UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
MEREDITH 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.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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[LOGO] MEREDITH
CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 11, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of holders of common stock
and class B common stock of Meredith Corporation (hereinafter called the
"Company") will be held at the Company's principal executive offices, 1716
Locust Street, Des Moines, Iowa 50309-3023, on Monday, November 11, 2002, at
10:00 A.M., local time, for the following purposes:
(1) To elect four Class I directors for terms expiring in 2005.
(2) To approve the Meredith Corporation Employee Stock Purchase Plan of
2002.
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
By resolution of the Board of Directors, only holders of record of the
Company's common stock and class B common stock at the close of business on
September 12, 2002, are entitled to notice of and to vote at the meeting or at
any adjournment or adjournments thereof.
By Order of the Board of Directors,
/s/ John S. Zieser
JOHN S. ZIESER
VICE PRESIDENT - GENERAL COUNSEL
AND SECRETARY
Des Moines, Iowa
September 23, 2002
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD(S) IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE FOR MAILING IN THE UNITED STATES. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. A PROMPT RESPONSE IS
HELPFUL, AND YOUR COOPERATION IS APPRECIATED.
[LOGO] MEREDITH
CORPORATION
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 11, 2002
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INTRODUCTION
This Proxy Statement, along with the Company's Annual Report to
Shareholders, is being sent to shareholders on or about September 23, 2002, in
connection with the solicitation of proxies by the Board of Directors of
Meredith Corporation (the "Company"). The proxies are to be used in voting at
the Annual Meeting of holders of common stock and class B common stock of the
Company to be held at the Company's principal executive offices, 1716 Locust
Street, Des Moines, Iowa 50309-3023, on Monday, November 11, 2002, at 10:00
A.M., local time, and at any adjournment or adjournments thereof.
YOU ARE REQUESTED TO SIGN AND COMPLETE THE ENCLOSED PROXY CARD(S) AND
RETURN IT (THEM) IN THE ENCLOSED ENVELOPE.
Proxies in such form, if duly signed and received in time for voting, will
be voted in accordance with the directions of the shareholders. If no
instructions are specified in a proxy, the proxy will be voted by the proxy
holders FOR the election as directors of the nominees hereinafter named, FOR the
approval of the Meredith Corporation Employee Stock Purchase Plan of 2002, and
in their discretion upon such matters not presently known or determined that may
properly come before the meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
The giving of a proxy does not preclude the right to vote in person or by
means of a subsequent proxy, should the person giving the proxy so desire. Any
proxy may be revoked by giving notice to the Company in writing prior to the
meeting or in open meeting, but such revocation shall not affect any vote
previously taken.
The expense of soliciting proxies for the Annual Meeting, including the
cost of preparing, assembling and mailing the notice, proxy and Proxy Statement
and the reasonable costs of brokers, nominees and fiduciaries in supplying
proxies to beneficial owners, will be paid by the Company. The solicitation will
be made by use of the mail, through brokers and banking institutions, and by
directors, officers or regular employees of the Company. In addition to
solicitation by use of the mail, certain directors, officers or regular
employees of the Company may solicit proxies by telephone, telegraph, internet,
telecopy or personal contact.
SHARES ENTITLED TO VOTE
Each holder of record of common stock at the close of business on September
12, 2002, is entitled to one vote per share so held on all matters to come
before the meeting. At the close of business on September 12, 2002, there were
outstanding and entitled to vote at the Annual Meeting, 39,216,275 shares of
common stock of the Company. Each holder of record of class B common stock at
the close of business on September 12, 2002, is entitled to ten votes per share
so held on all matters to come before the meeting. At the close of business on
September 12, 2002, there were outstanding and entitled to vote at the Annual
Meeting, 10,286,974 shares of class B common stock of the Company, for a total
of 142,086,015 votes.
The affirmative vote of a majority of the total number of votes entitled to
be cast represented by shares present in person or by proxy, a quorum being
present, is required to elect directors, to approve the Meredith Corporation
Employee Stock Purchase Plan of 2002 and to approve any other matters that
1
may properly come before the meeting. In determining whether a quorum exists at
the Annual Meeting for purposes of all matters to be voted on, all votes "for"
or "against," as well as all abstentions (including votes to "withhold
authority" to vote in certain cases), will be counted. Abstentions with respect
to a particular proposal will be counted as part of the base number of votes to
be used in determining if that particular proposal has received the requisite
percentage of base votes for approval, while broker non-votes will not be
counted in such base for each proposal. Therefore, an abstention will have the
same practical effect as a vote "against" such proposal, while a broker non-vote
will have no effect. If an individual has signed a proxy card but failed to
indicate a vote "for," "against," or "withhold authority," such proxy will be
voted FOR the election as directors of the nominees therein named, FOR approval
of the Meredith Corporation Employee Stock Purchase Plan of 2002, and in their
discretion upon such matters not presently known or determined that may properly
come before the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Under regulations of the Securities and Exchange Commission, persons who
have power to vote or to dispose of shares of the Company, either alone or
jointly with others, are deemed to be beneficial owners of such shares. Because
the voting or dispositive power of certain stock listed in the following table
is shared, in some cases the same securities are listed opposite more than one
name in the table. The total number of the Company's shares as listed in the
table (excluding stock options that are presently exercisable or will become
exercisable within sixty (60) days following the date of the Proxy Statement),
after elimination of such duplication is 12,110,766 shares of common stock
(approximately 31% of the outstanding common stock) and 8,322,896 shares of
class B common stock (approximately 81% of the outstanding class B common
stock).
Set forth below is information as of July 31, 2002, concerning security
ownership by each person who is known to management to be the beneficial owner
of more than 5% of any class of the Company's voting securities, and security
ownership by management.
COMMON STOCK OWNED (1) CLASS B COMMON STOCK OWNED (2)
-------------------------------- --------------------------------
SOLE VOTING SHARED SOLE VOTING SHARED
OR VOTING OR OR VOTING OR
INVESTMENT INVESTMENT % OF INVESTMENT INVESTMENT % OF
NAME POWER POWER CLASS POWER POWER CLASS
---- ----------- ---------- ----- ----------- ---------- -----
(a) BENEFICIAL OWNERS OF MORE THAN 5%
E. T. Meredith III, Director (3)(4)(6) ........ 13,200 1,745,898 20% 6,992,172 395,248 71%
1716 Locust Street
Des Moines, IA 50309-3023
Frederick B. Henry, Director (3)(6)(9) ........ 600,830 428,108 5% 17,063 772,204 8%
100 West Hallam Street
Aspen, CO 81611
Mell Meredith Frazier, Director (3)(4)(5) ..... 41,002 92,412 2% 95,345 692,412 8%
1716 Locust Street
Des Moines, IA 50309-3023
Anna K. Meredith Endowment Trust (11) ......... 0 0 2% 0 600,000 6%
665 Locust Street
Des Moines, IA 50304
AIM Funds Management, Inc. (12) ............... 0 3,968,000 10% 0 0 0
5140 Yonge Street, Suite 900
Toronto, Ontario, CN M2N 6X7
Franklin Mutual Advisers, LLC (13) ............ 2,611,759 0 7% 0 0 0
51 John F. Kennedy Parkway
Short Hills, NJ 07078
T. Rowe Price Associates, Inc. (14) ........... 0 2,307,580 6% 0 0 0
100 East Pratt Street
Baltimore, MD 21202
2
COMMON STOCK OWNED (1) CLASS B COMMON STOCK OWNED (2)
-------------------------------- --------------------------------
SOLE VOTING SHARED SOLE VOTING SHARED
OR VOTING OR OR VOTING OR
INVESTMENT INVESTMENT % OF INVESTMENT INVESTMENT % OF
NAME POWER POWER CLASS POWER POWER CLASS
---- ----------- ---------- ----- ----------- ---------- -----
(b) DIRECTORS, NOT LISTED ABOVE, INCLUDING
NOMINEES, AND NAMED EXECUTIVE OFFICERS
Herbert M. Baum, Director (6)(9) ............. 47,855 0 * 0 0 0
Mary Sue Coleman, Director (6) ............... 20,290 0 * 0 0 0
Joel W. Johnson, Director (6)(9) ............. 43,654 0 * 0 0 0
Jerome M. Kaplan, President -
Magazine Group (5)(7)(10) ................... 219,538 0 * 492 0 *
William T. Kerr, Director,
Chairman and CEO (4)(5)(7)(10) .............. 1,585,932 15,000 4% 0 0 0
Stephen M. Lacy, President -
Publishing Group (5)(7)(10) ................. 129,258 0 * 0 0 0
Robert E. Lee, Director (6)(9) ............... 50,815 0 * 2,800 0 *
David J. Londoner, Director (4) .............. 27,269 5,000 * 0 0 0
Philip A. Marineau, Director (6) ............. 18,520 0 * 0 0 0
Charles D. Peebler, Jr., Nominee ............. 0 0 * 0 0 0
Kevin P. O'Brien, President -
Broadcasting Group (15) ..................... 20,000 0 * 0 0 0
Suku V. Radia, Vice President -
Chief Financial Officer (5)(7) .............. 44,394 0 * 0 0 0
Nicholas L. Reding, Director (6)(9) .......... 53,685 0 * 0 0 0
Jack D. Rehm, Director (3)(4)(6)(9) .......... 300,923 10,068 1% 45,457 1,344 *
(c) ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP (3)(4)(5)(6)(7)(8)(9)(10)
(18 persons) ................................ 3,435,021 2,325,810 32% 7,154,100 1,861,208 87%
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*Less than one percent.
