Company Name: E.W. Scripps Co.
Public Availability Date: December 4, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
November 15, 2006
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal Excludable Under Rules 14a-8(b) and (f) Communications
Workers of America AFL-CIO, CLC
Ladies and Gentlemen:
Pursuant to Rule 14a-8 (the "Rule") under the Securities Exchange Act of 1934,
this letter sets forth for the staff of the Securities and Exchange Commission
(the "Commission") the basis for our intention to exclude from our proxy
statement and form of proxy (together, the "proxy materials"), for the 2007
annual meeting of shareholders of The E. W. Scripps Company (the "Company"), a
proposal and accompanying supporting statement submitted on behalf of the
Communications Workers of America's Pension Plan ("CWA").
By letter dated November 9, 2006, Larry Cohen, Trustee, submitted a proposal on
behalf of the CWA that consists of a resolution requesting the Board of
Directors of the Company to adopt a policy which would require the submission of
the following question at each annual meeting of shareholders: "Is the
compensation of Scripps' named executive officers as set forth in the proxy
statement's summary compensation table: (a) excessive; (b) appropriate; or (c)
too low?" A copy of the CWA's proposal and supporting statement is enclosed
herewith as Exhibit A.
We believe that, under paragraph (f) of the Rule, we may exclude the CWA's
proposal from our proxy materials because the CWA, as a holder of our Class A
Common Shares, is not entitled to vote on its proposal and thus is ineligible to
submit the proposal under paragraph (b)(1) of the Rule.
Paragraph (b)(1) of the Rule provides, among other things, that in order to be
eligible to submit a proposal a shareholder must hold "securities entitled to
vote on the proposal at the meeting." Under paragraph (f) of the Rule, a company
may exclude from its proxy materials a proposal submitted by a proponent who
fails to satisfy the Rule's eligibility requirements.
The Company has two classes of common stock outstanding: (i) Class A Common
Shares, which are listed for trading on the New York Stock Exchange; and (ii)
Common Voting Shares, which are privately held. Under Ohio law and the Company's
articles of incorporation (the "Articles"), holders of Common Voting Shares are
entitled to vote on all matters properly submitted to shareholders in accordance
with Ohio law and the Company's Articles; and holders of Class A Common Shares
are not entitled to vote on any matters other than the election of certain of
the Company's directors and such other matters on which their votes are required
by Ohio law. A copy of the Company's Articles is enclosed as Exhibit B.
The limited voting rights conferred by the Company's Articles and Ohio law on
the holders of Class A Common Shares do not entitle the CWA, as a holder of
those shares, to vote on proposals such as the CWA's Proposal. A copy of the
opinion of Baker & Hostetler LLP, counsel to the Company, confirming the
foregoing is attached as Exhibit C.
Given that the CWA is a holder of only Class A Common Shares and does not own
any Common Voting Shares, the CWA is not eligible to vote on its proposal, and
the Company may exclude such proposal pursuant to paragraph (f) of the Rule.
The staff of the Commission has consistently affirmed that a company may exclude
from its proxy materials a proposal submitted by a shareholder who does not hold
shares entitled to vote on such proposal. See The E.W. Scripps Company (December
20, 2004) 2004 SEC No-Act. LEXIS 885; Media General, Inc. (March 5, 2003) 2003
SEC No-Act. Lexis 288; The E. W. Scripps Company (February 18, 2003) 2003 SEC
No-Act. 236; Media General, Inc. (Feb. 10, 2001) 2001 SEC No-Act. Lexis 208;
Washington Post Company (Nov. 28, 2000), 2000 SEC No-Act. Lexis 967; Media
General, Inc. (Mar. 23, 2000) 2000 SEC No-Act. Lexis 464; Media General, Inc.
(Mar. 12, 1999) 1999 SEC No-Act. Lexis 354; and Media General, Inc. (Feb. 23,
1998) 1998 SEC No-Act. Lexis 252. Additionally, the staff recently reaffirmed
this proposition in Staff Legal Bulletin No. 14(CF) (July 13, 2001).
