adopted by the Board of Directors on October
26, 1999, and amended on January
Functions of the Board
Composition of the Board
Director Compensation and Other Matters
Management Review and Responsibility
FUNCTIONS OF THE BOARD
The directors of Knight Ridder are elected by the Company’s shareholders to
oversee the affairs of the Company for the benefit of its shareholders. The
board delegates to management the authority and responsibility for managing
the everyday affairs of the Company.
The principal functions of the board and its committees (as more fully set
forth below) are to:
Review and approve specific corporate actions as required
by law and by applicable stock exchanges and/or trading systems on which the
Company’s shares are listed or traded;
Select, regularly evaluate and, as necessary, replace
the chief executive officer; determine senior management compensation; review
executive succession planning;
Review and, where appropriate, approve major strategies,
financial objectives and other plans of the Company;
Advise management on specific issues facing the Company;
Oversee processes for evaluating the adequacy of internal
controls, risk management, financial reporting and compliance, and satisfy
itself as to the adequacy of such process; and
Nominate directors and ensure that the structure and
practices of the board provide for sound corporate governance.
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COMPOSITION OF THE BOARD
Size of the
The number of authorized board members is currently set at 10 members. The
board believes that the optimum size for the board is between 9 and 13
directors. The board periodically reviews the size of the board and from time
to time may increase the size temporarily in anticipation of retirements or
to take advantage of the availability of an outstanding director candidate.
The board is responsible for selecting candidates for board membership as
well as for establishing the general criteria to be used in identifying
potential candidates. The board delegates the screening process to the
Nominating and Corporate Governance Committee which receives direct input
from the chairman of the board and chief executive officer, and the other
directors, as well as input from other resources such as outside consulting firms.
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The Nominating and Corporate Governance Committee is responsible for
reviewing with the board from time to time the appropriate skills and
characteristics required of board members in the context of the current
composition of the board. The board selects director candidates who represent
a mix of backgrounds and experiences that will enhance the quality of the
board’s deliberations and decisions. The board is particularly interested in
maintaining a mix that includes, but is not limited to, active or retired
chief executive officers and senior executives, and particularly those with
experience in operations, finance/banking, technology, marketing and
international business, as well as leading entrepreneurs and academics.
Diversity in its broadest sense, reflecting, but not limited to, geography,
gender and ethnicity is also highly desirable.
Qualify as an Independent Director
For purposes of these Guidelines, a director is considered independent if the
board affirmatively determines that he or she has no other material
relationship with the Company, either directly or as a partner, shareholder
or officer of an organization that has a relationship with the Company. To
assist the board in making such determination, a director will not be
considered independent if any of the following categorical standards apply:
(i) if he or she is, or has been, an employee of the Company or an affiliate
of the Company during the last three years; (ii) if he or she receives, or
has received, any direct compensation from the Company or from an affiliate
of the Company, other than director and committee fees and pension or other
forms of deferred compensation for prior service (provided such compensation
is not contingent in any way on continued service) during the last three
years; (iii) if he or she is, or has been, affiliated with or employed in a
professional capacity by the present or former internal or external auditor
of the Company during the last three years; (iv) if he or she is, or has
been, employed as an executive officer of another company where any of the
Company’s present executives serve or have served on that other company’s
compensation committee during the last three years; (v) if he or she is an
executive officer or an employee of a company that makes payments to, or
receives payments from, the Company for property or services in an amount
that, in any single fiscal year, exceeds the greater of $1 million or 2% of
such other company’s consolidated gross revenues during the last three years;
and (vi) if he or she has any immediate family members who (A) serve or have
served as an executive officer of the Company or an affiliate of the Company
during the last three years, (B) receive or have received direct compensation
of more than $100,000 per year from the Company or an affiliate of the
Company during the last three years or (C) satisfy the criteria set forth in
clauses (iii) through (v) above. For purposes of this paragraph, an
"immediate family member" includes a person’s spouse, parents,
children, siblings, mothers and fathers-in-law, sons and daughters-in-law,
brothers and sisters-in-law, and anyone (other than domestic employees) who
shares that director’s home, and an "affiliate" of the Company
includes any parent or subsidiary in a consolidated group with the Company.
