SCHEDULE 14A
(EXCHANGE ACT RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
R.H. DONNELLEY CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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or the Form or Schedule and the date of its filing.
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[RH Donnelley LOGO]
R.H. DONNELLEY CORPORATION
ONE MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
------------------------
March 25, 2002
To Our Stockholders:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders
of R.H. Donnelley Corporation to be held on Wednesday, May 1, 2002, at 9:00 a.m.
local time, at The Crowne Plaza White Plains Hotel, 66 Hale Avenue, White
Plains, New York 10601.
The Notice of Annual Meeting and Proxy Statement dated March 25, 2002
accompanying this letter describe the business to be acted upon at the meeting.
The Annual Report for the year ended December 31, 2001 and a form of proxy are
also enclosed. These materials are being mailed to stockholders on or about
March 26, 2002.
Sincerely,
/s/ Frank R. Noonan
Frank R. Noonan
Chairman of the Board and
Chief Executive Officer
[RH Donnelley Logo]
R.H. DONNELLEY CORPORATION
ONE MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 2002
To the Stockholders of
R.H. Donnelley Corporation:
Notice is hereby given that the 2002 Annual Meeting of Stockholders (the
"Meeting") of R.H. Donnelley Corporation (the "Company") will be held on
Wednesday, May 1, 2002, at 9:00 a.m. local time, at The Crowne Plaza White
Plains Hotel, 66 Hale Avenue, White Plains, New York 10601.
At the Meeting, you will be asked to vote upon the following matters:
1. Election of two Class III members of the Board of Directors, each for a
term of three years;
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2002; and
3. Any other matter that may properly come before the Meeting or any
postponements or adjournments thereof.
The Board of Directors has fixed the close of business on March 4, 2002 as
the record date for the purpose of determining stockholders entitled to notice
of, and to vote at, the Meeting or any postponements or adjournments thereof. A
list of such stockholders will be available at the Meeting and, during the ten
days prior to the Meeting, at the place of the Meeting as well as the Company's
executive offices located at One Manhattanville Road, Purchase, New York 10577.
By Order of the Board of Directors,
/s/ Robert J. Bush
Robert J. Bush
Vice President, General Counsel
and Corporate Secretary
Purchase, New York
March 25, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS VERY IMPORTANT THAT YOU
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PREPAID
ENVELOPE PROVIDED AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE
YOUR PROXY AT THAT TIME AND VOTE YOUR SHARES IN PERSON AT THE MEETING.
[RH Donnelley Logo]
R.H. DONNELLEY CORPORATION
ONE MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of R.H. Donnelley Corporation (the "Company") of proxies
for use at the Company's 2002 Annual Meeting of Stockholders (the "Meeting") or
at any adjournments or postponements thereof.
TABLE OF CONTENTS
<Table>
Questions and Answers....................................... 2
Proposals to be Voted Upon.................................. 5
Election of Directors..................................... 5
Ratification of Appointment of Independent Accountants.... 6
Board of Directors.......................................... 7
Nominees.................................................. 7
Directors Continuing in Office............................ 7
Committees of the Board of Directors...................... 9
Attendance at Board Meetings.............................. 9
Report of the Audit and Finance Committee on Financial
Reporting.............................................. 10
Director and Executive Compensation......................... 11
Directors' Compensation................................... 11
Executive Compensation.................................... 11
Employment Agreements..................................... 15
Performance Measurement Comparison........................ 17
Report of the Compensation and Benefits Committee on
Executive Compensation................................. 18
Compensation Committee Interlocks and Insider
Participation; Certain Relationships and Related Party
Transactions........................................... 21
Security Ownership of Certain Beneficial Owners and
Management................................................ 22
Other Information........................................... 24
How to Nominate Members of the Board of Directors......... 24
How to Raise a Matter at a Meeting........................ 24
Section 16(a) Beneficial Ownership Compliance............. 24
Delivery of Annual Report on Form 10-K.................... 24
Return of Proxy........................................... 25
</Table>
QUESTIONS AND ANSWERS
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Q: WHAT AM I VOTING ON AT THE MEETING?
A: 1. Election of Frank R. Noonan and Peter J. McDonald as Class III
members of the Board of Directors of the Company to serve three year
terms; and
2. Ratification of PricewaterhouseCoopers LLP as the Company's
independent accountants for 2002.
(See pages 5-6 for more details.)
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Q: WHAT DOES THE BOARD OF DIRECTORS RECOMMEND WITH RESPECT TO THE MATTERS
TO BE PRESENTED AT THE MEETING?
A: The Board of Directors recommends a vote IN FAVOR of the (i) election
of the two nominees for the Class III members of the Board of
Directors; and (ii) ratification of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2002.
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Q: WHO IS ENTITLED TO VOTE?
A: Stockholders of record as of the close of business on March 4, 2002
(the "Record Date") are entitled to vote at the Meeting. As of the
Record Date, 29,424,806 shares of the Company's common stock were
outstanding and entitled to vote at the Meeting. As of the Record Date,
the outstanding shares of the Company's common stock were held by
approximately 7,100 holders of record in addition to approximately
15,000 stockholders whose shares were held in nominee name. Each share
of common stock is entitled to one vote on each proposal to properly
come before the Meeting.
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Q: HOW DO I VOTE BY PROXY?
A: Sign and date each proxy card that you receive and return it in the
postage prepaid envelope. The proxy will be voted at the Meeting
according to your instructions as indicated on the proxy card. If the
proxy card is signed and returned but no instructions are given, then
your proxy will be voted in favor of the proposals described herein and
on the proxy card. With respect to proposals brought before the Meeting
but not referenced on the proxy card or in this Proxy Statement, your
proxy will be voted in the discretion of the proxies named on the proxy
card. (See page 3 for more details.)
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Q: MAY I REVOKE MY PROXY?
A: Yes. Your proxy may be revoked at any time before it is voted at the
Meeting by (i) written notice to the Secretary of the Company (at the
address of the Company set forth on the first page of this Proxy
Statement), (ii) a duly executed proxy bearing a later date or (iii)
voting in person at the Meeting.
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2
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Q: HOW DO I VOTE SHARES THAT ARE HELD IN EMPLOYEE BENEFIT PLANS?
A: If you are a participant in the Company's Profit Participation Plan or
the DonTech Profit Participation Plan (collectively the "Plans") and
have funds invested in the Company's common stock, your proxy card will
serve as a voting instruction for the trustee of the respective Plan.
Fractional shares you hold in the Plans are not printed on the proxy
card but will be voted by the trustee as if included thereon. If a
proxy covering shares in the Plans has not been received on or before
April 26, 2002, or if it is signed and returned without instructions,
the trustee will vote those shares in the same proportion as the shares
for which it has received instructions, except as otherwise required by
law.
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Q: WHO WILL COUNT THE VOTE AT THE MEETING?
A: Representatives of The Bank of New York, the Company's transfer agent,
will tabulate the vote and serve as inspector of election at the
Meeting.
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Q: WHAT CONSTITUTES A QUORUM FOR THE MEETING?
A: A majority of the Company's outstanding shares, present or represented
by proxy at the Meeting, constitutes a quorum for purposes of
conducting business at the Meeting. Shares represented by proxies that
are marked "abstain" or "withhold authority" on any or all matters will
be counted as shares present for purposes of determining the presence
of a quorum on all matters. Proxies relating to shares held in "street
name" that are voted by brokers on some but not all of the matters will
be treated as shares present for purposes of determining the presence
of a quorum on all matters.
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Q: WHAT ARE THE VOTING REQUIREMENTS FOR THE APPROVAL OF EACH OF THE
PROPOSALS?
A: 1. The nominees for Class III members of the Board of Directors must be
elected by a plurality of the shares present in person or represented
by proxy and entitled to vote; and
2. The ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent accountants for 2002 and any other matter
that properly comes before the Meeting, in each case, requires the
approval of the majority of the shares present in person or represented
by proxy and entitled to vote at the Meeting.
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Q: HOW IS MY PROXY VOTED ON MATTERS NOT IDENTIFIED ON THE PROXY CARD OR IN
THIS PROXY STATEMENT?
A: The Board of Directors presently knows of no other matters to be
presented for action at the Meeting. The Company did not receive notice
by March 2, 2002 of any nomination for a director pursuant to the
By-Laws of the Company or by February 2, 2002 (as required by
applicable regulations of the Securities and Exchange Commission) of
any other matter intended to be raised by any shareholder at the
Meeting. Accordingly, the proxy card confers upon the persons named on
the proxy card authority to vote your shares in their discretion upon
any other matter that may properly come before the Meeting.
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3
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Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It means that your shares are registered differently and, therefore,
are in more than one account. Sign and return all proxy cards to ensure
that all of your shares are voted. To provide better stockholder
services, we encourage you to have all shares and accounts registered
in the same name and address. You may do this by contacting our
transfer agent, The Bank of New York, at 1-800-524-4458.