(1) Shares listed in the table under "Common Stock Owned" do not include shares
of common stock deemed to be owned by the shareholder as a result of the
shareholder's ownership of class B common stock which is convertible, share
for share, into common stock. However, the calculation of "% of Class"
includes such shares deemed to be owned. If such shares were not included
in the calculations, the common stock ownership percentages would be: Mr.
E. T. Meredith III, 4%; Mr. Frederick B. Henry, 3%; Ms. Mell Meredith
Frazier, 3%; the Anna K. Meredith Endowment Trust, 0%; the other
individuals' ownership percentages would be unchanged; and the ownership
percentage in (c) All directors and executive officers as a group, would be
15%.
(2) Class B common stock is not transferable except to members of the family of
the holder and certain other related entities. Class B common stock,
however, is convertible, share for share, at any time into fully
transferable common stock without the payment of any consideration.
(3) Includes shares owned by various trusts. The inclusion of these shares is
not to be taken as an admission by the named shareholder of beneficial
ownership of these shares for any other purpose.
(4) Includes shares beneficially owned by spouses and relatives living in the
same home with the named individuals, and includes shares owned by family
partnerships.
(5) Includes shares held by Wells Fargo, as trustee under the Meredith Savings
and Investment Plan for the benefit of certain officers, which shares are
voted by the trustee only at the direction of the individual plan
participants.
(6) Includes shares which are subject to presently exercisable stock options or
options exercisable within 60 days following July 31, 2002, by non-employee
directors under the Company's 1993 Stock Option Plan for Non-Employee
Directors as follows: 36,000 shares for Mr. Nicholas L. Reding; 32,000
shares each for Messrs. Herbert M. Baum, Joel W. Johnson and Robert E. Lee;
18,000 shares each for Dr. Mary Sue Coleman and Mr. Jack D. Rehm; 12,000
shares each for Messrs. Philip A. Marineau and E. T. Meredith III; and an
additional 264,056 shares for Mr. Rehm under the Company's 1992 and 1996
Stock Incentive Plans.
(7) Includes shares which are subject to presently exercisable stock options or
options exercisable within 60 days following July 31, 2002, by executive
officers under the Company's 1992 and 1996 Stock Incentive Plans as
follows: 1,424,035 shares for Mr. William T. Kerr; 202,500 shares for Mr.
Jerome M. Kaplan; 109,401 shares for Mr. Stephen M. Lacy; and 31,500 shares
for Mr. Suku V. Radia.
(8) Includes 2,414,992 shares which are subject to presently exercisable stock
options or options exercisable within 60 days following July 31, 2002, by
the directors and executive officers as a group.
3
(9) Includes stock equivalents held by the non-employee directors under the
Company's 1990 Restricted Stock Plan for Non-Employee Directors as follows
(rounded to the closest whole number): 9,907 shares for Mr. Robert E. Lee;
7,397 shares for Mr. Herbert M. Baum; 7,362 shares for Mr. Joel W. Johnson;
4,289 shares for Mr. Jack D. Rehm; 3,544 shares for Mr. Nicholas L. Reding;
and 1,478 shares for Mr. Frederick B. Henry; for an aggregate total of
33,977 shares.
(10) Includes stock equivalents held by the executive officers under the
Company's 1996 Stock Incentive Plan as follows (rounded to the closest
whole number): 44,606 shares for Mr. William T. Kerr; 9,451 shares for Mr.
Stephen M. Lacy; 4,457 shares for Mr. Jerome M. Kaplan; and 2,896 shares
for Mr. Suku V. Radia; for an aggregate total of 61,410 shares.
(11) This is a charitable trust with five trustees: Bankers Trust Company, D.
Mell Meredith Frazier, E. T. Meredith IV, Quentin G. Heisler, Jr., and
John D. Bloodgood. The five trustees act by majority vote.
(12) Information as of June 30, 2002, based on Schedule 13G filed with the
Securities and Exchange Commission.
(13) Information as of December 31, 2001, based on Schedule 13G filed with the
Securities and Exchange Commission.
(14) Information provided by T. Rowe Price Associates, Inc. as of July 30, 2002.
These securities are owned by various individual and institutional
investors which T. Rowe Price Associates, Inc. (Price Associates) serves as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(15) Information as of August 26, 2002, based on Form 4 filed with the
Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide that the Board of
Directors shall consist of not fewer than three nor more than 15 persons, as may
be provided by the Bylaws, to be divided into three classes, each class to
consist, as nearly as may be possible, of one-third of the total number of
directors. The Bylaws provide that the number of directors shall be fixed from
time to time by resolution of the Board of Directors. The last resolution
provided for 12 directors. The proxies cannot be voted for a greater number of
persons than the number of nominees named herein.
Listed below are the four persons who have been nominated as Class I
directors to serve three-year terms to expire in 2005. Three of the Class I
nominees are currently serving as directors and were previously elected by the
shareholders. Charles D. Peebler, Jr. has been nominated as a Class I director
by the Board of Directors to fill the vacancy which will be created by the
retirement of Mr. Jack D. Rehm from the Board effective as of the date of the
Annual Meeting. Should any of these nominees become unable to serve prior to the
upcoming Annual Meeting, an event which is not anticipated by the Company, the
proxies, except those from shareholders who have given instructions to withhold
voting for the following nominees, will be voted for such other person or
persons as the Nominating/ Governance Committee may nominate. Certain
information concerning each of the four nominees for Class I directors and each
of the continuing directors is set forth below.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS --
TERMS TO EXPIRE IN 2005
YEAR
FIRST ELECTED PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
NOMINEE AGE AS A DIRECTOR AND OTHER INFORMATION
----------------------- --- ------------- ---------------------------------------------------------------
Robert E. Lee 67 1982 President, Glacier Properties, Inc. (private investment firm),
1986 to present; Executive Director, Emeritus, The Denver
Foundation (community foundation), 1996 to present; Executive
Director, The Denver Foundation, 1989 to 1996; Chairman and
CEO, First Interstate Bank of Denver, 1980 to 1989. Mr. Lee is
a director of Storage Technology Corporation, ING North
America Insurance Holdings, Inc. and Financial Investors Trust.