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of Officer-Directors and Independent Directors
The board believes that, in addition to the chief executive officer, from
time to time it may be appropriate for one or more officers of the Company to
be members of the board. However, no officer of the Company other than the
chief executive officer should expect to be elected to the board by virtue of
his or her position in the Company. The board believes there should always be
a substantial majority of independent directors.
Change Job Responsibility
Individual directors who retire or change the principal position they held
when they were initially elected to the board are expected to volunteer to
resign from the board as of the date of retirement or change in position. The
board does not believe that a director in this circumstance should
necessarily be required to leave the board. Rather, the board believes the
Nominating and Corporate Governance Committee should have the opportunity to
assess each situation, based on the individual circumstances, and make a
recommendation to the board.
Tenure and Retirement Policy
The board comprises three classes of directors, with approximately one-third
of the directors assigned to each class. The members of each class are
elected for a term of three years. There is no limit on the number of terms
for which a director may be elected.
Except as noted below, Company officer-directors resign from the board at the
time they retire or otherwise relinquish their executive officer title.
Effective January 27, 2004: (a) all directors
who are not employees of the Company may not be nominated by the board for
election or reelection after they have reached age 70, and (b) all
non-employee directors retire from the board effective at the annual meeting
of shareholders that follows their seventieth birthday.
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Chief Executive Officers
In the discretion of the board, a former chief executive officer may continue
to serve as a director following the date of his or her retirement as chief
executive officer of the Company.
The board does not believe it is necessary to formally designate a lead
director. When the independent directors meet without the chairman of the
board, they may designate a director to chair the meeting whenever they
believe that would be useful. In the absence of such designation by the board
at meetings of the independent directors, the chairs of each of the Audit
Committee, Nominating and Corporate Governance Committee and Compensation
Committee shall rotate as the chairs of such meetings.
DIRECTOR COMPENSATION AND OTHER MATTERS
The management of the Company reports from time to time to the Nominating and
Corporate Governance Committee concerning the existing board compensation
program as compared to other large United States corporations.
Any recommendations for changes in the board compensation program are made to
the board by the chief executive officer following a review of the
recommendations by the Nominating and Corporate Governance Committee.
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The board believes that directors should hold meaningful equity ownership
positions in the Company. To assist in accomplishing that objective, the
board believes that a significant portion of director compensation should be
made in the form of Company equity. Pursuant to the Non-employee Director
Compensation Plan, half of each director’s annual retainer is paid in Company
stock. A director may also choose to receive the balance of the retainer in
Each director is expected to attend all meetings of the board and all
meetings of board committees of which the director is a member. The board
recognizes that occasional meetings may need to be scheduled on short notice
when the participation of a director is not possible and that conflicts may
arise from time to time that will prevent a director from attending a
regularly scheduled meeting. However, the board expects that each director
will make every possible effort to keep such absences to a minimum.
A director’s business or personal relationship may occasionally give rise to
a material personal interest on a particular issue that conflicts, or appears
to conflict, with the interests of the Company. The board, after consultation
with counsel, determines on a case-by-case basis whether an actual or
apparent conflict of interest exists. The board takes appropriate steps to
identify such potential conflicts to ensure that all directors voting on an
issue are disinterested with respect to that issue. In appropriate cases, a
director with a conflict will be excused from participation on that issue.
Directors also agree to comply with the Knight Ridder Code of Business
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of Interest Unique to Officers-Directors
On certain matters of corporate governance, such as officer-director
compensation, the selection or removal of the chief executive officer, the
assessment of the performance of the chief executive officer, and other
matters pertaining to the senior management of the Company, the board’s
decisions are made solely by the independent directors.
Interaction with Institutional Investors, the Press, Customers, and Other
Constituencies of the Company
The board believes that management should speak for the Company. Individual
directors may, from time to time, meet or otherwise communicate with various
constituencies who are involved with the Company. It is expected that
comments by individual directors will be with the knowledge of management
and, in most instances, at the request of management. If comments from the
board are appropriate, they should come from the chairman, or from the
Company’s designated spokesperson.