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Q: WHO MAY ATTEND THE MEETING?
A: All stockholders as of the Record Date (March 4, 2002) are invited to
attend, although seating may be limited.
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Q: WHO IS BEARING THE COST OF THIS PROXY SOLICITATION AND HOW IS THE
SOLICITATION EFFECTED?
A: The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the
Company. The solicitation of proxies may be made by directors, officers
and employees of the Company personally or by mail, telephone or
facsimile communication. No additional compensation will be paid for
such solicitation. In addition, arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of stock
held of record by such persons, and the Company will reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing.
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Q: UNDER WHAT CIRCUMSTANCES MAY THE MEETING BE ADJOURNED?
A: Adjournments may be made for the purpose of, among other things,
soliciting additional proxies. Any adjournment may be made from time to
time by approval of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Meeting
(whether or not a quorum exists) without further notice other than by
an announcement made at the Meeting. The Company does not currently
intend to seek an adjournment of the Meeting.
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Q: WHEN ARE STOCKHOLDER PROPOSALS DUE FOR INCLUSION IN THE COMPANY'S PROXY
STATEMENT FOR THE 2003 ANNUAL MEETING?
A: Proposals of the Company's stockholders intended to be presented at the
Company's 2003 Annual Meeting of Stockholders must be received by the
Company no later than November 26, 2002 to be included in the Company's
proxy statement and form of proxy relating to the 2003 Annual Meeting.
Any proposal should be addressed to Robert J. Bush, Esq., Vice
President, General Counsel and Corporate Secretary, R.H. Donnelley
Corporation, One Manhattanville Road, Purchase, New York 10577, and
should be sent by certified mail, return receipt requested. (Also see
"Other Information -- How to Nominate Members of the Board of
Directors" and " -- How to Raise a Matter at a Meeting" on page 24.)
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4
PROPOSALS TO BE VOTED UPON
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board of Directors of the Company is presently comprised of eight
members and is divided into three classes. At the 2002 Annual Meeting of
Stockholders, Frank R. Noonan and Peter J. McDonald, the Board of Directors'
nominees for Class III of the Board of Directors, are up for re-election to the
Board. Messrs. Noonan and McDonald presently serve as Class III Directors.
William G. Jacobi, another current Class III director, will not seek re-election
at the Meeting. In accordance with the Company's Certificate of Incorporation,
the Board of Directors has established that effective immediately prior to the
Meeting, the Board of Directors shall be comprised of seven members and divided
into three classes. (See page 7 for more information regarding the nominees.)
If elected, they (or their successors as so appointed by the Board in
accordance with the Company's By-Laws) will each serve until the 2005 Annual
Meeting of Stockholders or until their respective successors are duly elected
and qualified. Mr. Noonan presently intends to resign from the Board in December
2002. If he does so, the Board would either appoint another person to fill that
vacancy or reduce the size of the Board, in accordance with the Company's
Certificate of Incorporation and By-Laws. See "Director and Executive
Compensation -- Employment Agreements" beginning on page 15 for a discussion of
Mr. Noonan's employment transition arrangements.
Unless a proxy shall specify that it is not to be voted for them, the
shares of common stock represented by each duly executed and returned proxy will
be voted FOR their election as directors. With respect to the election of
directors, only shares that are voted in favor of a particular nominee will be
counted toward such nominee's achievement of a plurality. Shares present at the
Meeting that are not voted for a particular nominee or shares present by proxy
where the stockholder properly withholds authority to vote for such nominee or
broker non-votes will not be counted toward such nominee's achievement of a
plurality. A "broker non-vote" occurs when a broker does not have the authority
to vote on a particular proposal. This happens because brokers who hold shares
in "street name" have the authority to vote only on certain routine matters in
the absence of instructions from the beneficial owners.
If either nominee does not stand for re-election at the Meeting, an event
which the Board of Directors does not presently anticipate, the proxies will be
voted for a substitute nominee appointed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
5
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
It is proposed that the stockholders ratify the appointment by the Board of
Directors of PricewaterhouseCoopers LLP as independent accountants for the
Company for the year ending December 31, 2002. The Company expects
representatives of PricewaterhouseCoopers LLP to be present at the Meeting and
available to respond to appropriate questions submitted by stockholders. Such
representatives will also be afforded an opportunity at such time to make such
statements as they may desire. See page 10 for the Report of the Audit and
Finance Committee on Financial Reporting for certain information that may be
relevant to the selection of independent accountants, including disclosure of
certain non-audit services provided to the Company by PricewaterhouseCoopers LLP
and of related fees. The disclosure regarding audit fees and fees related to
non-audit services is incorporated by reference herein.
Approval by the stockholders of the appointment of the Company's
independent accountants is not required by law, any applicable stock exchange
regulation or by the Company's organizational documents, but the Board of
Directors deems it desirable to submit this matter to stockholders for
ratification as a corporate governance practice.
With respect to Proposal 2, if a stockholder abstains from voting or
directs the stockholder's proxy to abstain from voting, the shares are
considered present at the Meeting for such proposal but, since they are not
affirmative votes for the proposal, they will have the same effect as votes
against the proposal. With respect to broker non-votes on such proposal, the
shares are not considered present at the Meeting for such proposal and they are,
therefore, not counted in respect of such proposal. Such broker non-votes,
however, do have the practical effect of reducing the number of affirmative
votes required to achieve a majority for such proposal by reducing the total
number of shares from which the majority is calculated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY FOR 2002.
6
BOARD OF DIRECTORS
NOMINEES
CLASS III -- TERM EXPIRES AT THE 2005 ANNUAL MEETING
PETER J. MCDONALD Director since May 2001
Mr. McDonald, 51, most recently served as President and Chief Executive
Officer of SBC Directory Operations, a leading publisher of yellow pages
directories. He was President and Chief Executive Officer of Ameritech
Publishing's yellow pages business from 1994 to 1999, when Ameritech was
acquired by SBC Communications Inc, a major telecommunications company. Mr.
McDonald was President and Chief Executive Officer of DonTech, the perpetual
partnership between SBC and the Company, from 1993 to 1994. Before that, he
served in a variety of sales positions at the Company, after beginning his
career at National Telephone Directory Corporation. Mr. McDonald serves on the
boards of CMGI, an Internet development company, and DCCI, a Canadian
call-measurement company. He is also a past vice chairman of the Yellow Pages
Publishers Association.
FRANK R. NOONAN Director since April 1998
Mr. Noonan, 59, has been a director of R.H. Donnelley Inc. (a wholly owned
subsidiary of the Company) since February 1995, its President from August 1991
to December 2000, and has been Chairman and Chief Executive Officer of the
Company since June 30, 1998. Mr. Noonan was a director of The Dun & Bradstreet
Corporation, a diversified information services company and the former parent of
the Company, from April 1998 to June 1998. Mr. Noonan was Senior Vice President
Finance of Dun & Bradstreet Information Services from 1989 to August 1991. Prior
to joining Dun & Bradstreet, Mr. Noonan served as Senior Vice President and
Chief Financial Officer of UNUM Corporation and in various financial positions
for the General Electric Company. Mr. Noonan is Chairman of the Board of
Trustees for New York United Hospital Medical Center, a member of the Boards of
Trustees of Manhattanville College and the University of New Hampshire
Foundation, and Vice Chairman of the Board of Governors for the Buick Classic.
DIRECTORS CONTINUING IN OFFICE
CLASS I -- TERM EXPIRES AT THE 2003 ANNUAL MEETING
ROBERT KAMERSCHEN Director since June 1998
Mr. Kamerschen, 66, is retired Chairman and Chief Executive Officer of
ADVO, Inc., a leading full-service targeted direct mail marketing services
company. He had been Chairman and Chief Executive Officer of DIMAC Corporation,
a direct marketing services company, from October 1999 until January 2002, when
that company was sold. In July 1999, he retired as Chairman of ADVO, Inc., a
position he had held since 1989, and has served as Senior Consultant to ADVO,
Inc. since July 1999. Prior to January 1999, in addition to serving as Chairman
of ADVO, Inc., Mr. Kamerschen had also been Chief Executive Officer since 1988.
Mr. Kamerschen has also served in key senior leadership roles in a number of
prominent sales and marketing driven businesses involving significant turnaround
and/or transformation initiatives. Mr. Kamerschen currently serves on the boards
of IMS Health Incorporated, Synavant, Inc., Radio Shack Corporation and
TravelCLICK Holdings Inc. Mr. Kamerschen is a Trustee for the University of
Hartford. DIMAC Corporation filed a voluntary petition for reorganization under
the U.S. bankruptcy laws in April 2000 and successfully emerged from bankruptcy
in February 2001.