4
YEAR
FIRST ELECTED PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
NOMINEE AGE AS A DIRECTOR AND OTHER INFORMATION
----------------------- --- ------------- ---------------------------------------------------------------
David J. Londoner 65 2001 General Partner, The North River Company (family investment
partnership), 1995 to present; Managing Director, Manager of
Media/Entertainment Research Sector, ABN AMRO, Inc.
(investment banking firm), 2000 to 2001; Managing Director,
Director of the Media/Entertainment Research Group, Schroder
& Co., Inc. (successor to Wertheim & Co. Inc.) (investment
banking firm), 1972 to 2000.
Philip A. Marineau 55 1998 President and Chief Executive Officer, Levi Strauss & Co.
(worldwide brand apparel company), September 1999 to present;
President and Chief Operating Officer, Pepsi-Cola North
America (worldwide beverage division of Pepsico), December
1997 to September 1999; President, Dean Foods, January 1996
to October 1997. Mr. Marineau is a director of Levi Strauss &
Co.
Charles D. Peebler, Jr. 66 Nominee Managing Director, Plum Capital, LLC (a managed investment
company focused on early stage investment in high growth
media companies), 1999 to present; Chairman Emeritus, True
North Communications, Inc., 1999; President, True North and
CEO, Diversified Companies Group, 1997 to 1999; CEO, Bozell,
Jacobs, Kenyon & Eckhardt (merged with True North in 1997),
1958 to 1997. Mr. Peebler is a director of AvalonBay
Communities, Inc., EOS International Inc. and Valmont
Industries, Inc.
DIRECTORS CONTINUING IN OFFICE AS CLASS II DIRECTORS --
TERMS TO EXPIRE IN 2003
YEAR
FIRST ELECTED PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
NOMINEE AGE AS A DIRECTOR AND OTHER INFORMATION
----------------------- --- ------------- ---------------------------------------------------------------
Herbert M. Baum 65 1994 Chairman, President and Chief Executive Officer, The Dial
Corporation (manufacturer and marketer of consumer products),
2000 to present; President and Chief Operating Officer,
HASBRO, Inc. (toy manufacturer), 1999 to 2000; Chairman
and Chief Executive Officer, Quaker State Corporation, 1995
to 1998. Mr. Baum is a director of PepsiAmericas Corporation,
Midas, Inc., The Dial Corporation, Fleming Cos., Inc. and
Action Performance Companies, Inc.
Frederick B. Henry 56 1969 President, The Bohen Foundation (private charitable foundation),
1985 to present.
William T. Kerr 61 1994 Chairman and Chief Executive Officer, Meredith Corporation,
January 1998 to present; President and Chief Executive Officer,
Meredith Corporation, January 1997 to December 1997;
President and Chief Operating Officer, Meredith Corporation,
July 1994 to December 1996. Mr. Kerr is a director of Principal
Financial Group, Inc., Storage Technology Corporation and
Maytag Corporation.
Nicholas L. Reding 67 1992 Chairman, The Keystone Center, (nonprofit organization which
facilitates dispute resolution based on science leading to public
policy), 2001 to present; Chairman, Nidus Center for Scientific
Enterprise (plant science and biotechnology business), 1999 to
present; Vice Chairman, Monsanto Company, 1992 to 1998.
Mr. Reding is a director of International Multifoods Corporation
and CPI Corporation.
5
DIRECTORS CONTINUING IN OFFICE AS CLASS III DIRECTORS --
TERMS TO EXPIRE IN 2004
YEAR
FIRST ELECTED PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
NOMINEE AGE AS A DIRECTOR AND OTHER INFORMATION
----------------------- --- ------------- ---------------------------------------------------------------
Mary Sue Coleman 58 1997 President, University of Michigan, August 2002 to present;
President, The University of Iowa, 1995 to July 2002.
Mell Meredith Frazier 46 2000 Vice President, Meredith Corporation Foundation, September
1999 to present; Director of Corporate Planning, Meredith
Corporation, October 1999 to present; Financial Analyst,
Meredith Corporation, July 1995 to October 1999.
Joel W. Johnson 59 1994 Chairman, President and Chief Executive Officer, Hormel
Foods Corporation (producer and marketer of meat and food
products), 1995 to present; President and Chief Executive
Officer, Hormel Foods Corporation, 1993 to 1995. Mr. Johnson
is a director of Hormel Foods Corporation, Ecolab Inc. and
U.S. Bancorp.
E. T. Meredith III 69 1966 Chairman of the Executive Committee, Meredith Corporation,
1988 to present.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
COMMITTEES OF THE BOARD
There are six standing committees of the Board of Directors:
AUDIT COMMITTEE. The members of this committee are Messrs. Marineau
(Chairman), Baum, Johnson and Londoner and Dr. Coleman. The committee is
composed entirely of non-employee directors, each of whom meets the
"independence" requirement of the New York Stock Exchange ("NYSE"). Pursuant to
the Company's Audit Committee Charter, each member of the committee, in addition
to meeting the "independence" requirement, must be "financially literate" as
contemplated under the NYSE rules. The committee assists the Board of Directors
in fulfilling its oversight responsibilities as they relate to the Company's
accounting policies and internal controls, financial reporting practices and
legal and regulatory compliance. In addition, the committee maintains, through
regularly scheduled meetings, a line of communication between the Board of
Directors and the Company's financial management, internal auditors and
independent accountants.
COMPENSATION COMMITTEE (FORMERLY THE COMPENSATION/NOMINATING COMMITTEE).
The members of this committee are Messrs. Baum (Chairman), Henry, Lee and
Reding. The committee is composed entirely of non-employee directors, each of
whom meets the "independence" requirement of the NYSE. The committee reviews and
approves corporate officers' salaries, approves prior to adoption any officer,
director or management incentive, bonus or stock plans or agreements and
administers such plans as required. As described below, on August 14, 2002, the
Board of Directors formed the Nominating/ Governance Committee. In connection
with the formation of that committee, the nominating function of this committee
was transferred to the Nominating/Governance Committee. Prior to August 14,
2002, Mr. Lee served as Chairman of the Compensation/Nominating Committee.
EXECUTIVE COMMITTEE. The members of this committee are Messrs. Meredith
(Chairman), Kerr, Lee and Rehm and Dr. Coleman. The committee has, during
intervals between meetings of the Board in cases in which specific directions
have not been given by the Board of Directors, all the authority of the Board
in management of the Company's business, except for certain matters set forth
in the Bylaws including the authority to declare dividends or other
distributions; adopt, amend or repeal the Bylaws; or make fundamental changes
in the corporate structure of the Company.
FINANCE COMMITTEE. The members of this committee are Messrs. Reding
(Chairman), Baum, Johnson, Lee and Rehm. The committee advises the Board with
respect to corporate financial policies and procedures, dividend policy,
specific corporate financing plans and annual operating and capital budgets. It
also provides financial advice and counsel to management, appoints depositories
of corporate funds and specifies conditions of deposit and withdrawal, approves
corporate investment portfolios and capital expenditure requests by management
within the limits established by the Board.
6
NOMINATING/GOVERNANCE COMMITTEE. The Nominating/Governance Committee was
formed by the Board of Directors on August 14, 2002. The members of this
committee are Messrs. Lee (Chairman), Baum and Marineau. The committee is
composed entirely of non-employee directors, each of whom meets the
"independence" requirement of the NYSE. The committee recommends to the Board of
Directors corporate governance guidelines applicable to the Company, leads the
Board in its annual review of Board and management performance, recommends to
the Board nominees to serve on each committee, and nominates individuals to
become directors. The committee will consider shareholder recommendations for
directors sent to the Nominating/Governance Committee, c/o Mr. John S. Zieser,
Vice President - General Counsel and Secretary, Meredith Corporation, 1716
Locust Street, Des Moines, Iowa 50309-3023.
