental defined contribution plan benefit wherein the Company provides a matching contribution percentage up to 4% of the participating executive’s base salary in excess of the annual covered compensation limit applied to qualified plan benefits. The executive is required to make contributions to the SERP in order to receive the applicable matching Company credit each year. The Deferred Compensation Plan provides an opportunity for participants to voluntarily defer the receipt of all or a portion of annual bonus and/or certain long-term cash awards made under the 2012 Incentive Compensation Plan.ICP. Elections to defer must be filed in advance of earning such awards. The Company closed the SERP and the Deferred Compensation Plan to new participants as of December 2015. Deferred amounts under both plans will earn investment credits in accordance with the participant’s elections from a choice of investment indexes. Amounts deferred under the SERP are payable on the first day of the seventh month following termination of service. Amounts deferred under the Deferred Compensation Plan are payable on the first business day of the seventh month following the date of separation from service or such other future date as specified by the participant at the time of election. Effective for deferral elections made on or after January 1, 2014, amounts deferred under the Deferred Compensation Plan are payable on the first business day of the seventh month following the date of separation of service regardless of the participant’s elections.
Name (a) | Executive Contributions in Last FY ($) (b)1 | Registrant Contributions in Last FY ($) (c)2 | Aggregate Earnings in Last FY ($) (d)3 | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at last FYE ($) (f)4 |
Donald E. Graham | — | — | — | — | — |
Hal S. Jones | 18,800 | 24,440 | 484,990 | — | 2,237,575 |
Gerald M. Rosberg | 14,400 | 18,720 | 115,865 | — | 507,392 |
Ann L. McDaniel | 384,280 | 18,720 | 263,503 | — | 1,656,067 |
Veronica Dillon | 14,400 | 18,720 | 35,688 | — | 265,396 |
Name (a) | Executive Contributions in Last FY ($) (b)1 | Registrant Contributions in Last FY ($) (c)2 | Aggregate Earnings (d)3 | Aggregate Withdrawals/ (e)4 | Aggregate Balance (f)5 | |||||
Donald E. Graham | — | — | — | — | — | |||||
Timothy J. O’Shaughnessy | — | — | — | — | — | |||||
Hal S. Jones | 20,800 | 27,040 | (106,074) | — | 3,840,998 | |||||
Andrew S. Rosen | 40,800 | 40,800 | (39,769) | — | 5,796,548 | |||||
Gerald M. Rosberg | 16,000 | 20,800 | (82,956) | — | 1,634,251 | |||||
Nicole M. Maddrey | — | — | — | — | — |
1. | Amounts in this column represent contributions by the named executive officer to the SERP and to the Deferred Compensation Plan as follows: Mr. Jones, |
2. | Amounts in this column represent Company |
3. | Amounts in this column represent investment gains or losses to the SERP and to the Deferred Compensation |
4. | There were no payments from the SERP and Deferred Compensation Plan to any of the named executive officers in 2015. |
Amounts in this column represent balances at December 31, |
Potential Payments Upon Termination or Change in Control
The Company does not have any agreements with any of the named executive officers that provide payments in conjunction with a change in control. A description and quantification of the estimated dollar value of potential severance payments and other benefits that would be provided to the named executive officers (or, in the case of death, to their respective estates or beneficiaries) under the named executive officer’s respective letter or employment agreements, option award agreements and individual arrangements following a termination of their employment is described below, assuming, in accordance with the SEC regulations, all relevant events occurred on December 31, 2015. For purposes of the valuations below, the price of the Company’s Class B common stock and the price of Cable ONE stock (to which all applicable equity awards relate) is assumed to be $485.76 and $439.46, respectively, which were the averages of the high and low share prices on December 31, 2015.
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Mr. Graham
Mr. Graham resigned as Chief Executive Officer of the Company in November 2015. Mr. Graham did not receive any payments or benefits upon his resignation, other than the benefits he is entitled to in accordance with the terms of the pension plans in which he participates, as described above in “Executive Compensation: Pension Benefits.”