DAVID C. SWANSON Director since December 2001
Mr. Swanson, 47, will become Chief Executive Officer of the Company
immediately following the Meeting, having been named CEO-elect and appointed to
the Board in December 2001. Previously, he
7
served as President and Chief Operating Officer of the Company since January
2001. Prior to that, Mr. Swanson served as President of Donnelley Directory
Services since March 1999. Mr. Swanson joined the Company in 1985 as an Account
Executive and held increasingly senior management positions over the next 15
years. In 1995, he became Executive Vice President of Sales and in 1997 was
named Executive Vice President and General Manager of Proprietary Operations. In
1998, he was named Executive Vice President of Corporate Strategy in conjunction
with the Company's spin-off ("Spin-Off") as an independent public company from
Dun & Bradstreet.
CLASS II -- TERM EXPIRES AT THE 2004 ANNUAL MEETING
KENNETH G. CAMPBELL Director since November 1999
Mr. Campbell, 55, is the President and Chief Executive Officer of Wagic
Corporation, a product development and marketing company, as well as a
co-founder and a board member of WebAccomodate Corp., a provider of Internet
property management software. Previously, he had been Chairman and Chief
Executive Officer of Centegy Corporation (formerly NETEQ, Inc.), an Internet
business services provider, from 1998 to 2001. Mr. Campbell co-founded and was
Executive Vice President of Affiliate Sales and Operations at USWEB from 1995 to
1998. From 1992 to 1995, Mr. Campbell was Vice President and General Manager,
North America at Inmac Corporation. From 1990 to 1992, Mr. Campbell was co-
founder and President of Advanced Partners. Prior to that, Mr. Campbell held
management positions at CopyMat Corporation from 1988 to 1990 and was co-founder
and Vice President of Sales and Operations for USTelecenters from 1985 to 1988.
CAROL J. PARRY Director since June 1998
Ms. Parry, 60, has been the President of Corporate Social Responsibility
Associates, a management consulting firm, since September 2000. Previously, Ms.
Parry served as Executive Vice President in charge of the Community Development
Group at The Chase Manhattan Bank, a major commercial banking institution (the
"Bank"), from 1996 to June 1999. In 1999, Ms. Parry was nominated to serve on
the Board of Governors of the Federal Reserve System, the central bank of the
United States. Ms. Parry was Managing Director of the Bank's Community
Development Group from 1992 to 1996 and served on the Bank's Policy Council, the
central governing body of the Bank, from 1997 to 1999. Ms. Parry has served on
the Federal Reserve Board Consumer Advisory Council and the advisory board for
the Community Development Financial Institutions Program. Ms. Parry is a Trustee
for the Committee for Economic Development and serves on the boards of a number
of not-for-profit organizations.
BARRY LAWSON WILLIAMS Director since June 1998
Mr. Williams, 57, has been President and founder of Williams Pacific
Ventures, Inc., a venture capital and real estate investment and consulting firm
since 1988. He is also the owner and a director of the Oakland Alameda Joint
Venture, which operates the sports stadium in Oakland, California. Previously,
he served as President and Chief Executive Officer of the American Management
Association International, a leading membership-based management development
organization, from November 2000 to December 2001. He also serves as Senior
Mediator of JAMS/Endispute, Inc., a leading alternative dispute resolution
provider, since 1993, Adjunct Lecturer, Entrepreneurship at Haas School of
Business since 1995, and General Partner of WDG Ventures, a California-based
real estate development firm, since 1987. He was previously President of C.N.
Flagg Power Inc. from 1989 to 1992. Mr. Williams serves on the boards of CH2M
Hill Companies, Ltd., Kaiser Permanente, Newhall Land & Farming Company,
Northwestern Mutual Life Insurance Company, PG&E Corp., Synavant Inc., Simpson
Manufacturing Company and Student Loan Marketing Association, a part of USA
Education, Inc. Mr. Williams also serves on the boards of a number of other
not-for-profit organizations. PG&E Corp. has filed a voluntary petition for
reorganization under the U.S. bankruptcy laws.
8
COMMITTEES OF THE BOARD OF DIRECTORS
Audit and Finance Committee
The Audit & Finance Committee has overall responsibility for the integrity
of the Company's financial reporting process, including oversight of the
preparation of financial statements and related financial information, as well
as the annual independent audit of such statements. The Audit & Finance
Committee, among other matters: recommends the appointment of independent
certified public accountants; reviews the scope of the audit examination,
including fees and staffing; reviews the independence of the accountants;
assesses the adequacy of financial disclosures to shareholders and reviews the
interim and year-end financial statements prepared by management prior to
external reporting; reviews and approves non-audit services provided by the
accountants, if any; reviews findings and recommendations of the accountants and
management's response; reviews the internal audit function; reviews the system
of internal controls; assesses annually the adequacy of the Committee Charter
and recommends changes to the Charter as appropriate; and prepares the Report of
the Audit and Finance Committee on Financial Reporting included in this Proxy
Statement on page 10. In addition, the Audit and Finance Committee has
responsibility for reviewing existing financing arrangements (and compliance
with governing documents) and for making recommendations to the Board regarding
financing requirements for the Company and sources for such financing. The Audit
and Finance Committee met four times during 2001. The Audit and Finance
Committee members are Messrs. Williams (chairperson) and McDonald and Ms. Parry.
Compensation and Benefits Committee
The Compensation and Benefits Committee, among other matters: reviews
management compensation programs; reviews and approves compensation changes for
senior management; administers the Company's compensation and benefit plans; and
prepares the Report of the Compensation and Benefits Committee on Executive
Compensation included in this Proxy Statement beginning on page 18. The
Compensation and Benefits Committee met eight times during 2001. The
Compensation and Benefits Committee members are Messrs. Kamerschen
(chairperson), Campbell and Williams.
Corporate Governance Committee
The Corporate Governance Committee, among other matters: makes
recommendations to the Board regarding criteria to be used to assess
qualifications for Board membership; reviews qualifications of potential
candidates and makes recommendations to the Board of persons to serve on the
Board and the various committees of the Board; and makes recommendations to the
Board regarding corporate governance guidelines. The Corporate Governance
Committee met four times during 2001. The Corporate Governance Committee members
are Ms. Parry (chairperson) and Messrs. Campbell, Jacobi and Kamerschen. Mr.
Jacobi will not stand for re-election to the Board at the Meeting and therefore
will not serve on the Corporate Governance Committee after the Meeting.
Stockholders' recommendations for nominees to the Board of Directors will
be considered by the Corporate Governance Committee provided such nominations
are made in accordance with the Company's By-Laws. (See discussion on page 24.)
ATTENDANCE AT BOARD MEETINGS
Eight meetings of the Board of Directors were held during 2001. No director
attended fewer than 75% of the aggregate of all meetings of the Board of
Directors and of the committees of the Board on which he or she served during
the period for which he or she was a director.
9
REPORT OF THE AUDIT AND FINANCE COMMITTEE
ON FINANCIAL REPORTING
The Audit and Finance Committee of the Board of Directors (the "Committee")
is comprised entirely of independent directors, within the meaning of, and in
accordance with, applicable New York Stock Exchange rules. The Committee
operates pursuant to a written charter and under delegated authority from the
Board of Directors.
Management is responsible for the Company's financial reporting process,
financial statements (including notes thereto) and internal controls. The
Company's independent accountants, PricewaterhouseCoopers LLC ("PwC"), are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards,
and issuing a written report thereon to the Board and the Company's
shareholders. The Committee is responsible for monitoring and overseeing this
entire process.
In this context, the Committee met and held discussions with management and
PwC regarding the financial reporting process, the consolidated financial
statements and the internal controls. Specifically, the Committee discussed with
PwC (i) the overall scope of its audit, (ii) the results of its examination,
(iii) its evaluation of internal controls, (iv) the overall quality of the
financial reporting process and the financial statement disclosures and (v) the
matters required to be discussed by PwC under (a) Statement on Auditing
Standards No. 61 (Communication with Audit Committees) and (b) Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
including the written disclosures regarding independence made by PwC to the
Committee thereunder.
Audit Fees. The Company incurred approximately $320,000 in fees for
professional services rendered in connection with PwC's annual audit and
quarterly reviews of the Company's consolidated financial statements for 2001,
of which approximately $205,000 had been billed and paid by December 31, 2001.
Other Fees. During 2001, the Company paid PwC approximately $494,000 in
fees and expenses in connection with other non-audit matters, primarily certain
tax matters (approximately $279,000), as well as operational reviews and
employee benefit related services (approximately $215,000). During 2001, the
Committee considered whether PwC's provision of these other non-audit services
impaired PwC's independence. The Committee determined that the type and size of
such services did not impair PwC's independence.
Management has represented to the Committee that the Company's audited
consolidated financial statements were prepared in accordance with generally
accepted accounting principles. Accordingly, based upon the Committee's review
of the financial statements and in reliance on its discussions with management
and PwC, the Committee has recommended to the Board of Directors (and the Board
has accepted such recommendation) that the Company's audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, for filing with the Securities and Exchange
Commission.