PENSION COMMITTEE. The members of this committee are Messrs. Henry
(Chairman) and Marineau, Ms. Frazier and Dr. Coleman. The committee reviews
pension plans and amendments to ascertain that they are being administered in
accordance with their terms and are providing authorized benefits. It also
reviews levels and types of benefits and recommends changes. The committee
recommends to the Board investment objectives for pension funds, reviews the
performance of the funds and recommends to the Board such committees it deems
desirable for the administration of the pension plans.
MEETINGS OF THE BOARD
During fiscal 2002 the Board had four regularly scheduled meetings as did
the Finance, Audit, and Compensation/Nominating Committees. The Pension
Committee met twice and the Executive Committee met once. All directors attended
at least 90% of regularly scheduled meetings of the Board and the respective
committees on which they served during fiscal 2002.
In addition to regularly scheduled meetings, the Board had three special
meetings; the Finance Committee had four special meetings; and the
Compensation/Nominating Committee had one special meeting. Including special
meetings, all directors attended at least 75% of meetings of the full Board and
the respective committees on which they served during fiscal 2002, except for
Mr. Marineau who was unable to attend the three special board meetings and one
committee meeting.
COMPENSATION OF THE BOARD
Employee directors receive no compensation for Board service. Non-employee
directors receive a $35,000 annual retainer with an additional $3,000 annual
retainer for committee chairpersons. Under the 1990 Restricted Stock Plan for
Non-Employee Directors, as amended, non-employee directors have the opportunity
to receive either all or 50% of the annual retainer (including the chairperson
retainer) in either restricted stock or stock equivalents equal to 105% of the
amount of the annual retainer converted. Each new non-employee director receives
1,200 shares of restricted stock upon election to the Board. The restricted
stock vests on the fifth anniversary of the date of the grant. During fiscal
2002, seven of ten non-employee directors elected to receive all or 50% of their
retainer in restricted stock or stock equivalents.
The 1993 Stock Option Plan for Non-Employee Directors, as amended, is a
further encouragement of directors' ownership of the Company's stock. Each
non-employee director receives an option to purchase 6,000 shares of Company
common stock on the day following the Annual Meeting of Shareholders at an
exercise price equal to the average of the high and low market prices on the
date of the grant. The options become exercisable one-third per year over a
three-year period beginning on the first anniversary of the grant date. The
options expire on the tenth anniversary of the grant date.
Pursuant to a consulting agreement, Mr. Jack D. Rehm, former Chairman of
the Board and a current director, receives not less than $150,000 per year
through December 31, 2002. During fiscal 2002, Mr. Rehm received $150,000 under
this consulting agreement. Mr. Rehm's consulting agreement will expire on
December 31, 2002.
Under a consultancy agreement, Mr. Meredith renders such consulting
services to the Company as the Chief Executive Officer or Board of Directors may
from time to time reasonably request. As consideration for such services, the
Company provides to Mr. Meredith the continuation of certain perquisites he
received while an employee of the Company, as well as health insurance coverage.
7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In conjunction with the Company's ongoing share repurchase program, in
March 2002, the Company purchased 60,000 shares of class B common stock from the
Mildred M. Bohen Charitable "C" Trust for an aggregate consideration of
$2,482,200 (based upon the reported price per share of the Company's common
stock on the New York Stock Exchange at the time of purchase). Frederick B.
Henry, a member of the Company's Board of Directors, is a remainder beneficiary
and co-trustee of that Trust.
In May 2002, also in conjunction with the Company's ongoing share
repurchase program, the Company purchased an aggregate of 50,000 shares of class
B common stock from the Mildred M. Bohen Family Trust for an aggregate
consideration of $2,142,200 (based upon the reported price per share of the
Company's common stock on the New York Stock Exchange at the time of purchase).
Frederick B. Henry, a member of the Company's Board of Directors, is a
beneficiary and co-trustee of that Trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires that certain of the
Company's officers and directors and persons who own more than ten percent of
the Company's outstanding stock, file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. To the Company's knowledge, based solely upon a review of copies of
forms submitted to the Company during and with respect to the most recent fiscal
year and on written representations from the Company's directors and officers,
all Section 16(a) filing requirements were complied with during the fiscal year
ended June 30, 2002.
8
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides a summary of compensation paid to Mr. Kerr and
the other four most highly compensated executive officers of the Company (the
"named executive officers") for services rendered to the Company during each of
the last three fiscal years.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- -----------------------
RESTRICTED
STOCK SECURITIES
FISCAL OTHER ANNUAL AWARD(S) UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1)(2) AWARDS COMPENSATION (3)
--------------------------- ------ -------- -------- ------------ ---------- ---------- ----------------
William T. Kerr 2002 $725,000 $375,000 $ 56,267(6) $ 0 120,000 $12,276
Chairman & CEO 2001 690,000 382,062 0 175,000 21,790
2000 650,000 836,000 0 100,000 21,790
Stephen M. Lacy 2002 $475,000 $220,000 $23,788 50,000 $ 9,437
President - Publishing 2001 415,039 249,715 27,835 70,000 8,238
Group 2000 325,385 340,000 24,426 30,000 9,036
Jerome M. Kaplan 2002 $455,000 $160,000 $ 8,558(7) $84,823 36,000 $ 8,000
President - Magazine 2001 425,289 172,343 2,521 50,000 6,800
Group 2000 390,000 225,000 21,917 25,200 6,800
Kevin P. O'Brien 2002 $327,115 $183,750 $209,870(8) $ 0 130,000 $ 0
President - Broadcasting
Group (4)
Suku V. Radia 2002 $375,000 $130,000 $55,596 22,500 $ 9,798
Vice President - Chief 2001 360,000 141,750 0 30,000 13,210
Financial Officer (5) 2000 114,923 127,258 85,313 18,000 1,195
------------------
(1) Accumulated Restricted Stock:
AGGREGATE
SHARES YEAR-END VALUE ($)
------ ------------------
William T. Kerr * *
Stephen M. Lacy 3,204 $122,873
Jerome M. Kaplan 3,771 144,618
Kevin P. O'Brien 0 0
Suku V. Radia 4,615 176,985
*On February 25, 1999, Mr. Kerr and the Company entered into an
agreement whereby all of Mr. Kerr's restricted stock (43,200
shares) was exchanged for an equal number of stock equivalents.
Dividends are paid on reported restricted stock.
(2) Generally, restricted stock awards vest five years after date of grant;
however, Mr. Radia has a three-year cliff vest award from fiscal 2000. The
vesting of certain shares of restricted stock is also conditioned upon the
continued holding of a corresponding number of shares of common stock.
(3) This column discloses: (a) matching contributions made by the Company equal
to 80% of the first 5% of the employee's contributions to the Meredith
Savings and Investment Plan, a defined contribution plan available
generally to the employees of the Company, as follows: $8,000 for Messrs.
Kaplan, Kerr and Lacy; and $9,315 for Mr. Radia; (b) the premiums paid on
term life insurance in fiscal 2002 as follows: $4,275 for Mr. Kerr; $1,437
for Mr. Lacy; and $483 for Mr. Radia.
(4) Mr. O'Brien joined the Company on November 8, 2001.
(5) Mr. Radia joined the Company on March 1, 2000.
(6) Includes $29,816 for payment of professional fees for estate and tax
planning.
(7) Represents payment for flex vacation.
(8) Includes $50,000 for moving allowance; $90,000 for country club initiation
fees and $61,388 for related tax reimbursement.
9
OPTION GRANTS TABLE
The following table sets forth certain information with respect to options
to purchase shares of the Company's common stock awarded during fiscal 2002 to
the named executive officers. All options granted were nonqualified options. The
option exercise price is equal to the fair market value of the Company's common
stock on the date of the grant.