Other Named Executive Officers
Upon a termination of employment, each of Messrs. Jones, Rosen, Rosberg and Ms. Maddrey would be entitled to pension and deferred compensation plan benefits in accordance with the terms of the pension and deferred compensation plans and arrangements in which they participate, as described above in “Executive Compensation: Pension Benefits” and “Executive Compensation: Non-Qualified Deferred Compensation.”
In addition, in the case of a termination by the Company other than for cause, Mr. O’Shaughnessy would be entitled to accelerated vesting of the next tranche of options that is scheduled to vest following such termination, as described above in “Compensation Disclosure and Analysis: Employment Agreements and Severance Packages.” Assuming a termination of employment as of December 31, 2015, Mr. O’Shaughnessy would be entitled to accelerated vesting of 12,876 stock options (representing a value of $0, based on their exercise price of $719.15 per share) and 3,790 stock options (representing a value of $0, based on their exercise price of $872.01 per share), subject to his signing of a release of claims in favor of the Company that has become irrevocable.
In the case of a termination by the Company other than for cause, Mr. Rosen would be entitled to (i) accelerated vesting of a pro rata portion of his outstanding and unvested stock options and restricted stock, which, assuming a termination of employment as of December 31, 2015, would result in accelerated vesting of 5,063 shares of Company restricted stock (representing a value of $2,459,403) and 5,063 shares of Cable ONE restricted stock (representing a value of $2,224,986), and (ii) a severance payment of $3,500,000, payable in a lump sum on the 65th day following such termination in accordance with the terms of his employment agreement, in each case, as described above in “Executive Compensation: Employment Agreements and Severance Packages,” and subject to his signing a release of claims in favor of the Company that has become irrevocable.
Each of Messrs. Jones, O’Shaughnessy, Rosen and Rosberg are subject to restrictive covenants that apply following termination for any reason, as described above in “Executive Compensation: Employment Agreements and Severance Packages.”
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AUDIT COMMITTEE REPORT
One of the standing committees of the Board of Directors of the Company is the Audit Committee. Currently, there are three non-employee members of the Board on the Audit Committee: Christopher C. Davis; Thomas S. Gayner, who serves as Chairman of the Audit Committee; and G. Richard Wagoner, Jr. The Audit Committee operates under a delegation of authority from the Board of Directors, which has determined that each Committee member is “independent” under the listing standards of the New York Stock Exchange. Specifically, the Board determined that none of the members of the Audit Committee (or any immediate family member) (i) had been employed by or affiliated with the Company within the past three years, (ii) received any compensation from the Company other than Director and committeeCommittee fees, (iii) is an employee of a company that makes payments to or receives payments from the Company in an amount that exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues within the past three years or (iv) has a material relationship with the Company.
Management has the primary responsibility for the preparation of the Company’s financial statements in accordance with generally accepted accounting principles and for the financial reporting process, including its system of internal control. The Company’s independent auditor, PricewaterhouseCoopers LLP, is responsible for auditing those financial statements in accordance with auditing standards generally accepted in the United States of America and for issuing a report thereon. In this context, the Audit Committee’s responsibility is to monitor and review these processes, as well as the independence and performance of the Company’s auditor. In undertaking its monitoring and reviewing responsibilities, without independent verification, the Audit Committee has relied on (i) management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with generally accepted accounting principles in the United States of America and (ii) the representations of PricewaterhouseCoopers LLP included in their report on the Company’s financial statements.
The Audit Committee has reviewed and discussed the audited fiscal year 20132015 financial statements with the Company’s management. In addition, the Audit Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by PCAOB Auditing Standard No. 16. The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountant the independent accountant’s independence. The Audit Committee has also considered whether PricewaterhouseCoopers LLP’s provision of non-audit services to the Company is compatible with the independence of such firm.
The Audit Committee also reviewed matters relating to the Company’s internal control over financial reporting.