AUDIT AND FINANCE COMMITTEE
Barry Lawson Williams, Chairperson
Peter J. McDonald
Carol J. Parry
10
DIRECTOR AND EXECUTIVE COMPENSATION
DIRECTORS' COMPENSATION
Beginning in 2002, each non-employee director annually will receive a cash
retainer of $24,000, or $25,000 for committee chairpersons, 1,500 deferred
shares of the Company's common stock and an option to purchase 1,500 shares of
the Company's common stock. In addition, each non-employee director receives
$1,000 for each Board and committee meeting he or she attends and $1,000 for
each committee meeting for which he or she serves as chairperson. All such
deferred share and option grants vest in three equal installments as of the
close of business on the day immediately preceding the date of the three annual
meetings of stockholders immediately following the date of grant, subject to
acceleration in the event of death, disability or retirement or a change in
control of the Company. Directors may elect to defer their cash retainer fees
into a deferred cash account, which may be invested in various investment
alternatives, a deferred share account or options to purchase additional shares
of the Company's common stock. All non-cash awards to non-employee directors
through 2000 were made under the Company's 1998 Directors' Stock Plan and,
commencing in 2001, under the Company's 2001 Stock Award and Incentive Plan
("2001 Plan").
EXECUTIVE COMPENSATION
The following tables provide information regarding the compensation of the
Chief Executive Officer and the next four most highly compensated executive
officers (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS PAYOUTS
-------------------------------------- -----------------------------------------
OTHER SECURITIES LONG-
ANNUAL RESTRICTED UNDERLYING TERM
COMPEN- STOCK OPTIONS/ INCENTIVE
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS(1)($) SATION(2)($) AWARDS($) SARS(#) PAYOUTS(3)($)
- --------------------------- ---- --------- ----------- ------------ ------------ ---------- -------------
Frank R. Noonan(5)....... 2001 512,502 542,850 23,896 0 100,000 1,290,740
Chairman and Chief 2000 475,008 677,749 16,441 0 113,579 739,745
Executive Officer 1999 430,000 308,052 4,491 0 0 448,805
David C. Swanson(5)...... 2001 308,016 155,163 23,070 0 26,872 472,698
President and Chief 2000 258,000 670,171 16,878 0 20,000 252,080
Operating Officer 1999 244,843 145,519 4,396 0 27,100 152,935
Philip C. Danford(6)..... 2001 329,004 154,845 10,500 0 30,000 552,205
Senior Vice President and 2000 317,016 506,732 13,747 0 30,000 322,580
Chief Financial Officer 1999 300,000 161,190 1,993 0 0 195,700
Frank M. Colarusso....... 2001 188,500 66,611 0 0 11,636 222,470
Vice President and 2000 181,000 128,914 0 0 11,636 127,711
Treasurer 1999 172,000 69,312 1,000 0 0 78,363
George F. Bednarz........ 2001 185,396 77,313 0 0 10,736 207,200
Vice President, 2000 167,000 110,906 250 0 10,736 117,573
Publishing and IT 1999 156,200 62,945 1,000 0 0 72,142
<Caption>
ALL
OTHER
COMPEN-
NAME AND PRINCIPAL POSITION SATION(4)($)
- --------------------------- ------------
Frank R. Noonan(5)....... 23,929
Chairman and Chief 20,431
Executive Officer 22,423
David C. Swanson(5)...... 12,215
President and Chief 10,320
Operating Officer 9,998
Philip C. Danford(6)..... 14,591
Senior Vice President and 13,003
Chief Financial Officer 12,431
Frank M. Colarusso....... 7,532
Vice President and 6,113
Treasurer 6,094
George F. Bednarz........ 7,076
Vice President, 5,671
Publishing and IT 5,429
</Table>
- ---------------
(1) The 2001 bonus awards were paid under the Company's Annual Incentive Plan in
February 2002 based on 2001 performance. Future awards will be made under
the 2001 Plan. Mr. Swanson's 2000 bonus amount includes a special bonus of
$50,000 paid in connection with the publicly-announced suspended sale
process. Mr. Danford's 2000 bonus amount includes a special bonus of
$250,000 for his role in the restructuring of the Company during 2000.
(2) Amounts shown represent reimbursement for taxes paid by the Named Executive
Officers with respect to company-directed travel and certain other expenses.
11
(3) Amounts shown represent the dollar value of the performance shares ("PERS")
earned under the Company's Performance Unit Plan. Future awards of long-term
performance based compensation will be made under the 2001 Plan. Upon
completion of the respective performance periods (July 1, 1998 to December
31, 1999 and January 1, 1999 to December 31, 2001), a dollar amount was
determined for each recipient based on the Company's actual financial
performance against economic profit and earnings per share goals. The dollar
amount was then converted into a number of performance shares by dividing
the dollar amount of the award by the Company's stock price (calculated as
the average of the high and low prices of the Company's common stock on the
10 trading days subsequent to delivery of the Company's respective audited
financial statements to the Compensation and Benefits Committee). Dollar
amounts shown in 1999 represent one-third of the aggregate 1998 PERS grant,
which was paid in the form of shares in March 2000. Dollar amounts for 2000
represent an additional one third of the aggregate 1998 PERS grant, which
was paid in the form of shares in March 2001. Dollar amounts for 2001
reflect the final one-third of the 1998 PERS grant as well as the first one-
third of the 1999 PERS grant, which were paid in February 2002 in shares,
other than with respect to Messrs. Noonan and Danford who received cash with
respect to the first installment of the 1999 PERS grant.
(4) Amounts shown represent aggregate annual Company contributions for the
account of each Named Executive Officer under the Company's Profit
Participation Plan (the "PPP") and the Profit Participation Benefit
Equalization Plan (the "PPBEP"). The PPP is a tax-qualified defined
contribution plan and the PPBEP is a non-qualified plan that provides
benefits to participants in the PPP equal to the amount of Company's
contributions that would have been made to the participant's PPP account but
for certain Federal tax laws.
(5) On January 7, 2002, the Company announced that Mr. Swanson would replace Mr.
Noonan as Chief Executive Officer effective at the Meeting. Mr. Noonan, who
will remain Chairman following the Meeting, presently expects to resign as
Chairman of the Board in December 2002. See "-- Employment Agreements."
Because officers had received option grants in connection with the Spin-Off
in June 1998, options were not generally awarded in 1999, except that in
February 1999, Mr. Swanson received a grant of non-qualified stock options
covering 27,100 shares in connection with his promotion to President of
Directory Services.
(6) Mr. Danford resigned as Senior Vice President and Chief Financial Officer
effective February 28, 2002. He will remain employed by the Company in a
reduced role for a specified period. See "-- Employment Agreements."
STOCK OPTION/SAR GRANTS IN LAST YEAR
The following table provides information on grants of options under the
Company's 1991 Key Employee Stock Option Plan to the Named Executive Officers
for the year ended December 31, 2001. Future option grants will be made under
the 2001 Plan.
<Table>
<Caption>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1)(#) 2001 ($/SHARE) DATE VALUE(2)($)
- ---- ------------- ------------ ----------- ---------- -----------
Frank R. Noonan............. 100,000 18.9% $24.7500 01/31/11 910,000
David C. Swanson............ 26,872 5.1% $24.7500 01/31/11 244,535
Philip C. Danford........... 30,000 5.7% $24.7500 01/31/11 273,000
Frank M. Colarusso.......... 11,636 2.2% $24.7500 01/31/11 105,888
George F. Bednarz........... 10,736 2.0% $24.7500 01/31/11 97,698
</Table>
- ---------------
(1) These options were granted on January 31, 2001 at market price and are
exercisable in four equal installments on the first four anniversaries of
the date of grant.
12
(2) The hypothetical grant date present value is calculated under the modified
Black-Scholes option pricing methodology, which is a mathematical formula
used to value options traded on stock exchanges. This formula considers a
number of factors in hypothesizing an option's present value. The Company
made the following assumptions with respect to the range of factors used to
value the option grants: the stock's expected volatility rate (23.09%), risk
free rate of return (4.43%), dividend yield (0%) and projected time of
exercise (7 years).
AGGREGATED OPTION EXERCISES IN LAST YEAR AND YEAR END OPTION/SAR VALUES
The following table provides information concerning the number and value of
(i) option exercises during 2001 and (ii) unexercised stock options held at
December 31, 2001 by the Named Executive Officers.
<Table>
<Caption>
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED
LYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/
SHARES SAR'S AT YEAR-END(3) SAR'S AT YEAR-END(4)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(1) REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Frank R. Noonan...... 146,794 $3,053,511 437,446 386,340 $6,705,812 $4,415,430
David C. Swanson..... 34,018 675,759 114,591 84,448 1,792,866 921,157
Philip C. Danford.... 48,000 953,579 149,718 93,000 2,361,698 1,001,915
Frank M. Colarusso... 24,000 495,102 74,362 37,073 1,212,500 402,741
George F. Bednarz.... 8,352 156,441 83,467 34,628 1,391,581 377,553
</Table>
- ---------------
(1) Represents all shares covered by options exercised by the Named Executive
Officers during 2001, without regard to shares that may have been withheld
by the Company to cover exercise prices and/or taxes.
