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EXHIBIT 10.1
THE WASHINGTON POST COMPANY
ANNUAL INCENTIVE COMPENSATION PLAN
Amended and Restated
Effective June 30, 1995*
1. Purposes
The purposes of this Annual Incentive Compensation Plan
(hereinafter called the Plan) of The Washington Post Company, a Delaware
corporation (hereinafter called the Company), are (a) to provide greater
incentives to key employees to increase the profitability of the Company and
its subsidiaries and (b) to strengthen the ability of the Company and its
subsidiaries to attract, motivate and retain persons of merit and competence
upon which, in large measure, continued growth and profitability depend.
2. Administration of the Plan
This Plan shall be administered by a Committee which shall be
constituted as determined from time to time by the Board of Directors of the
Company and which shall be chosen by the Board from among its members. No
member of the Board of Directors shall be disqualified from serving on the
Committee or from voting on any action taken by the Committee by virtue
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of the fact that he is eligible to participate in the Plan, except that no
member of the Committee shall vote upon the
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* Plan adopted by Board of Directors on January 9, 1974, and approved by
Class A stockholders on February 13, 1974. Amendments effective
January 4, 1982, adopted by Board of Directors on November 6, 1981,
and approved by Class A stockholders on December 11, 1981. Further
amendments adopted by the Board of Directors on May 11, 1995 and
approved by Class A stockholders on June 30,1995.
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making of an incentive award to himself. The Committee shall have full power
and authority to interpret and administer the Plan, to adopt rules and
regulations and to establish terms and conditions, not inconsistent with the
provisions of the Plan, for the administration of its business and the
implementation of the Plan.
3. Participation
(a) Participation in the Plan shall be extended to senior
executives, key managers and other key employees of the Company and its
subsidiaries who, in the opinion of the Committee, are mainly responsible for
the management of the operations or departments of the Company or its
subsidiaries or who are otherwise in a position to make substantial
contributions to the success of the business of the Company or its
subsidiaries.
(b) Directors as such shall not participate in the Plan, but
the fact that an employee is also a Director of the Company or a subsidiary
shall not prevent his participation. Awards for any year may be made to an
employee of the Company who dies or is granted a leave of absence during such
year.
(c) As used in the Plan, the terms "Company" shall mean The
Washington Post Company and any subsidiary the earnings of which are included
in the Consolidated Statement of Income of the Company.
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(d) The Plan shall not be deemed to preclude other
compensation, incentive or bonus plans which may be in effect from time to
time.
4. Annual Incentive Provision
(a) For each fiscal year the Committee may make incentive
awards in an aggregate amount not exceeding the Maximum Incentive Credit (as
hereinafter defined) for such year.
(b) The terms "Maximum Incentive Credit," as used herein,
shall mean for any year an amount determined as follows: (i) There shall first
be calculated an amount equal to 12 per cent of Stockholders' Equity
(hereinafter called the "Basic Return on Equity"). (ii) There shall then be
deducted from Consolidated Profit Before Income Taxes an amount equal to the
Basic Return on Equity, the excess (if any) being hereinafter called "Incentive
Profit". (iii) The Maximum Incentive Credit shall be 10 per cent of Incentive
Profit.
(c) The term "Consolidated Profit Before Income Taxes," as
used herein, shall mean for any year the sum of (i) the profit before income
taxes (exclusive of special credits and charges and extraordinary items)
included in the Consolidated Statement of Income of the Company for such year
and (ii) the amount of incentive compensation provided for in computing such
profit before income taxes.
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(d) The term "Stockholders' Equity," as used herein, shall
mean for any year the amount reported as stockholders' equity (or the
comparable item, however designated) at the end of the preceding year as
included in the Consolidated Balance Sheet of the Company for such preceding
year, with appropriate pro retie adjustments, as approved by the Committee, for
any change during the year arising from any increase or decrease in outstanding
capital stock.
(e) During the last month of each fiscal year the Vice
President-Finance of the Company shall advise the Committee of the estimated
Maximum Incentive Credit for such fiscal year and the Committee shall determine
the employees who are to receive awards for such fiscal year and the amount of
each such award.
(f) As soon as practicable after the close of each fiscal
year the Company's independent public accountants shall calculate and certify
to the Committee the Maximum Incentive Credit for such fiscal year.
(g) The amount determined and reported by the Company's
independent auditors as the Maximum Incentive Credit for any fiscal year shall
be final, conclusive and binding upon all parties, including the Company, its
stockholders and employees, notwithstanding any subsequent special item or
surplus charge or credit that may be considered applicable in
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whole or in part to such fiscal year; provided that if the amount actually
awarded for any fiscal year should later be determined by a court of competent
jurisdiction to have exceeded the Maximum Incentive Credit for such fiscal
year, the Maximum Incentive Credit for the fiscal year next succeeding such
determination shall be reduced by the amount of such excess. Any such excess
shall thus be corrected exclusively by adjustments of the amounts subsequently
available for awards and not be recourse to the Company, the Board of
Directors, the Committee, any participant or any other person.
5. Determination of Incentive Awards
The Committee shall determine the participants to receive
incentive awards for each fiscal year, the amount and form of each award (which
shall not exceed in value the lesser of 200% of a participant's base earnings
or $1 million), and the other terms and conditions applicable thereto.
Specifically, the Committee shall establish performance goals related to
operating income, cash flow, earnings per share, return on assets, return on
equity, operating margins, economic value added (EVA), cash flow margins,
shareholder return, cost control and/or revenue growth measurements, which may
be in respect of the Company, as a whole, or any business unit thereof, before
the commencement of the services to which an incentive award relates and in no
event later than March 31
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of the year to which the award relates or such other date as may be permitted
under the Internal Revenue Code.
6. Method of Payment of Awards
All incentive awards shall be made in cash.
7. Time of Payment of Awards
(a) Awards may be paid in a lump sum, in annual installments,
or otherwise, or deferred until after retirement as hereinafter provided.
(b) When payments or distributions are not to be made in a
lump sum in the year of the award, the Committee shall fix the time or times of
payments or distributions, and may impose such terms and conditions with
respect to the making of payments or distributions and forfeitures thereof, as
in its judgment will best serve the interests of the Company and the purposes
of the Plan.
(c) The Committee may also in its sole discretion establish
terms and conditions under which a participant may elect to defer the payment
of an award in whole or in part to a period following retirement or other
termination of employment, provided that any election by an employee to defer
payment shall be irrevocably made by him at such time prior to the end of the
year for which such award shall be made as the Committee shall determine.
(d) The Committee may also in its sole discretion establish
arrangements, terms and conditions under which
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portions of awards payable in the future may be invested in securities or other
suitable or appropriate property. The amounts of such future payments, whether
made in installments or deferred until after retirement or other termination of
employment, shall be subject to increase or decrease to reflect income earned
on, and gains or losses of principal of, the funds so invested.
8. Expenses
The expenses of administering this Plan shall be borne by the
Company.
9. Amendment or Discontinuance
The Board of Directors may amend, suspend or discontinue this
Plan, but may not, without the approval of the stockholders of the Company
having unlimited voting power, make any amendment which would permit the
incentive provision of any year provided in paragraph 4 hereof to exceed the
limitations set forth in said paragraph.