Preapproval policy
In 2013,2015, the Audit Committee again reviewed and reauthorized its policies and procedures with regard to the preapproval of audit and non-audit services performed by the independent auditor in order to assure that the provision of such services does not impair the auditor’s independence. Unless a type of service to be provided by the independent auditor has received preapproval, it will require specific preapproval by the Audit Committee. Any proposed services exceeding preapproved cost levels will require specific preapproval by the Audit Committee. The term of any preapproval is 12 months from the date of preapproval, unless the Audit Committee specifically provides for a different period. The Audit Committee will periodically review and preapprove the services that may be provided by the independent auditor without obtaining specific preapproval from the Chairman of the Audit Committee, as well as revise the list of preapproved services from time to time, based on subsequent determinations.
The Audit Committee will not delegate to management responsibilities to preapprove services performed by the independent auditor to management.auditor. The Audit Committee may delegate preapproval authority to one or more of its members. The annual audit services engagement terms and fees will be subject to the specific preapproval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other matters. In addition to the annual audit services engagement specifically approved by the Audit Committee, the Audit Committee may grant preapproval for other audit services, which are those services that only the independent auditor reasonably can provide.
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements or that are traditionally performed by the independent auditor. The Audit Committee believes that the provision of audit-related services does not impair the independence of the independent auditor.
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The Audit Committee believes that the independent auditor can provide tax services to the Company, such as tax compliance, tax planning and tax advice, without impairing such auditor’s independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations.
The Audit Committee may grant preapproval of those permissible non-audit services classified as “All Other” services that it believes are routine and recurring services and would not impair the independence of the auditor. Preapproval fee levels for all such services to be provided by the independent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels will require specific preapproval by the Audit Committee.
Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by the Chief Financial Officer or Chief Accounting Officer (or other designated officer) and must include a statement from that individual as to whether, in his or her view, the request or application is consistent with the Securities and Exchange Commission’s rules on auditor independence.
In addition, the Audit Committee has established procedures for, and received periodic reports on, the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters through the use of a third-party-managed telephone hotline.
Audit Fees
PricewaterhouseCoopers LLP’s fees for the annual audit, statutory audits and reviews of financial statements included in the Company’s quarterly filings, including reimbursable expenses, were $4,476,100$4,585,000 in 20132015 and $4,126,500$6,079,000 in 2012,2014, which fees were reviewed and approved by the Audit Committee.
Audit-Related Fees
PricewaterhouseCoopers LLP’s fees for assurance and related services reasonably related to the performance of the audit or reviews of financial statements and not included under “Audit Fees” above, including reimbursable expenses, were $30,000$0 in 20132015 and $30,000$35,000 in 2012,2014, which fees were reviewed and approved by the Audit Committee. These fees were primarily for financial due diligence and transaction analysis and other audit-related reports.
Tax Fees
PricewaterhouseCoopers LLP’s fees for tax compliance, tax advice and tax planning, including reimbursable expenses, were $952,300$730,000 in 20132015 and $1,430,900$868,000 in 2012,2014, which fees were reviewed and approved by the Audit Committee. These fees were primarily for tax due diligence and transaction analysis, as well as federal, multistate and foreign tax consulting.
All Other Fees
PricewaterhouseCoopers LLP’s fees for other services, including a finance and accounting research tool provided by PricewaterhouseCoopers LLP, were $9,600$108,000 in 20132015 and $16,600$40,000 in 2012,2014, which fees were reviewed and approved by the Audit Committee.
Based on such review and discussion and in reliance thereon, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013,2015, for filing with the Securities and Exchange Commission.
Thomas S. Gayner, Chairman
Christopher C. Davis
G. Richard Wagoner, Jr.
37
Transactions With Related Persons, Promoters and Certain Control Persons
Mrs. Elizabeth G. Weymouth, the daughter of the late Mrs. Katharine Graham and the sister of Mr. Donald E. Graham, is employed as an Editor-at-Large of the Company’s publications and websites. In 2013,2015, she received $300,000 in compensation. Mrs. Weymouth’s base salary for 20142016 is $300,000.