(2) The value realized equals the market value of all shares of common stock
acquired on the date of exercise minus the aggregate exercise price.
(3) No SAR's were outstanding at December 31, 2001.
(4) The values shown equal the difference between the exercise price of the
unexercised in-the-money options and the closing market price of the
Company's common stock on December 31, 2001 ($29.43). Options are
"in-the-money" if the fair market value of the Company's common stock
covered by such option exceeds the exercise price of the option.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST YEAR
The following table provides information on Long-Term Incentive Plan awards
under the Company's Key Employee Performance Unit Plan to the Named Executive
Officers during the year ended December 31, 2001. Future long-term performance
awards will be made under the 2001 Plan.
<Table>
<Caption>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS(1)
OTHER PERIOD UNTIL ---------------------------------------------
NAME MATURATION OR PAYOUT THRESHOLD($) TARGET($)(2) MAXIMUM($)(2)
- ---- -------------------- ------------ ------------ -------------
Frank R. Noonan................ 1/1/01 - 12/31/03 0 840,000 1,680,000
David C. Swanson............... 1/1/01 - 12/31/03 0 338,800 677,600
Philip C. Danford.............. 1/1/01 - 12/31/03 0 333,000 666,000
Frank M. Colarusso............. 1/1/01 - 12/31/03 0 133,700 267,400
George F. Bednarz.............. 1/1/01 - 12/31/03 0 134,750 269,500
</Table>
- ---------------
(1) Upon completion of the performance period, the dollar amounts awarded are
calculated based on the Company's actual financial performance against
economic profit and EPS goals. The dollar amount is then converted into a
number of PERS by dividing the dollar amount of the award by the Company's
stock price (calculated as the average of the high and low prices of the
Company's common stock on
13
the 10 trading days subsequent to delivery of the Company's audited
financial statements to the Compensation and Benefits Committee). One-third
of such shares will be payable immediately after calculation of the
Company's stock price for purposes of computing PERS, an additional
one-third will be payable one year thereafter, and the last one-third two
years thereafter. Messrs. Noonan and Danford will receive lump sum cash
payments equal to one-third of target in consideration for their agreement
to surrender these PERS awards. See "-- Employment Agreements" below for a
more detailed discussion.
(2) The target and maximum amounts listed are based upon 2001 year-end base
salary. Any increase in base salary in the future would increase the target
and maximum amounts listed in this table on a pro rata basis for the time
period during which base salary increased during the performance period.
RETIREMENT BENEFITS
The Retirement Account is a qualified defined benefit plan covering
substantially all employees. The Pension Benefit Equalization Plan ("PBEP") is
an unfunded, non-qualified plan that covers senior management and certain key
employees.
The Retirement Account, together with the PBEP, provides retirement
benefits computed based upon a percentage of annual compensation. The percentage
of compensation allocated annually ranges from 3% to 12.5%, based on age and
credited service as follows: if age plus credited service equals (a) less than
35, the percentage of monthly compensation is 3%; (b) between 35 and 44, 4%; (c)
between 45 and 54, 5%; (d) between 55 and 64, 7.5%; (e) between 65 and 74, 9%;
(f) between 75 and 84, 10.5%; and (g) 85 and over, 12.5%. Amounts allocated also
receive interest credits based on 30-year Treasury rates with a minimum interest
credit rate of 3%. Members vest in their accrued retirement benefit upon
completion of five years of service. The projected benefits described below are
calculated on a straight-life annuity basis. The number of years of credited
service under the plans for the Named Executive Officers as of December 31, 2001
are as follows: Mr. Noonan -- 12 years; Mr. Swanson -- 15.5 years; Mr.
Danford -- 13 years; Mr. Colarusso -- 14 years; and Mr. Bednarz -- 25 years.
Based upon their present compensation levels, the projected annual pension
benefits at normal retirement age under the Retirement Account and the PBEP are
as follows: Mr. Noonan -- $105,200; Mr. Danford -- $62,300; Mr.
Swanson -- $298,900; Mr. Colarusso -- $126,450; and Mr. Bednarz -- $129,300.
Compensation, for the purpose of determining retirement benefits, consists
of salary, wages, regular cash bonuses, commissions, overtime pay and severance
pay. Contingent payments and other forms of special remuneration are excluded.
Bonuses included in the Summary Compensation Table are normally not paid until
the year following the year in which they are accrued and expensed; therefore,
compensation for purposes of determining retirement benefits varies from the
Summary Compensation Table amounts in that bonuses expensed in the previous
year, but paid in the current year, are part of retirement compensation in the
current year, and current year's bonuses accrued and included in the Summary
Compensation Table are not.
For the reasons discussed above, compensation for determining retirement
benefits for the Named Executive Officers differed by more than 10% from the
amounts shown in the Summary Compensation Table. For 2001, compensation for
purposes of determining retirement benefits for the Named Executive Officers was
as follows: Mr. Noonan -- $1,190,251; Mr. Swanson -- $930,270; Mr.
Danford -- $835,736; Mr. Colarusso -- $292,414; and Mr. Bednarz -- $297,031.
Previously, Messrs. Noonan and Danford also participated in the
Supplemental Executive Benefit Plan ("SEBP"), which would have provided
retirement benefits substantially higher than those discussed above. Under their
respective amended and restated employment agreements, Messrs. Noonan and
Danford will cease participation under the SEBP and the PBEP and will receive
certain lump sum payments in consideration of their cessation of participation
and in settlement of their accrued benefits thereunder. See "-- Employment
Agreements."
14
EMPLOYMENT AGREEMENTS
Each of the Named Executive Officers, other than Mr. Bednarz, has an
employment agreement with the Company. Messrs. Noonan and Danford executed
amended and restated employment agreements effective December 27, 2001, which
will be summarized separately below.
As of December 31, 2001, the base salary and cash bonus opportunity
established by the employment agreements of the Named Executive Officers are as
follows:
<Table>
<Caption>
GUIDELINE CASH
NAME BASE SALARY BONUS OPPORTUNITY
- ---- ----------- -----------------
(% OF BASE
SALARY)
Frank R. Noonan................................. $525,000 100%
David C. Swanson................................ $308,016 65%
Philip C. Danford............................... $333,000 60%
Frank M. Colarusso.............................. $191,000 45%
George F. Bednarz............................... $192,500 45%
</Table>
The cash bonus is measured as a percentage of base salary and is governed
by the Company's 2001 Plan, which mandates the establishment of criteria for the
determination of an executive's bonus. The foregoing compensation is subject to
annual review and increase (but not decrease).
The terms and conditions of each of the employment agreements, other than
those of Messrs. Noonan and Danford, which have been recently amended and
restated and will be discussed separately below, are substantially similar,
except where specified below. The key terms of the employment agreements are as
follows:
TERM The employment agreements are subject to automatic
one-year renewals, unless notice has been given
ninety days prior to any termination date. Any
nonrenewal of the employment agreement by the
Company shall be considered a termination without
Cause*.
ADDITIONAL COMPENSATION Each executive is eligible to participate in all
bonuses, long-term incentive compensation, stock
options and other equity participation arrangements
made available to other senior executives of the
Company.
BENEFITS Each executive is eligible to participate in all
employee benefit programs (including fringe
benefits, vacation, pension and profit sharing plan
participation and life, health, accident and
disability insurance) no less favorable than in
effect prior to their execution of their employment
agreement.
TERMINATION WITHOUT CAUSE*
BY
THE COMPANY NOT ARISING
FROM A
CHANGE IN CONTROL Each receives a cash lump sum payment equal to
one-and-one-half times (two times for Mr. Swanson)
the base salary and target bonus. Each also
receives continuation of benefits for 1 1/2 years
(two years for Mr. Swanson).
TERMINATION ARISING FROM,
AND
WITHIN TWO YEARS AFTER, A
CHANGE
IN CONTROL Each executive shall receive a cash lump sum
payment equal to two (three for Mr. Swanson) times
the sum of base salary and target bonus and
continuation of benefits for two years (three years
for Mr. Swanson). In addition, under the 2001 Plan
and the predecessor plans, upon a Change in
Control, certain awards may vest and become fully
payable as provided in the relevant Plan and/or
grant documents. If negotiations commence prior to
a termination of employment but eventually result
in a Change in Control within two years, then the
executive shall be treated as having been
terminated within two years
15
following a Change in Control and, therefore, shall
be entitled to the foregoing benefits.
DEATH/DISABILITY Each executive (or beneficiary) shall receive
salary through date of termination and a pro rata
portion of target bonus.
EXCISE TAX The compensation of each executive will be "grossed
up" for any excise tax imposed under Section 4999
of the U.S. Internal Revenue Code relating to any
payments made on account of a Change in Control or
a termination of the executive's employment.