OPTION GRANTS IN LAST FISCAL YEAR
REALIZABLE VALUE AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (3)
----------------------------------------------------------------------------------------- --------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES IN OR BASE EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR (1) PRICE ($) DATE (2) 5% ($) 10% ($)
---- --------------- --------------- ---------- ---------------- -------------- --------------
William T. Kerr 120,000 14.53 34.80000 August 8, 2011 2,626,264 6,655,469
Stephen M. Lacy 50,000 6.05 34.80000 August 8, 2011 1,094,277 2,773,112
Jerome M. Kaplan 36,000 4.36 34.80000 August 8, 2011 787,879 1,996,641
Kevin P. O'Brien 130,000 15.74 33.62000 November 7, 2011 2,748,647 6,965,611
Suku V. Radia 22,500 2.72 34.80000 August 8, 2011 492,424 1,247,900
All Shareholders (4) 1,084,994,799 2,749,589,846
------------------
(1) Total options granted to employees during the fiscal year were 825,950.
(2) Options are fully exercisable after death or termination of employment due
to disability or retirement through the expiration date. All options become
exercisable in installments of one-third on the first three anniversaries
of the date of grant.
(3) As required by the rules of the Securities and Exchange Commission, the
dollar amounts under these columns represent the hypothetical gain or
"option spread" that would exist for the options based on assumed 5% and
10% annual compounded rates of stock price appreciation over the full
option term. The prescribed rates are not intended to forecast possible
future appreciation.
(4) All shareholders are shown for comparison purposes only. The realizable
value to all shareholders is the aggregate net gain, assuming a starting
market price of $34.80 (the fair market value on August 11, 2001), and
appreciation at assumed annual rates of 5% and 10% for a ten-year period.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth for each named executive officer information
on the status of all options granted to such officer as of June 30, 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($) (2)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE VALUE REALIZED ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ---------------------- ----------- ------------- ----------- -------------
William T. Kerr 25,000 $708,625 1,317,369 294,999 $21,786,152 $2,056,512
Stephen M. Lacy 0 0 78,734 124,666 185,163 887,899
Jerome M. Kaplan 8,000 278,760 178,700 89,400 2,823,974 597,233
Kevin P. O'Brien 0 0 0 130,000 0 614,900
Suku V. Radia 0 0 18,000 52,500 180,675 386,250
------------------
(1) Calculated based on the difference between the exercise price and the fair
market value on the date of exercise.
(2) Calculated based on the fair market value of the Company's common stock on
June 28, 2002 ($38.35).
10
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information with respect to the Company's
common stock that may be issued under all equity compensation plans of the
Company in existence as of June 30, 2002. All of the equity compensation plans
for which information is included in the following table have been approved by
shareholders. The following table does not include information with respect to
the Meredith Corporation Employee Stock Purchase Plan of 2002, which became
effective July 1, 2002, and is being submitted to the shareholders for approval
at the Annual Meeting.
(c)
NUMBER OF SECURITIES
(a) (b) REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING COMPENSATION PLANS (EXCLUDING
OUTSTANDING OPTIONS, OPTIONS, WARRANTS SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS COLUMN (a))
------------- -------------------------- ------------------------- -----------------------------
Equity compensation plans
approved by shareholders 6,570,077 $ 26.55 3,408,869
Equity compensation plans not
approved by shareholders None N/A None
Total 6,570,077 $ 26.55 3,408,869
RETIREMENT PROGRAMS AND EMPLOYMENT AGREEMENTS
The Company maintains separate qualified defined benefit plans for its
union and nonunion employees, as well as two nonqualified supplemental pension
plans covering certain nonunion employees. Defined benefit plans and the
supplemental pension plans are actuarial plans and the amount of the
contribution with respect to a specific person cannot readily be separately
calculated by the regular actuaries for the plans. The Company makes annual
contributions to the qualified plans to the extent permitted by the funding
rules of the Internal Revenue Service.
As of January 1, 2002, the latest date for which information is available,
341 employees participated in the bargaining unit defined benefit plan and 2,566
nonunion employees participated in the nonunion defined benefit plans. Assuming
retirement at age 65, estimated annual retirement benefits under the nonunion
qualified plan in effect for the 2002 plan year would be as follows:
PENSION TABLE
FINAL YEARS OF SERVICE
AVERAGE ----------------------------------
COMPENSATION 10 15 20+
------------ -------- -------- --------
$ 400,000 $ 92,530 $138,795 $185,060
500,000 117,530 176,295 235,060
600,000 142,530 213,795 285,060
700,000 167,530 251,295 335,060
800,000 192,530 288,795 385,060
900,000 217,530 326,295 435,060
1,000,000 242,530 363,795 485,060
1,100,000 267,530 401,295 535,060
1,200,000 292,530 438,795 585,060
1,300,000 317,530 476,295 635,060
1,400,000 342,530 513,795 685,060
As of January 1, 2002, the credited years of service for individuals
listed in the compensation tables above are as follows: Mr. Jerome M. Kaplan,
President - Magazine Group - 20 years; Mr. William T. Kerr, Chairman and Chief
Executive Officer - 10 years; Mr. Stephen M. Lacy, President - Publishing Group
- 4 years; Mr. Kevin P. O'Brien, President - Broadcasting Group - 0 years; and
Mr. Suku V. Radia, Vice President - Chief Financial Officer - 1 year. For
calendar year 2001, covered compensation for purposes of the supplemental
pension plans including bonuses was $1,089,562 for Mr. William T. Kerr;
$712,215 for Mr. Stephen M. Lacy; $625,709 for Mr. Jerome M. Kaplan; $453,865
for Mr. Suku V.
11
Radia; and $114,615 for Mr. Kevin P. O'Brien. The compensation includes
deferrals under the Deferred Compensation Plan, which are included as
compensation under the Replacement and Supplemental plans.
The Company entered into an agreement effective February 1, 2001, with Mr.
Kerr that provides for his employment through June 30, 2006, subject to
automatic renewal for subsequent one-year terms. Mr. Kerr receives an annual
base salary and an incentive bonus determined under the terms of the Company's
Management Incentive Plan. The agreement also provides that during the course of
his employment, Mr. Kerr shall be eligible to participate in all long-term
incentive plans, including, without limitation, stock incentive plans adopted by
the Company and, in effect, at levels of awards to be granted by the
Compensation Committee commensurate with the level of Mr. Kerr's
responsibilities and performance thereof. In addition to participating in the
Meredith Employees' Retirement Income Plan, the Meredith Savings and Investment
Plan and the Company's supplemental retirement plans, the Company has
established a Minimum Supplemental Retirement Benefit Program ("MSRBP") for the
benefit of Mr. Kerr. The MSRBP provides for a minimum retirement benefit equal
to the benefits Mr. Kerr would have received under the retirement plans of a
previous employer offset by benefits accrued under the Company's pension plans.
The MSRBP also provides for a death benefit related to the value of the accrued
benefit under the MSRBP.
Mr. Kerr and the other executive officers of the Company have all entered
into severance agreements with the Company. These agreements provide for the
payment to the executive of an amount equal to three times the average annual
base salary and incentive compensation paid to the executive during the three
fiscal years immediately prior to a change of control of the Company as defined
in detail in the agreements. All agreements with the executive officers with
respect to grants of nonqualified stock options under the 1996 Plan provide for
the vesting of the options in the event of a change of control in accordance
with the terms of the 1996 Plan.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee (formerly the Compensation/Nominating Committee)
reviews and approves the compensation of the Company's officers. The Committee
administers various stock and other compensation-related plans provided for the
benefit of the Company's officers, directors and other key managers, with the
purpose of encouraging the participants to achieve the Company's performance
goals and to align the interests of the participants with the interests of the
Company's shareholders. The Compensation Committee is composed entirely of
independent outside directors. There are no Compensation Committee interlocks
and there is no insider participation on the Committee. The Committee has
provided the following report on executive compensation for inclusion in this
Proxy Statement:
COMPENSATION PHILOSOPHY
The Company's executive compensation philosophy has the following
objectives:
(1) To provide compensation opportunities competitive with those available
at comparable firms in the specific industries in which the Company
conducts its businesses and the national marketplace;
(2) To provide the opportunity to earn beyond competitive levels if
superior operating performance and shareholder returns are achieved;
(3) To design incentives that balance the need to meet or exceed annual
operating plans with the need for long-term business growth and to
provide superior shareholder returns;
(4) To provide clear, controllable and measurable objectives for the
executives to meet; and
(5) To attract, retain and motivate top caliber executives in each market
segment in which the Company competes.