Laura O’Shaughnessy, a daughter of Mr. Donald E. Graham and the wife of Mr. Timothy J. O’Shaughnessy, is employed full time as the President and Chief Executive Officer of Social Code LLC, a subsidiary of the Company. In 2013,2015, Mrs. O’Shaughnessy was paid $150,000$300,000 in base salary and received a bonus of $250,000$319,807 based on the achievement of pre-established 20132015 performance goals. She currently has 1,500 shares of Restricted Stock in the 2013–2016 cycle and 1,000 shares of Restricted Stock in the 2015–2018 cycle. Mrs. O’Shaughnessy’s base salary for 20142016 is $200,000.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, the only matters that the Board of Directors expects to present to the Meeting are those discussed herein. If any other matter or matters are properly brought before the Meeting or any adjournment thereof, it is the intention of the persons named in the accompanying form of Proxy to vote on those matters in accordance with their best judgment.
Upon the recommendation of the Audit Committee, the Board of Directors has selected PricewaterhouseCoopers LLP as the Company’s independent registered accountant to audit and report on its financial statements for the fiscal year 2014.2016. The same firm has acted as the Company’s independent accountant continuously since the Company was organized in 1946. As in previous years, a representative of PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have the opportunity to make any statement that he or she may desire with respect to the Company’s financial statements for 20132015 and the firm’s relationship with the Company and will be available to respond to appropriate questions from shareholders.
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Notice of
Annual Meeting
and
Proxy Statement
20142016
A | Proposals — The Board Recommends a vote FOR all nominees and FOR Proposal 2. | |||||||||||||||
1. | Election of Directors | For Withhold | For Withhold | For Withhold | ||||||||||||
01 - | Lee C. Bollinger | 02 - | Barry Diller | 03 - | David Goldberg | |||||||||||
04 - | Donald E. Graham | 05 - | Ronald L. Olson | 06 - | G. Richard Wagoner, Jr. | |||||||||||
07- | Katharine Weymouth |
Important notice regarding the availability of Proxy materials for the Annual Meeting of Shareholders to be held on May 12, 2016. The Proxy Statement and the Annual Report to Shareholders are available |
6qPLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q6
Proxy — Graham Holdings Company |
Class A Common Stock
Annual Meeting of Stockholders -Shareholders — May 8, 2014
Proxy Solicited on behalf of the Board of Directors
The undersigned hereby appoints Donald E. Graham, Hal S. Jones, Veronica DillonNicole M. Maddrey, Timothy J. O’Shaughnessy and Gerald M. Rosberg, and each of them, his/her true and lawful agents and proxies, with full power of substitution in each, to vote as indicated on the reverse of the Proxy all shares of Class A Common Stock whichthat the undersigned is entitled to vote, at the Annual Meeting of StockholdersShareholders of GRAHAM HOLDINGS COMPANY to be held on May 8, 2014,12, 2016, and at any adjournment thereof, and to vote on all other matters properly coming before said meeting.
You are encouraged to specify your choices by marking the appropriate boxes. SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote this card in accordance with the Board of Directors’ recommendations. The Proxy Committee cannot vote your shares unless you sign and return this card.
Please vote, date and sign this proxy on the other side and return it promptly in the enclosed envelope.
(Continued and to be voted on reverse side.)