- ---------------
* Such terms have the meanings ascribed to such terms in the employment
agreements, which are filed as Exhibits to the Company's Annual Report on Form
10-K.
Effective December 27, 2001, Messrs. Noonan and Danford entered into
amended and restated employment agreements on the following terms and
conditions. Copies of these agreements are filed as Exhibits to the Company's
Annual Report on Form 10-K for the year ended December 31, 2001.
Under his amended and restated employment agreement, Mr. Noonan will
continue to serve as Chief Executive Officer through the Meeting. Following the
Meeting, Mr. Noonan will continue to serve as Chairman of the Board until the
December 2002 Board of Directors meeting, at which point he presently expects to
resign from the Board. Following his resignation from the Board, Mr. Noonan will
continue to be employed by the Company in a special advisory role through July
31, 2003. For his service in 2002 prior to the Meeting, Mr. Noonan will continue
to receive his present salary ($525,000 annually) and a lump sum cash payment of
$625,000 in lieu of his participation in any and all variable compensation
programs. For his service as Chairman for the remainder of 2002, Mr. Noonan will
be paid a total salary of $500,000. His aggregate compensation for the remainder
of his employment term is expected to be approximately $100,000. In
consideration of his long service and significant contributions to the Company
as well as his execution of the amended and restated employment agreement, Mr.
Noonan will receive a special recognition bonus of $1.5 million payable shortly
after the Meeting. In connection with his resignation as Chief Executive Officer
effective as of the Meeting, Mr. Noonan will cease participation in the
Company's non-qualified excess and supplemental pension plans (collectively
"SERP"). In consideration of his cessation of participation in the SERP and in
settlement of all accrued benefits due from the Company under the SERP, Mr.
Noonan will receive a lump sum cash payment of approximately $7.1 million
shortly following the Meeting. Mr. Noonan will also be paid $280,000
(representing one-third of the target award for the three year performance
period) shortly following the Annual Meeting in consideration for his agreement
to surrender his 2001 PERS grant. The Company and Mr. Noonan have agreed that
following the Meeting he will cease participation in the Company's Deferred
Compensation Plan and will be entitled to a distribution of his entire deferred
compensation account. The Company has agreed not to terminate his employment
prior to July 31, 2003, except for Cause (as defined). In the event that his
employment is terminated prior to that date by reason of his death or disability
or a Change in Control (as defined), the Company has agreed to pay all amounts
and benefits owed thereunder that had not previously been paid. The amended and
restated employment agreement also contains excise tax "gross up" provisions
substantially the same as described above.
Under his amended and restated employment agreement, Mr. Danford continued
to serve as Senior Vice President and Chief Financial Officer until February 28,
2002. Mr. Danford will continue to be employed by the Company in a special
advisory role through July 31, 2003. For his service through February 28, 2002,
Mr. Danford continued to receive his then-current salary ($333,000 annually) and
a lump sum cash payment of $122,100 in lieu of his participation in any and all
variable compensation programs. For the remainder of his employment term, Mr.
Danford will be paid an annual salary of $75,000. In connection with his
resignation as Senior Vice President and Chief Financial Officer, Mr. Danford
ceased participation in the SERP. In consideration of his cessation of
participation in the SERP and in settlement of all accrued benefits due from the
Company under the SERP, Mr. Danford received a lump sum cash payment of
approximately $3.6 million in March 2002. Mr. Danford was also
16
paid $111,000 (representing one-third of the target award for the three year
performance period) in March 2002 in consideration for his agreement to
surrender his 2001 PERS grant. The Company and Mr. Danford have agreed that he
ceased participation in the Company's Deferred Compensation Plan as of February
28, 2002 and he received a distribution of his entire deferred compensation
account. The Company has agreed not to terminate his employment prior to July
31, 2003, except for Cause (as defined). In the event that his employment is
terminated prior to that date by reason of his death or disability or a Change
in Control (as defined), the Company has agreed to pay all amounts and benefits
owed thereunder that had not previously been paid. The amended and restated
employment agreement also contains excise tax "gross up" provisions
substantially the same as described above.
PERFORMANCE MEASUREMENT COMPARISON
The following graph sets forth as of December 31, 2001, the cumulative
total stockholder return on the Company's common stock compared with the
cumulative total return of the Russell 2000 Stock Index, a peer group of the
Company and the peer group that appeared in last year's Proxy Statement. As the
Company is not included in an identifiable and accepted peer group, the Company
has created a peer group based on several factors: revenues, net income and
enterprise value, which is comprised of market capitalization and total debt.
The peer group consists of the following companies: Acxiom Corporation, ADVO,
Inc., APAC Teleservices, Inc., Catalina Marketing Corporation, Hanover Direct,
Inc., National Processing, Inc., Personnel Group of America, Inc., Sitel
Corporation, and Valassis Communications, Inc.
For purposes of this year's performance comparison, the following companies
have been eliminated from the peer group disclosed last year for the following
reasons. Two companies were acquired by much larger enterprises that provide far
different and/or more comprehensive services as compared to the Company and
other members of the peer group. For that reason they were deemed no longer
comparable for performance measurement comparison purposes. Advest Group was
acquired by The MONY Group (primarily a life insurance company) in February
2001, which has a larger market capitalization than the Company and other peer
group members. True North Communications was acquired by Interpublic Group in
June 2001. While Interpublic is a global advertising and marketing firm, its
market capitalization far exceeds that of the Company and other peer group
members. HA-LO Industries filed for bankruptcy protection under Chapter 11 of
the U.S. Bankruptcy Code in July 2001, and is deemed no longer comparable to the
Company or the other peer group members for that reason.
The total return assumes a $100 investment on July 1, 1998 (the date of the
Spin-Off) and reinvestment of dividends in the Company's common stock and in
each index.
[PERFORMANCE GRAPH]
<Table>
<Caption>
R.H. DONNELLEY OLD PEER GROUP RUSSELL 2000 NEW PEER GROUP
CORP. INDEX INDEX INDEX
-------------- -------------- ------------ --------------
07/01/98 100 100 100 100
9/30/98 80.23 89.15 79.85 88.78
12/31/98 95.56 121.35 92.63 107.87
3/31/99 101.3 114.42 87.31 99.07
6/30/99 128.37 127.92 100.55 107.92
9/30/99 122.22 122.65 93.87 106.26
12/31/99 123.86 162.02 110.78 132.36
3/31/00 111.55 139.79 118.31 119.18
6/30/00 127.14 134.57 113.46 122.54
9/30/00 138.62 113.69 114.31 104.73
12/31/00 159.54 138.88 106 122.81
3/31/01 190.3 111.08 98.76 100.98
6/30/01 209.98 105.05 112.46 102.04
9/30/01 171.4 83.64 88.76 92.29
12/31/01 190.62 110.04 107.08 115.75
</Table>
17
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") is comprised entirely of outside and independent Directors. The
Committee is responsible for establishing, implementing, administering and
monitoring the Company's strategy, policies and plans for executive
compensation.
EXECUTIVE COMPENSATION OBJECTIVES
The Company's executive compensation objectives are to:
- Attract and retain top-performing executives at the corporate level and
in each of the Company's business units;
- Provide compensation opportunities that are fair and competitive with
those provided by comparable organizations;
- Utilize compensation vehicles that are cost-effective and tax efficient;
and
- Motivate and reward its executives based on corporate, business unit and
individual annual and long-term business performance, strategic progress
and the creation of stockholder value.
DETERMINING EXECUTIVE OFFICER COMPENSATION
In accordance with its responsibilities, the Committee reviews the
Company's overall corporate mission, strategy and objectives. These form the
basis for establishing both corporate and business unit annual and long-term
performance goals that are subject to Board and Committee review and approval at
the beginning of each year, and for executive officer performance-based
compensation initiatives. Based on this review, the Committee, in its sole
discretion, determines the Company's total compensation structure for the coming
year, including the elements and level of compensation opportunities and the
variable portion of "at risk" pay for performance and equity participation. At
year-end, results and strategic progress achieved at the corporate, business
unit and individual levels are assessed by the Committee, relative to previously
approved goals, taking into consideration prevailing economic and business
conditions and opportunities, performance by comparable organizations, and
stockholder value.
In establishing the Company's executive officer compensation structure and
program, the Committee also considers:
- Industry conditions;
- Corporate performance relative to a selected peer group;
- Current market data among comparable companies;
- Current and evolving practices and trends among comparable companies; and
- Overall effectiveness of the program in measuring and rewarding desired
performance levels.
The Committee has been assisted in this review and evaluation by an
independent consulting firm retained by the Company to serve as outside advisors
in the discharge of the Committee's responsibilities. The consultants provide
data to the Committee, relative to the above-mentioned considerations, with
respect to the compensation paid to the Chief Executive Officer and other
executive officers. In setting competitive compensation levels, the Company
compares itself with a peer group of companies based on several factors
including revenues, net income and enterprise value, which is comprised of
market capitalization and total debt. Based on this information, the Committee
evaluates the reasonableness, fairness and competitiveness of the Company's
executive compensation program. The peer group used for executive compensation
purposes is similar to (with relevant distinctions) the peer group used for the
Performance Measurement Comparison on page 17.