Pay for performance, which is directly linked to both short-term and
long-term compensation, is the foundation of the compensation program for the
Company's CEO and other executive officers.
Section 162(m) of the Internal Revenue Code limits the deductibility of
certain items of compensation paid to the CEO and to each of the named executive
officers to $1,000,000 annually. The Committee believes that it is in the best
interests of the Company to receive maximum tax deductibility for
12
compensation paid to the CEO and the other executive officers under Section
162(m). The Committee has adopted or approved appropriate changes to the
Company's long-term and short-term incentive programs to provide for the
deductibility of compensation received under the plans, but reserves the right
to provide for compensation to the CEO and other executive officers that may not
be deductible, if determined to be in the best interests of the Company and its
shareholders.
CEO AND EXECUTIVE OFFICER COMPENSATION PROGRAM ELEMENTS
Periodic media and general industry competitive market reviews of executive
compensation are conducted with the assistance of outside compensation
consultants. The Company's compensation program strives to be competitive in
relation to the market data available. The Committee strives to establish CEO
and other executive officer base salaries within the mid-range of the market
survey data. Short-term and long-term incentive targets are set in the same
manner. Compensation beyond the mid-range may be awarded from time to time based
upon individual performance.
BASE SALARY. Salaries for the CEO and executive officer group are based on
the marketplace value of each job and on individual contributions and
performance. The performance of the CEO and each executive officer is reviewed
annually by the Committee. Salary increases are based primarily on the annual
merit reviews. The rates of increase are tied to both individual performance and
general executive compensation trends.
Mr. Kerr's annual base salary, pursuant to his employment contract, was
$725,000 for fiscal 2002. Mr. Kerr's salary is within the mid-range of salaries
for comparable positions as reported in the market survey data.
SHORT-TERM INCENTIVE PROGRAM. The Company's Management Incentive Plan
provides the CEO and other executive officers with an annual incentive to attain
established financial and overall performance targets. For fiscal 2002, at least
75% of the incentive awards to the CEO and all other executive officers serving
at the beginning of the fiscal year was based on specific financial targets
relating to earnings and cash flow, with the balance relating to predetermined
qualitative organizational objectives.
The goals for each participant are reviewed and revised annually in
connection with the approval of the budget for the upcoming fiscal year. For
fiscal 2002, the incentive payments for goal achievement for the CEO were set at
55% of base salary for achieving target and up to 137.5% of base salary for
achieving performance above target. The incentive payments for the other
executive officers were 45% for achieving target and up to 112.5% for achieving
performance above target. At each quarterly meeting of the Committee, the
progress of the CEO and other executive officers toward meeting the quantitative
goals established for the fiscal year was reviewed.
For fiscal 2002, the Company did not achieve all of the financial
performance goals established by the Committee at the beginning of the year for
Mr. Kerr and the other executive officers to receive their targeted incentive
awards. Mr. Kerr received an incentive award of $375,000. For fiscal 2002, the
other executive officers named in this Proxy Statement received incentive awards
totaling $693,750.
LONG-TERM INCENTIVE PROGRAM. In fiscal 2002, the Committee utilized the
grant of nonqualified stock options, under the 1996 Stock Incentive Plan (the
"1996 Plan"), to the executive officers in the implementation of its long-term
incentive program.
The nonqualified stock options awarded by the Committee under the 1996 Plan
during fiscal 2002 as part of the long-term incentive program are generally
exercisable one-third per year over the three-year period commencing on the
first anniversary of the grant date. The options granted will expire on the
tenth anniversary of the date of grant. All options granted become exercisable
in the event of the grantee's termination of employment due to death, disability
or retirement. Unless the grantee's employment with the Company is terminated
for reasons other than death, disability or retirement, the grantee may exercise
all exercisable stock options until the date of expiration. All options granted
during fiscal 2002 carry an exercise price at the fair market value on the date
of grant.
THE MEREDITH EXECUTIVE STOCK OWNERSHIP PROGRAM. A stock ownership program
has been designed by the Committee utilizing the 1996 Plan. The purpose of the
program is to encourage increased Company stock holdings by executives. Target
levels of individual stock holdings are established for the participants in the
program at one and one-half to two times each participant's base pay. Each
participant is awarded restricted stock equal to 20% of his or her personal
acquisitions of Company stock up to the established target since the last day of
the prior year. The incremental stock holdings
13
must be maintained for a specified period of time in order for the restrictions
to lapse. The Committee believes this program provides further incentives to the
participants to focus on long-term Company performance and shareholder value.
Because Mr. Kerr has met his target ownership, he did not receive any shares of
restricted stock under this program during fiscal 2002. The other named
executive officers received an aggregate total of 4,770 shares of restricted
stock under this program during fiscal 2002.
OTHER COMPENSATION
The CEO and other executive officers are eligible to participate in the
Company benefit plans described elsewhere in this Proxy Statement under the
terms of those plans and without consideration of achievement of performance
standards.
PEER GROUP SELECTION AND COMPARATIVE ANALYSIS
The Company does not believe that the published indices accurately reflect
the mix of businesses in which the Company competes. Therefore, the Company has,
in good faith, selected a Peer Group of ten media and television broadcast
companies for the purpose of preparing the shareholder performance graph set
forth under "Comparison of Shareholder Return." Recognizing that there are no
other companies that have the exact combination of businesses as the Company,
the companies selected for the Peer Group have multimedia businesses primarily
with publishing and/or television broadcasting in common with the Company.
Many of the companies selected for the Peer Group are larger and/or engaged
in businesses other than the Company's core businesses. Consequently, for the
purposes of compensation comparisons, the Company and the Committee have chosen
to use broader media and general industry survey information that includes
information on members of the Peer Group. The Committee has attempted to
maintain the total compensation for the CEO and other executive officers at a
level close to the mid-range of the surveyed groups.
CONCLUSION
The Committee believes that the Company's executive compensation programs
effectively tie executive pay to the performance of the Company and to
shareholder value.
Mr. Herbert M. Baum, Chairman
Mr. Frederick B. Henry
Mr. Robert E. Lee
Mr. Nicholas L. Reding
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee, which are set forth in the
Audit Committee Charter adopted by the Board of Directors, include providing
oversight to the Company's financial reporting process through periodic meetings
with the Company's independent auditors, internal auditors and management to
review accounting, auditing, internal controls and financial reporting matters.
The management of the Company is responsible for the preparation and integrity
of the financial reporting information and related systems of internal controls.
The Audit Committee, in carrying out its role, relies on the Company's senior
management, including senior financial management, and its independent auditors.
We have reviewed and discussed with senior management the Company's audited
financial statements included in the 2002 Annual Report to Shareholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are the responsibility of
management, and (ii) have been prepared in conformity with accounting principles
generally accepted in the United States.
We have discussed with KPMG LLP, our independent auditors, the matters
required to be discussed by SAS 61 (Communications with Audit Committee). SAS 61
requires our independent auditors to provide us with additional information
regarding the scope and results of their audit of the Company's financial
statements, including with respect to (i) their responsibility under generally
accepted auditing standards, (ii) significant accounting policies, (iii)
management judgments and estimates, (iv) any significant audit adjustments, (v)
any disagreements with management, and (vi) any difficulties encountered in
performing the audit.
14
We have received from KPMG LLP a letter providing the disclosures required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees) with respect to any relationships between KPMG LLP and the
Company that in its professional judgment may reasonably be thought to bear on
independence. KPMG LLP has discussed its independence with us, and has confirmed
in such letter that, in its professional judgment, it is independent of the
Company within the meaning of the federal securities laws.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2002 Annual
Report to Shareholders, we have recommended to the Board of Directors that such
financial statements be included in the Company's Annual Report on Form 10-K for
filing with the Securities and Exchange Commission.
