CORPORATE GOVERNANCE: COMPENSATION COMMITTEE CHARTER

Purpose of Committee

The purpose of the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of Knight-Ridder, Inc. (the "Company") is to discharge the Board’s responsibilities relating to compensation of the Company’s officers and to produce an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC").

Committee Membership

The Committee shall consist of three or more members of the Board, each of whom the Board has determined has no material relationship with the Company and each of whom is otherwise "independent" under the rules of the New York Stock Exchange.

Members shall be appointed by the Board based on nominations recommended by the Company’s Nominating and Corporate Governance Committee, and shall serve at the pleasure of the Board and for such term or terms as the Board may determine.

Committee Structure and Operations

The Board shall designate a member of the Committee as its chairperson. The Committee shall meet in person or telephonically at least three times a year at a time and place determined by the Committee chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its chairperson.

The Committee may invite such members of management to its meetings as it may deem desirable or appropriate, consistent with the maintenance of the confidentiality of compensation discussions. The Company’s Chief Executive Officer (the "CEO") should not attend any portion of a meeting where the CEO’s performance or compensation are discussed, unless specifically invited by the Committee.

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Committee Goals and Responsibilities

The following are the goals and responsibilities of the Committee:

  1. In consultation with senior management, establish the Company’s general compensation philosophy, and oversee the development and implementation of compensation programs.
  2. Review and approve corporate goals and objectives relevant to the compensation of the CEO, evaluate the performance of the CEO in light of those goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation. In determining the long-term incentive component of CEO compensation, the Committee shall consider, among other factors, the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the CEO in past years.
  3. Review and make recommendations to the Board with respect to non-CEO officer compensation, incentive-compensation plans and equity plans, including without limitation the Company’s Annual Incentive Plan, Long-Term Incentive Plan and Employee Stock Option Plan (collectively, the "Plans").
  4. Oversee the activities and administration of the Plans to the extent the Committee serves in that capacity pursuant to the terms of those Plans, and oversee the activities of the individuals and committees responsible for administering the Plans, where such administration is permitted to be handled by persons other than the Committee, and discharge any responsibilities imposed on the Committee by any of the Plans.
  5. In consultation with management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company’s policies on structuring compensation programs to preserve tax deductibility, and, as and when required, establishing performance goals and certifying that performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code.
  6. Prepare and issue the evaluations and reports required under "Committee Reports" below.
  7. Review and set guidelines for stock ownership by executive officers.
  8. Any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the Company’s compensation programs.

 

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Delegation to Subcommittee

The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.

Committee Reports

The Committee shall produce the following reports and provide them to the Board:

  1. An annual Report of the Compensation Committee on Executive Compensation for inclusion in the Company’s annual proxy statement or annual report on Form 10-K in accordance with applicable SEC rules and regulations.
  2. An annual performance evaluation of the Committee. The performance evaluation should also recommend to the Board any improvements to this charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate.
  3. A summary of the actions taken at each Committee meeting, which shall be presented to the Board at the next Board meeting.

Resources and Authority of the Committee

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, without seeking approval of the Board or management. With respect to compensation consultants retained to assist in the evaluation of director, CEO or senior executive compensation, this authority shall be vested solely in the Committee.