18
COMPENSATION COMPONENTS
The compensation program for the Company's Chief Executive Officer and
other executive officers is comprised of three major elements:
- Base Salary
- Annual Incentive Opportunity
- Long-Term Equity Incentive Opportunities
Base salaries and total compensation for target performance are generally
positioned in the mid-range of the peer group. Actual annual and long-term
incentive compensation levels, which are based on performance relative to goals,
will vary from year to year below and above those of the peer group.
BASE SALARY:
Salaries are established relative to the competitive marketplace at the
appropriate level and reflect the individual performance and contribution of
each executive officer to the business, the level of the executive's experience
and overall corporate financial circumstances. Base salaries are generally
subject to review for adjustment by the Committee every twelve to eighteen
months.
ANNUAL INCENTIVE OPPORTUNITY:
Through 2001, executive officers have participated in the Annual Incentive
Plan ("AIP") under which annual incentive awards have been made in cash.
Beginning in 2002, the Committee will consider granting cash annual incentive
awards to executive officers under the 2001 Plan, and may be obligated to do so
under certain employment agreements. See "Director and Executive
Compensation -- Employment Agreements" beginning on page 15 for a description of
these employment agreements.
Each executive officer is assigned performance goals and an annual
incentive award opportunity based on position responsibilities. Performance
weightings vary by executive officer and include corporate performance goals
and/or business unit performance goals for those executive officers who have
business unit responsibilities.
The target annual award opportunity for the Named Executive Officers range
from 45% to 100% of base salary. In 2001, performance goals included advertising
sales, operating income, and earnings per share growth for all executive
officers, and business unit advertising sales and operating income for those
executive officers who also had business unit responsibilities. Based on
performance versus goals, awards to the Named Executive Officers with respect to
2001 averaged approximately 85% of target, and excluding the Chief Executive
Officer, averaged approximately 76% of target. The below target pay out reflects
the Company's below target financial performance during the year. The Committee
did not make any individual adjustments, but did exclude the effects of certain
"special charges" in accordance with the terms of the AIP Plan.
LONG-TERM INCENTIVE EQUITY OPPORTUNITIES:
Officers may receive stock options to purchase the Company's common stock
and long-term performance-based stock awards. These equity opportunities are
designed to align the interests of executive officers and the stockholders in
the Company's long-term growth by increasing each executive officer's equity
position in the Company.
- STOCK OPTIONS
Executive officers, including the Chief Executive Officer, were granted
stock options shortly after the Spin-Off in mid-1998 under the Company's 1991
Key Employees' Stock Option Plan ("1991 Plan"), in recognition of the Company's
new status as an independent, publicly-traded entity. With the exception of a
one-time special recognition grant to Mr. Swanson and grants to select new
hires, subsequent option grants
19
to the Chief Executive Officer and other executive officers were not made in
1999, but were made in 2000 and 2001. Beginning in 2002, the Committee will
consider granting options (or other forms of equity participation) to executive
officers under the 2001 Plan and may be obligated to do so under certain
employment agreements. See "Director and Executive Compensation -- Employment
Agreements" beginning on page 15. Values of options granted are determined as a
percentage of base salary using the Black-Scholes option valuation methodology.
The applicable percentage ranges from 45% to 150% for the Named Executive
Officers.
- LONG-TERM PERFORMANCE-BASED STOCK AWARDS
This "at risk" equity interest in the Company has historically been granted
to executive officers, including the Chief Executive Officer, under the
Company's Key Employees' Performance Unit Plan ("PUP"), with such grants in the
form of performance shares ("PERS"). Beginning in 2002, the Committee will
consider granting performance shares or other long-term performance-based awards
to executive officers under the 2001 Plan.
With respect to PERS, target annual award opportunities are determined as a
percent of base salary and range from 35% to 80% for the Named Executive
Officers. Actual awards are based on performance versus objectives for each
performance period. Presently, new performance cycles commence every other year,
therefore, the target award opportunity for each performance period is two times
the annualized target. Award values, in dollars, are determined upon the
completion of each performance period and (with limited exceptions) are
converted into shares of the Company's common stock by dividing the dollar
amount of the award by the Company's common stock price (calculated as the
average of the high and low prices of the Company's common stock on the 10
trading days subsequent to delivery of the Company's audited financial
statements to the Committee). Once converted into shares, the PERS vest and are
payable one-third immediately after calculation of the Company's stock price for
purposes of computing PERS, an additional one-third one year thereafter and the
last one-third two years thereafter.
In 2001, one performance period concluded (on December 31, 2001) and one
performance period commenced (January 1, 2001 through December 31, 2003). As
noted above, the final one-third of the 1998 PERS award and the first one-third
of the 1999 PERS award vested at December 31, 2001 and was paid in February 2002
in shares, other than with respect to Messrs. Noonan and Danford, who received
cash with respect to the first installment of the 1999 PERS award. The Committee
did not make any individual adjustments, but did exclude the effects of certain
"special charges" in accordance with the terms of the PUP Plan.
It is the Committee's policy to make stock option grants, as well as
long-term performance-based stock awards, to executive officers on a
discretionary basis within a guideline range that takes into account the
position and responsibilities of each individual executive officer and
competitive practice. Such grants reflect the relative value of the individual's
position, as well as the current performance, continuing contribution and
prospective impact of executive officers, including the Chief Executive Officer,
on the Company's future success and creation of long-term stockholder value.
CEO COMPENSATION
Mr. Noonan received a merit salary increase of $50,000 effective April 1,
2001 based on performance and competitive positioning. Due to his impending
resignation as Chief Executive Officer, his salary remains unchanged in 2002. As
outlined earlier in this report, base salaries are generally subject to review
for adjustment by the Committee every twelve to eighteen months. Mr. Noonan had
last received a salary increase in January 2000.
Mr. Noonan's 2001 AIP performance goals were based on the Company's gross
advertising sales, operating income, earnings per share and cumulative return to
stockholders over the last three years relative to the total cumulative return
of the Russell 2000 Stock Index over that period. Based on results versus these
performance goals, Mr. Noonan received an award of $542,850, or 103.4% of his
annual incentive target. Mr. Noonan's annual target is set at 100% of base
salary. The above target payout reflects the Company's favorable total
cumulative return to stockholders over that time.
20
In 2001, Mr. Noonan was granted stock options covering 100,000 shares based
on performance and competitive positioning. Mr. Noonan will not be eligible to
receive stock option grants or other long-term performance awards in 2002 under
the terms of his amended and restated employment agreement. See "Director and
Executive Compensation -- Employment Agreements" beginning on page 15. In
February 2002, Mr. Noonan received a PERS award payment in shares equal to
$782,296, which represents the third and final installment of the PERS award for
the performance period July 1998 to December 1999. At that time, he also
received a PERS award payment in cash equal to $508,444, which represents the
first one-third of the award for the performance period January 1999 to December
2001. Under the terms of his amended and restated employment agreement, Mr.
Noonan will receive the balance of that PERS award in cash upon his resignation
as CEO. He was also eligible for a PERS award at target performance of $840,000
in company stock after completion of the long-term performance period from
January 1, 2001 to December 31, 2003. However, under the terms of his amended
and restated employment agreement, he will be paid one-third of that amount in
May 2002 and will relinquish the remainder of that award. Mr. Noonan will
receive other payments and benefits under his amended and restated employment
agreement. See "Director and Executive Compensation -- Employment Agreements"
beginning on page 15.
TAX CONSIDERATIONS
As noted above, one of the Company's objectives is to maintain
cost-effective and tax efficient executive compensation programs. Code Section
162(m) limits the Company's tax deduction to $1 million for compensation paid to
any one of the Named Executive Officers identified in this Proxy Statement
unless certain requirements are met. One of the requirements is that
compensation over $1 million must be based upon attainment of performance goals
approved by stockholders. The Annual Incentive Plan, the 1991 Stock Option Plan,
the Performance Unit Plan, as well as the 2001 Stock Award and Incentive Plan
were each designed to satisfy these requirements. The Committee's policy is to
preserve corporate tax deductions attributable to the compensation of executives
while maintaining the flexibility to approve, when appropriate, compensation
arrangements which it deems to be in the best interests of the Company and its
stockholders, but which may not always qualify for full tax deductibility.
COMPENSATION AND BENEFITS COMMITTEE
Robert Kamerschen, Chairperson
Kenneth G. Campbell
Barry Lawson Williams
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Messrs. Kamerschen, Campbell and Williams serve as members of the
Compensation and Benefits Committee. No member of that Committee is or has been
an officer or employee of the Company and none had interlocking relationships
with any other entities of the type that would be required to be disclosed in
this Proxy Statement.