As specified in the Audit Committee Charter, it is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and in accordance with accounting
principles generally accepted in the United States. That is the responsibility
of management and the Company's independent auditors. In giving our
recommendation to the Board of Directors, we have relied on (i) management's
representation that such financial statements have been prepared with integrity
and objectivity and in conformity with accounting principles generally accepted
in the United States, and (ii) the report of the Company's independent auditors
with respect to such financial statements.
Philip A. Marineau, Chairman
Herbert M. Baum
Mary Sue Coleman
Joel W. Johnson
David J. Londoner
INDEPENDENT AUDITORS
The Board of Directors has reappointed KPMG LLP as independent auditors to
audit the financial statements of the Company for the fiscal year ending June
30, 2003. Representatives of KPMG LLP are expected to be present at the Annual
Meeting and will be given the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services rendered in
connection with (i) the audit of the Company's annual financial statements set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 2002, and (ii) the review of the Company's quarterly financial statements
set forth in the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 2001, December 31, 2001 and March 31, 2002, were
approximately $377,000.
ALL OTHER FEES
The aggregate fees for all other services rendered by KPMG LLP for the
Company's most recent fiscal year were approximately $247,000. This consisted of
audit related fees of approximately $40,000 and fees for other non-audit
services of approximately $207,000. Audit related fees consisted of audits of
financial statements of certain employee benefit plans and assistance in the
interpretation and implementation of new accounting pronouncements. Fees for
other non-audit services consisted primarily of tax services for the Company.
These fees also include work performed by KPMG LLP with respect to tax
preparation and planning services on behalf of certain officers and directors of
the Company.
The Audit Committee has advised the Company that it has determined that the
non-audit services rendered by KPMG LLP during the Company's most recent fiscal
year are compatible with maintaining the independence of such auditors.
15
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the performance of the Company's common stock
during the period July 1, 1997, to June 30, 2002, with the S&P 500 Index and
with a Peer Group of ten companies engaged in multimedia businesses primarily
with publishing and/or television broadcasting in common with the Company.
The S&P 500 Index includes 500 U.S. companies in the industrial,
transportation, utilities and financial sectors and is weighted by market
capitalization. The Peer Group selected by the Company for comparison, which is
also weighted by market capitalization, is comprised of the following: Belo
Corp.; Gannett Co., Inc.; Hearst-Argyle Television, Inc.; The McGraw-Hill
Companies, Inc.; Media General, Inc.; The New York Times Company; The Reader's
Digest Association, Inc.; The E. W. Scripps Company; Tribune Company; and The
Washington Post Company.
The graph depicts the results for investing $100 in the Company's common
stock, the S&P 500 Index and the Peer Group at closing prices on June 30, 1997.
It assumes that dividends were reinvested.
[PLOT POINTS CHART]
1997 1998 1999 2000 2001 2002
------ ------ ------ ------ ------ ------
Meredith ................. $100 163 121 119 128 138
S&P 500 .................. $100 130 160 171 146 120
Peer Group ............... $100 140 149 137 156 167
APPROVAL OF MEREDITH CORPORATION EMPLOYEE
STOCK PURCHASE PLAN OF 2002
BACKGROUND
The Board of Directors believes it is in the best interest of the Company
to encourage stock ownership by employees of the Company. Accordingly, on May 8,
2002, the Board of Directors adopted, subject to shareholder approval, the
Meredith Corporation Employee Stock Purchase Plan of 2002 (the "Stock Purchase
Plan"). An aggregate of 500,000 shares of the Company's common stock (subject to
adjustment for any dividend, stock split or other relevant changes in the
Company's capitalization) (the "Shares") may be sold pursuant to the Stock
Purchase Plan. These Shares may be authorized but unissued shares, treasury
shares or shares purchased in the open market. The text of the Stock Purchase
Plan has been filed electronically with the Securities and Exchange Commission,
but is not included in the printed version of this Proxy Statement. A copy of
the Stock Purchase Plan is also available from the Company's Secretary at 1716
Locust Street, Des Moines, Iowa 50309-3023. The following is a summary of the
material provisions of the Stock Purchase Plan.
16
ADMINISTRATION
The Stock Purchase Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"). The Committee has the authority to
make rules and regulations governing the administration of the Stock Purchase
Plan and to interpret the Plan.
ELIGIBILITY
Substantially all employees of the Company and designated subsidiaries are
eligible to participate in the Stock Purchase Plan except that employees whose
customary employment is 20 hours or less per week may be excluded at the
discretion of the Committee. As of June 11, 2002, approximately 2,609 employees
were eligible to participate in the Stock Purchase Plan.
PARTICIPATION AND TERMS
An eligible employee may elect to participate in the Stock Purchase Plan as
of any Enrollment Date. "Enrollment Dates" occur on the first day of each
Offering Period, which is currently set as a calendar quarter (after an initial
Offering Period of six months, from July 1 to December 31, 2002). To participate
in the Stock Purchase Plan, an employee must complete an enrollment and payroll
deduction authorization form, which indicates the amounts to be deducted from
his or her salary and applied to the purchase of the Shares on the Share
Purchase Date (as hereinafter defined). The payroll deduction must be within
limits set by the Committee.
A payroll deduction account is established for each participating employee
and all payroll deductions made on behalf of each employee are credited to each
such employee's respective payroll deduction account. No interest will be
credited to a participant for amounts credited to that account. On the last day
of each Offering Period (the "Share Purchase Date"), the amount credited to each
participating employee's payroll deduction account is applied to purchase as
many Shares as may be purchased with such amount at the applicable purchase
price. However, no more than $25,000 in market value of Shares (determined as of
the first day of each Offering Period) may be purchased by a participant during
any calendar year.
The purchase price for the Shares will not be less than the lesser of 85%
of the closing price of shares of common stock as reported on the New York Stock
Exchange (i) on the first day of the applicable Offering Period or (ii) on the
Share Purchase Date. Employees may purchase Shares through the Stock Purchase
Plan only by payroll deductions.
During an Offering Period, a participant may not change the amount of his
or her payroll deductions, but may withdraw from the Stock Purchase Plan by
submitting a withdrawal notice. Upon withdrawal, all payroll deductions will
cease and amounts credited to the participant's payroll deduction account will
be paid to the participant.
If a participant's employment is terminated for any reason, or if a
participant otherwise ceases to be eligible to participate in the Stock Purchase
Plan, payroll deductions on behalf of that participant will be discontinued and
the amounts then credited to his or her payroll deduction account will be used
to purchase Shares as of the last day of the current Offering Period.
Rights granted under the Stock Purchase Plan are not transferable other
than in connection with a participant's death.
AMENDMENT AND TERMINATION
The Board of Directors of the Company or the Committee may amend the Stock
Purchase Plan at any time, provided that if shareholder approval is required for
the plan to continue to comply with the requirements of Section 423 of the
Internal Revenue Code (the "Code"), such amendment shall not be effective unless
approved by the Company's shareholders within twelve months after the date of
its adoption by the Board of Directors or the Committee. The Stock Purchase Plan
may be terminated by the Board of Directors or the Committee at any time.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to be an "employee stock purchase plan"
as defined in Section 423 of the Code. As a result, an employee participant will
pay no federal income tax upon enrolling in the Stock Purchase Plan or upon
purchase of the Shares. A participant may recognize income and/or gain or loss
upon the sale or other disposition of Shares purchased under the plan, the
17
amount and character of which will depend on whether the Shares are held for two
years from the first day of the Offering Period in which they were purchased.
If the participant sells or otherwise disposes of the Shares within that
two-year period, the participant will recognize ordinary income at the time of
disposition in an amount equal to the excess of the market price of the Shares
on the date of purchase over the purchase price and the Company will be entitled
to a tax deduction for the same amount.