The board shall conduct an annual self-performance evaluation of itself,
which evaluation shall be conducted in such manner as the board deems
appropriate, to determine whether it and its committees are functioning
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Orientation and Continuing Education
All new non-management directors will be provided with orientation materials
upon joining the board and will be offered an opportunity to attend an
orientation meeting with senior management to familiarize new directors with
the Company’s strategic plans, its significant financial, accounting and risk
management issues, its compliance programs, its Code of Business Ethics, its
principal officers and its internal and independent auditors. The Company’s
management will provide periodically, where appropriate, materials, briefings
and continuing educational opportunities for all directors on subjects that
would assist them in discharging their duties
Frequency of Board Meetings
The board meets four times annually, in January, April or May, July and
October, and also holds an organizational meeting in conjunction with the
annual meeting of shareholders. In addition, the board may hold additional
meetings from time to time, either in person or by telephonic conference
call, when circumstances warrant.
Agenda Items for Board Meetings
The chairman of the board establishes the agenda for each board meeting. Any
director may suggest the inclusion of items on the agenda and may raise at any regular board meeting subjects for discussion
that are not on the meeting’s formal agenda.
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Materials Distributed in Advance
Information that is important to the board’s understanding of the business of
the Company is distributed in writing to the board prior to each board
meeting, and periodically, as appropriate, between board meetings.
As a general rule, materials on specific subjects should be sent to directors
in advance so that board meeting time may be conserved and discussion time
focused on questions that the board has about the material. Sensitive subject
matters may be discussed at the meeting without written materials being
distributed in advance or at the meeting.
Non-Directors at Board Meetings
The chairman, at his or her discretion, may invite senior officers of the
Company to attend non-executive sessions of board meetings. The chairman, at
his or her discretion, may also invite other employees of the Company to
attend specific board meetings.
The board encourages management to schedule presentations at board meetings
by managers who can provide additional insight into the items being discussed
because of their personal involvement in these areas, and/or represent
managers with future potential that management believes should be given
exposure to the board.
In addition, board members have free access to all other members of
management and employees of the company.
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On a regular basis, including annually when it reviews the performance of the
chief executive officer, the board meets in executive session without the
officer-directors or other members of management.
The board believes that long-range, strategic issues should be discussed as a
matter of course at regular board meetings. In addition, from time to time,
and normally in January of each year, the board devotes an extended meeting
to an update from management on the strategic issues and opportunities facing
Significant corporate strategy decisions are brought to the board in a timely
way for its consideration. These decisions are discussed and approved by the
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The board presently has five standing committees: Audit, Compensation,
Nominating and Corporate Governance, Environmental Affairs, and Executive.
The Audit Committee ensures that the Company conducts its business in
conformance with appropriate legal and regulatory standards and requirements.
The Audit Committee annually selects, appoints, evaluates, determines the
compensation of, and retains the independent auditors, reviews the services
to be performed by the independent auditors and the terms of their
engagement, exercises oversight of their activities and, where appropriate,
terminates and/or replaces the independent auditors. It reviews the results of
each external audit and considers the adequacy of the Company’s internal
controls. It also determines the duties and responsibilities of the internal
auditors, reviews the internal audit program, and oversees other activities
of the internal auditing staff.
The Compensation Committee administers the Company’s incentive compensation
plans and its stock option plans, including the review and grant of stock
options to all eligible employees and directors. The Compensation Committee
reviews and approves corporate goals and objectives relevant to the chief
executive officer’s compensation, evaluates such CEO’s performance in light
of those goals and objectives, and together with the other independent
directors determines and approves in an executive session (where appropriate)
the CEO’s compensation level based on this evaluation. After receiving input
from the CEO, it makes recommendations to the board in an executive session
(where appropriate) with respect to non-CEO compensation,
incentive-compensation plans and equity-based plans. The Compensation
Committee oversees the selection of the chief executive officer and
recommends to the board the process by which a new chief executive officer is
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The Nominating and Corporate Governance Committee makes
recommendations to the board regarding the size and composition of the board,
establishes procedures for the nomination process, recommends candidates for
election to the board, makes committee assignments and selects committee
chairs. The committee also reviews and reports to the board on matters of
corporate governance (that is, the relationships of the board and its
committees, the shareholders and management in determining the direction and
performance of the Company), reviews and make recommendations to the board
with respect to non-employee director compensation (including equity plans),
oversees the evaluation of the board and management, and reviews and
addresses these Guidelines and recommends revisions, as appropriate.