Ms. Parry, a member of the Board, was an officer of The Chase Manhattan
Bank from 1992 to June 1999. The Bank is Administrative Agent for, and one of
the lenders under, the Company's $400 million credit facility, and an affiliate
of the Bank was one of the initial purchasers of the Company's 9 1/8%
subordinated notes in the aggregate principal amount of $150 million. In
connection with serving in such roles, the Bank and its affiliate received usual
and customary fees. All of such debt was incurred by the Company in order to
fund certain cash distributions payable to The Dun & Bradstreet Corporation, the
Company's former parent, in connection with the Spin-Off.
21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's common
stock beneficially owned as of March 4, 2002 by (i) each of the Company's Named
Executive Officers, (ii) each of the Company's directors, (iii) all directors
and executive officers of the Company as a group and (iv) owners of more than 5%
of the outstanding shares of the Company's common stock. Except as indicated in
the footnotes to the table, the Company believes that the persons named in the
table have sole voting and investment power with respect to all shares owned
beneficially by them. The mailing address for each of the Company's directors
and Named Executive Officers listed below is One Manhattanville Road, Purchase,
NY 10577.
<Table>
<Caption>
SHARES OF THE COMPANY'S
COMMON STOCK
----------------------------------
AMOUNT BENEFICIALLY PERCENTAGE
BENEFICIAL OWNERS OWNED(1) OF CLASS(1)
- ----------------- ------------------- -----------
Frank R. Noonan............................................. 571,499(2) 1.9%
David C. Swanson............................................ 174,837(3) *
Philip C. Danford........................................... 205,279(4) *
Frank M. Colarusso.......................................... 93,310(5) *
George F. Bednarz........................................... 96,349(6) *
Kenneth G. Campbell......................................... 7,620(7) *
William G. Jacobi........................................... 11,661(8) *
Robert Kamerschen........................................... 17,545(9) *
Peter J. McDonald........................................... 2,000(10) *
Carol J. Parry.............................................. 11,545(11) *
Barry Lawson Williams....................................... 7,545(12) *
All Directors and Executive Officers as a Group (14
persons).................................................. 1,241,717(13) 4.0%
Neuberger Berman, Inc....................................... 2,323,558(14) 7.9%
605 Third Avenue
New York, NY 10158
</Table>
- ---------------
* Represents ownership of less than 1%.
(1) The amounts and percentage of the Company's common stock beneficially owned
are reported on the basis of rules and regulations of the Securities and
Exchange Commission (the "Commission") governing the determination of
beneficial ownership of securities. Under such rules and regulations, a
person is deemed to be a "beneficial owner" of a security if that person
has or shares "voting power", which includes the power to vote or to direct
the voting of such security, or "investment power", which includes the
power to dispose of or to direct the disposition of such security. A person
is also deemed to be a beneficial owner of any securities which that person
has a right to acquire beneficial ownership of within 60 days. Under these
rules and regulations, more than one person may be deemed a beneficial
owner of the same securities and a person may be deemed to be a beneficial
owner of securities in which he has no economic interest. As of March 4,
2002, the Company had 29,424,806 shares outstanding.
(2) Includes 487,892 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(3) Includes 133,084 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(4) Includes 164,718 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter. Mr. Danford resigned as Senior Vice President and Chief
Financial Officer effective February 28, 2002.
22
(5) Includes 80,180 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(6) Includes 88,835 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(7) Includes 4,620 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(8) Includes 4,500 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(9) Includes 4,500 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(10) Includes 500 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(11) Includes 4,500 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(12) Includes 1,500 shares of the Company's common stock which may be acquired
pursuant to options exercisable as of March 4, 2002 or within 60 days
thereafter.
(13) Includes options to purchase 999,702 shares of the Company's common stock
that are exercisable as of March 4, 2002 or within 60 days thereafter.
(14) Neuberger Berman, Inc. and Neuberger Berman, LLC filed a Schedule 13G with
the Commission on February 14, 2002. According to that Schedule 13G, they
beneficially owned 2,323,558 shares as of December 31, 2001, including the
sole power to vote 737,897 shares and the sole power to dispose of 0 shares
of the Company's common stock.
23
OTHER INFORMATION
HOW TO NOMINATE MEMBERS OF THE BOARD OF DIRECTORS
The Company's By-Laws provide that stockholders may nominate individuals
for the Board of Directors if such nomination is made pursuant to timely notice
in writing to the Secretary of the Company at the address set forth on the cover
page of this Proxy Statement. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Company not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice by prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received by the Company not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting or such public disclosure was made. Such
stockholder's notice shall set forth (i) as to each person whom the stockholder
proposes to nominate for election or re-election as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); and (ii) as to the stockholder giving the
notice (a) the name and address, as they appear on the Company's books, of such
stockholder and (b) the class and number of shares of the Company which are
beneficially owned by such stockholder as of the date of such notice. At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Company that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee.
HOW TO RAISE A MATTER AT A MEETING
Any stockholder intending to propose any matter at the next annual meeting
but not intending for the Company to include the matter in its proxy statement
and proxy related to the next annual meeting must notify the Company by February
9, 2003 of such intention. If the Company does not receive such notice by that
date, the notice will be considered untimely. The Company's proxy for the next
annual meeting will grant authority to the persons named therein to exercise
their voting discretion with respect to any such matter of which the Company
does not receive notice by February 9, 2003. Notices should be submitted to the
Secretary of the Company at the address set forth on the cover page of this
Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Commission and the New York Stock
Exchange. Officers, directors and greater than ten percent stockholders are
required by the Commission to furnish the Company with copies of all Forms 3, 4
and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its officers, directors and greater
than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during 2001.
DELIVERY OF ANNUAL REPORT ON FORM 10-K
The Company will provide without charge a copy of the Company's Annual
Report on Form 10-K for the year ended December 31, 2001 to each of the
Company's stockholders of record as of March 4, 2002 and each beneficial
stockholder on that date, upon receipt of a written request therefor mailed to
the Company's principal executive offices, One Manhattanville Road, Purchase,
New York 10577, Attention: Investor Relations. Requests from beneficial
stockholders must set forth a good faith representation as to such ownership on
that date.
24
RETURN OF PROXY
It is important that the accompanying proxy be returned promptly.
Therefore, whether or not you plan to attend the Meeting in person, you are
earnestly requested to date, sign and return your proxy in the enclosed
envelope. No postage is required if mailed in the United States. Thanks for your
prompt attention to this important matter.
By Order of the Board of Directors
/s/ Robert J. Bush
Robert J. Bush
Vice President, General Counsel
and Corporate Secretary
March 25, 2002
Purchase, New York
25
R.H. DONNELLEY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- MAY 1, 2002
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints David C. Swanson and Robert
J. Bush (collectively, the "Proxies"), and each of them, his, her or its true
and lawful agents and proxies with full power of substitution in each, to
represent the undersigned at the Annual Meeting of Stockholders (the "Meeting")
of R.H. Donnelley Corporation (the "Company"), to be held at The Crowne Plaza
White Plains Hotel, White Plains, New York, on May 1, 2002, at 9:00 a.m. local
time, and at any adjournments or postponements thereof, and to vote all the
shares of common stock of the Company which the undersigned may be entitled to
vote on all matters properly coming before the Meeting, and any adjournments or
postponements thereof.
The trustees of the Company's Profit Participation Plan and the DonTech
Profit Participation Plan (collectively the "Plans") have agreed that this proxy
will also serve as voting instructions from participants in those Plans who have
plan contributions for their respective accounts invested in the Company's
Common Stock. Proxies covering shares in the Plans must be received on or prior
to April 26, 2002. If a proxy covering shares in either of the Plans has not
been received on or prior to April 26, 2002 or if it is signed and returned
without specification marked in the instruction boxes, the trustee will vote
those Plan shares in the same proportion as the respective shares in such Plan
for which it has received instructions, except as otherwise required by law.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN HEREIN, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED (A) IN FAVOR OF THE ELECTION OF THE
NOMINEES FOR THE CLASS III MEMBERS OF THE BOARD OF DIRECTORS, (B) FOR PROPOSAL
2, AND (C) IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING, AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
PLEASE MARK YOUR DIRECTIONS BELOW, FILL IN THE DATE AND SIGN AND RETURN THIS
PROXY CARD PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF
MAILED IN THE UNITED STATES.
(1) Election of Class III Members of the Board of Directors
WITHHOLD AUTHORITY
Nominee VOTE FOR TO VOTE FOR
---------------- -------- ------------------
Frank R. Noonan [ ] [ ]
Peter J. McDonald [ ] [ ]
(2) Ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for 2002.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) In their discretion, the Proxies are hereby authorized to vote upon such
other business as may properly come before the Meeting, and any
adjournments or postponements thereof.
Signatures: _________________________________ Dated: _________________, 2002
NOTE: Please sign exactly as your name or names appear hereon. Joint owners
should each sign personally. When signing as executor, administrator,
corporation, officer, attorney, agent, trustee or guardian, etc., please add
your full title following your signature.