If the participant sells or otherwise disposes of the Shares after holding
the Shares for the two-year period, the participant will recognize ordinary
income at the time of disposition in an amount equal to the lesser of (i) 15% of
the market price of the Shares on the first day of the Offering Period, or (ii)
the excess of the market price of the Shares at the time of disposition over the
purchase price. The Company will not be entitled to any tax deduction with
respect to Shares purchased under the Stock Purchase Plan if the Shares are held
for the requisite two-year period.
The employee may also recognize capital gain or loss at the time of
disposition of the Shares, either short-term or long-term, depending on the
holding period for the Shares.
OTHER INFORMATION
Although the Stock Purchase Plan became effective July 1, 2002, it will be
terminated if shareholder approval is not obtained at the Annual Meeting and all
payroll deductions would then be returned to participants. No shares of the
Company's common stock have yet been issued or purchased under the Stock
Purchase Plan. Because levels of participation and the eventual purchase prices
are not presently known and will likely vary from time to time, the future
benefits to be received by any person under the Stock Purchase Plan cannot be
determined at this time. The closing price of a share of the Company's common
stock on the New York Stock Exchange on July 1, 2002, was $37.77 per share.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE MEREDITH CORPORATION EMPLOYEE
STOCK PURCHASE PLAN OF 2002. UNLESS OTHERWISE INDICATED BY YOUR PROXY, THE
SHARES WILL BE VOTED FOR APPROVAL OF THE MEREDITH CORPORATION EMPLOYEE STOCK
PURCHASE PLAN OF 2002.
SHAREHOLDER PROPOSALS
Any shareholder wishing to include a proposal in the Company's Proxy
Statement and form of proxy for the 2003 Annual Meeting of Shareholders must
submit the proposal so that it is received by the Company no later than May 26,
2003. The proposal should be addressed to Secretary, Meredith Corporation, 1716
Locust Street, Des Moines, Iowa 50309-3023.
Pursuant to the Company's Bylaws, any shareholder wishing to bring a
proposal before the 2003 Annual Meeting of Shareholders (but whose proposal will
not be included in the Company's Proxy Statement) must deliver written notice of
such proposal in accordance with the requirements of the Bylaws to the Secretary
of the Company at the address specified above not earlier than the close of
business on the 120th day nor later than the close of business on the 90th day
prior to the first anniversary of the preceding year's Annual Meeting. For 2003,
such proposal must be received not earlier than the close of business on July
14, 2003, and not later than the close of business on August 13, 2003, and
otherwise comply with the requirements of the Bylaws.
Pursuant to the Company's Bylaws, any shareholder wishing to propose a
nominee for the Board of Directors must deliver written notice of such proposed
nominee to the Secretary of the Company at the address specified above not
earlier than the close of business on the 120th day, nor later than the close of
business on the 90th day, prior to the first anniversary of the preceding year's
Annual Meeting. For 2003, written notice of such proposed nominee must be
received not earlier than the close of business on July 14, 2003, and not later
than the close of business on August 13, 2003, and otherwise comply with the
requirements of the Bylaws.
18
FURTHER BUSINESS
Except as described in this Proxy Statement, the management knows of no
other business intended to be presented at the meeting, but, if any other
business properly comes before the meeting, the persons named in the enclosed
form of proxy will vote all proxies in accordance with their best judgment using
the discretionary authority granted in the proxies.
JOHN S. ZIESER
VICE PRESIDENT - GENERAL COUNSEL
AND SECRETARY
Des Moines, Iowa
September 23, 2002
19
DETACH HERE
ZMRA12
MEREDITH CORPORATION
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MEREDITH CORPORATION
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 11, 2002
FREDERICK B. HENRY, E.T. MEREDITH III and WILLIAM T. KERR, and each of them
P are hereby appointed proxies of the shareholder(s) signing this card on the
reverse side, with power of substitution acting by a majority of proxies
R present and voting, or if only one proxy is present and voting, then acting
by that one, to vote the shares of Meredith Corporation common stock which
O said shareholder(s) is (are) entitled to vote, at the ANNUAL MEETING OF
SHAREHOLDERS to be held at the Company's principal executive offices, 1716
X Locust Street, Des Moines, Iowa 50309-3023, on Monday, November 11, 2002,
at 10:00 A.M., local time, and at any adjournment thereof, with all the
Y powers the signing shareholders would possess if present. The Directors
recommend a vote FOR such matters. The proxies are instructed to vote as
follows:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL PROPOSALS SHOWN ON THE REVERSE SIDE OF THIS
CARD AND AS SET FORTH IN THE NOTICE OF ANNUAL MEETING DATED SEPTEMBER 23,
2002. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS AND THE RELATED PROXY STATEMENT.
------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
------------- -------------
MEREDITH CORPORATION
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
[LOGO] MEREDITH
CORPORATION
PLEASE ACT PROMPTLY, SIGN, DATE & MAIL YOUR PROXY CARD TODAY.
DETACH CARD BELOW, SIGN, DATE AND MAIL IN POSTAGE-PAID ENVELOPE PROVIDED.
DETACH HERE
ZMRA11
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
1. Election of four Class I Directors for terms expiring in 2005, as provided in
the Bylaws of the Company:
NOMINEES: (01) Robert E. Lee, (02) David J. Londoner, (03) Philip A.
Marineau, and (04) Charles D. Peebler, Jr.
FOR WITHHELD
[ ] [ ]
[ ] __________________________________________
For all nominees except as noted above
2. To approve the Meredith Corporation Employee Stock Purchase Plan of 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In its discretion, upon such other matters as may properly come before
the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized official. If a
partnership, please sign in partnership name by an authorized person.
Signature: ______________ Date: ________ Signature: ______________ Date: _______
DETACH HERE
ZMRB12
MEREDITH CORPORATION
CLASS B COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MEREDITH CORPORATION
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 11, 2002
FREDERICK B. HENRY, E.T. MEREDITH III and WILLIAM T. KERR, and each of them
P are hereby appointed proxies of the shareholder(s) signing this card on the
reverse side, with power of substitution acting by a majority of proxies
R present and voting, or if only one proxy is present and voting, then acting
by that one, to vote the shares of Meredith Corporation Class B common
O stock which said shareholder(s) is (are) entitled to vote, at the ANNUAL
MEETING OF SHAREHOLDERS to be held at the Company's principal executive
X offices, 1716 Locust Street, Des Moines, Iowa 50309-3023, on Monday,
November 11, 2002, at 10:00 A.M., local time, and at any adjournment
Y thereof, with all the powers the signing shareholders would possess if
present. The Directors recommend a vote FOR such matters. The proxies are
instructed to vote as follows:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL PROPOSALS SHOWN ON THE REVERSE SIDE OF THIS
CARD AND AS SET FORTH IN THE NOTICE OF ANNUAL MEETING DATED SEPTEMBER 23,
2002. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS AND THE RELATED PROXY STATEMENT.
------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
------------- -------------
MEREDITH CORPORATION
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
[LOGO] MEREDITH
CORPORATION
PLEASE ACT PROMPTLY, SIGN, DATE & MAIL YOUR PROXY CARD TODAY.
DETACH CARD BELOW, SIGN, DATE AND MAIL IN POSTAGE-PAID ENVELOPE PROVIDED.
DETACH HERE
ZMRB11
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
1. Election of four Class I Directors for terms expiring in 2005, as provided in
the Bylaws of the Company:
NOMINEES: (01) Robert E. Lee, (02) David J. Londoner, (03) Philip A.
Marineau and (04) Charles D. Peebler, Jr.
FOR WITHHELD
[ ] [ ]
[ ] __________________________________________
For all nominees except as noted above
2. To approve the Meredith Corporation Employee Stock Purchase Plan of 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In its discretion, upon such other matters as may properly come before the
meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized official. If a
partnership, please sign in partnership name by an authorized person.
Signature: ______________ Date: ________ Signature: ______________ Date: _______