Upon nomination by the chief executive officer, the board approves the
election of Company officers.
The Environmental Affairs Committee oversees the policies of the Company
formulated to carry out the Company’s commitment to preserving the natural
environment of the communities it serves and the safety of its workplaces.
When the board is not in session, the Executive Committee may exercise all
powers of the board delegated to it, except certain actions specified in the
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The charter of each committee is reviewed by the board periodically. The
board has the flexibility to form a new committee or to disband a current
committee, as it deems appropriate. The chair of each committee reports to
the full board, whenever appropriate, with respect to those matters
considered and acted upon by his or her committee. Management assigns an
officer to provide and coordinate staff support for each committee.
Agenda for Committee Meetings
Each committee chair, in consultation with the appropriate members of
management, develops the agenda for committee meetings. Any director who is a
member of a committee may suggest the inclusion of additional items on the
agenda. Directors may raise at any regular committee
meeting subjects for discussion that are not on the meeting’s formal agenda.
Each committee chair may invite members of management, as appropriate, to
attend committee meetings.
Each committee chair, in consultation with the chairman of the board and
committee members, determines the frequency of the meetings of the committee.
Each committee prepares minutes of its meetings.
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and Rotation of Committee Members
The Nominating and Corporate Governance Committee is responsible for the
assignment of directors to various committees after consultation with the
chairman of the board and after giving due consideration to the desires of
individual directors. The Nominating and Corporate Governance Committee is
also responsible for the selection of committee chairs. The board has no set
policy for the regular rotation of committee members or committee chairs. The
Audit, Compensation, and Nominating and Corporate Governance committees
consist solely of independent directors.
MANAGEMENT REVIEW AND RESPONSIBILITY
Evaluation of Senior Executive Officers
The chair of the Compensation Committee conducts and reviews with the
independent directors an annual evaluation of the performance of the chief
executive officer and other senior executive officers in connection with
determining their salary, bonuses and other awards or compensation.
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of the Chairman and Chief Executive Officer
The Compensation Committee considers succession planning for the chief
executive officer and recommends to the board an appropriate process by which
a new chief executive officer is selected. The board has no required
procedure for executing this responsibility because it believes this decision
must be made in the way the board determines to be in the best interests of
the Company in light of the circumstances surrounding each such decision.
The board is comfortable with the practice of combining the role of chairman
of the board with the role of chief executive officer, believing it generally
provides the most efficient and effective leadership model for the Company.
The board anticipates that, in occasional circumstances and particularly
during relatively short periods of leadership transition, these roles may be
assigned to two different persons for a period of time.
Planning and Management Development
The chief executive officer is responsible for advising the Compensation
Committee and the board on planning for potential successor chief executive
officers, as well as for other key senior leadership positions in the
Company. The chief executive officer reviews such matters with the board
Ownership by the Chief Executive Officer and Other Senior Executives
The board believes that senior executive officers and other key employees of
the Company should hold significant equity ownership positions in the
Company. Specifically, the Company’s chief executive officer, president,
senior vice presidents, and vice presidents and publishers of the company’s
largest newspapers are required to purchase and hold shares of Knight Ridder
common stock equal in value to four, three, two and one times their base
Authority of the Board
The board and its committees may obtain advice and assistance from outside
legal, accounting or other advisors, as the board and its committees deem
necessary to carry out their duties. In this regard, the board and its
committees will 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 or independent counsel,
accountants or other experts or consultants, as they deem appropriate,
without seeking approval of management.