Using ablack ink pen, mark your votes with an this example. Please do not write outside the designated areas. | ||
x | ||
6qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE,PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVLEOPE. ENVELOPE.q6
A | Election of Directors — The Board of Directors recommends a vote FOR all the nominees listed. | |||||||||||||||||||
1. | Nominees: | For Withhold | For Withhold | For Withhold | ||||||||||||||||
01 - | Christopher C. Davis | 02 - | Thomas S. Gayner | 03 - | Anne M. Mulcahy | |||||||||||||||
04 - | Larry D. Thompson |
A | Proposals — The Board recommends a voteFOR all nominees andFOR Proposal 2. |
For | ||||||||||||||||||||||||
For | Withhold | For | Withhold | |||||||||||||||||||||
01 - Lee C. Bollinger | ¨ | ¨ | 02 - Barry Diller | ¨ | ¨ | 03 - Donald E. Graham | ¨ | ¨ | ||||||||||||||||
04 - Ronald L. Olson | ¨ | ¨ | 05 - Timothy J. O’Shaughnessy | ¨ | ¨ | 06 - James H. Shelton | ¨ | ¨ | ||||||||||||||||
07 - G. Richard Wagoner, Jr. | ¨ | ¨ | 08 - Katharine Weymouth | ¨ | ¨ |
For | Against | Abstain | ||||||
2. Advisory Approval of the Company’s Executive Compensation. | ¨ | ¨ | ¨ |
B | Non-Voting Items |
Change of Address — Please print new address below. | Comments — Please print your comments below. | |||
C | Authorized Signatures — This section must be completed for your vote to be counted |
Please sign exactly as name(s) appears |
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||||||||
/ / | ||||||||||||
Important notice regarding the availability of Proxy materials for the Annual Meeting of Shareholders to be held on May 12, 2016. The Proxy Statement and the Annual Report to |
6qPLEASE IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q6
Proxy — Graham Holdings Company |
Graham Holdings Company
Class B Common Stock
Annual Meeting of Stockholders -Shareholders — May 8, 2014
Solicited on behalf of the Board of Directors
The undersigned hereby appoints Donald E. Graham, Hal S. Jones, Veronica DillonNicole M. Maddrey, Timothy J. O’Shaughnessy and Gerald M. Rosberg, and each of them, his/her true and lawful agents and proxies, with full power of substitution in each, to represent the undersigned, and to vote as indicated on the reverse of thethis Proxy all shares of Class B Common Stock whichthat the undersigned is entitled to vote, at the Annual Meeting of StockholdersShareholders of GRAHAM HOLDINGS COMPANY to be held on May 8, 2014
You are encouraged to specify your choices by marking the appropriate boxes. SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote this card in accordance with the Board of Directors’ recommendations. The Proxy Committee cannot vote your shares unless you sign and return this card.
Please vote, date and sign this proxy on the other side and return it promptly in the enclosed envelope.
(Continued and to be voted on reverse side.)
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if you voted by telephone, a subsequent Internet vote will change your vote. The last vote received before 5:00 p.m., Eastern Daylight Saving Time on May 7, 201411, 2016 will be the one counted. You may also revoke your proxy by voting in person at the annual meeting.Annual Meeting.
Electronic Voting Instructions You can vote by Internet or telephone Available 24 hours a day, 7 days a week | ||||||
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. | ||||||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||||||
Proxies submitted by the Internet or telephone must be received by 5:00 p.m., Eastern Daylight Saving Time, on May 11, 2016. | ||||||
Vote by Internet | ||||||
• Go towww.lnvestorvote.com | ||||||
• Or scan the QR code with your smartphone | ||||||
• Follow the steps outlined on the secure website | ||||||
Vote by telephone | ||||||
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone | ||||||
• Follow the instructions provided by the recorded message |
Using ablack ink pen, mark your votes with anX as shown in this example. Please do not write outside the designated areas. | x |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
A | Election of Directors — The Board of Directors recommends a voteFOR all the nominees listed. |
1. Nominees: | For | Withhold | For | Withhold | For | Withhold | ||||||||||||
01 - Christopher C. Davis | ¨ | ¨ | 02 - Thomas S. Gayner | ¨ | ¨ | 03 - Anne M. Mulcahy | ¨ | ¨ | ||||||||||
04 - Larry D. Thompson | ¨ | ¨ |
B | Non-Voting Items |
Change of Address —Please print your new address below. | Comments —Please print your comments below. | Meeting Attendance | ||||||||
Mark the box to the right if you plan to attend the Annual Meeting. | ¨ |
C | Authorized Signatures — This section must be completed for your vote to be counted — Date and Sign Below |
Please sign exactly as name(s) appears herein. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) — Please print date below.
/ / |
Signature 1 — Please keep signature within the box.
Signature 2 — Please keep signature within the box.