For the reasons stated above, the Company intends to omit the CWA's proposal
from its proxy materials and requests that the staff confirm to the Company that
it will not recommend enforcement action to the Commission if the CWA's proposal
is so omitted.
As required by paragraph (j)(1) of the Rule, copies of this letter and all
exhibits are being sent to the CWA to notify it of our intention to omit the
CWA's proposal from our proxy materials. A copy of our cover letter to the CWA
accompanying the foregoing is enclosed as Exhibit D.
Six copies of this letter, including Exhibits, are enclosed. If you have any
questions with respect to this letter, please contact the undersigned at the
above number.
Sincerely,
/s/
Mary Denise Kuprionis
Vice President/Corporate Secretary and Director of Legal Affairs
MDK:mak
Enclosures:
Exhibit A: Proposal by the Communications Workers of America's Pension Plan
Exhibit B: The E. W. Scripps Company's Articles of Incorporation
Exhibit C: Opinion of Baker & Hostetler LLP
Exhibit D: Scripps' cover letter to the CWA
[INQUIRY LETTER]
Via Fax & Overnight Mail
November 9, 2006
Ms. Mary Denise Kuprionis
Corporate Secretary/Director of Legal Affairs
E.W. Scripps Company
312 Walnut Street, Suite 2800
Cincinnati, Ohio 45202
Dear Ms. Kuprionis:
Re: Submission of Shareholder Proposal
On behalf of the CWA Pension Plan ("Plan"), we hereby submit the enclosed
Shareholder Proposal ("Proposal") for inclusion in the E.W. Scripps Company
proxy statement to be circulated to Company shareholders in conjunction with the
next annual meeting of shareholders in 2007. The Proposal is submitted under
Rule 14(a)-8 of the U.S. Securities and Exchange Commission's proxy regulations.
The Plan is a beneficial holder of Scripps Company Class A common stock with
market value in excess of $2,000 held continuously for more than a year prior to
this date of submission.
The Plan intends to continue to own Scripps Class A common stock through the
date of the Company's 2007 annual meeting. Either the undersigned or a
designated representative will present the Proposal for consideration at the
annual meeting of stockholders. Please direct all communications regarding this
matter to Mr. Tony Daley, CWA Research Department, at 202-434-9515.
Sincerely,
/s/
Larry Cohen
Trustee
Enclosures
[APPENDIX]
Shareowner Proposal
RESOLVED, that shareowners of E.W. Scripps Company ("Scripps") request that the
Board of Directors ("Board") adopt a policy of submitting the following question
to a shareowners' vote at each annual meeting in the future: "Is the
compensation of Scripp's named executive officers as set forth in the proxy
statement's Summary Compensation Table: (a) excessive; (b) appropriate; or (c)
too low?"
Supporting Statement
We believe the compensation of Scripps' senior executives is excessive.
According to proxy statements from 2002 through 2006, the five senior executives
listed in the Summary Compensation Table received "Total Annual Compensation" of
$23.0 million from 2001 through 2005. The "Total Annual Compensation" of Kenneth
W. Lowe, the President and CEO of Scripps, accounted for more than $8.2 million
of that sum.
In addition, the five officers received another $23.8 million in "Long-Term
Compensation" (the market value of restricted stock awards) over the 2001-2005
period.
The top five officers received $0.5 million in "All Other Compensation" (company
contributions to pension, savings, and deferred compensation) over the same
period.
The total amount paid to the top five officers over these five years was more
than $47.3 million. These five officers then exercised stocks options to realize
a gain of another $24.5 million.
In all, these five executives received over $71.8 million for the five years
covered by the proxy disclosures between 2002 and 2006. In our view, this amount
is excessive by any definition.
Finally, the 2006 proxy statement reports that the five top officers have
accumulated unexercised in-the-money options worth $25.7 million.
The major stock exchanges have adopted rules requiring public companies to
submit equity-based compensation plans for shareholder approval. According to a
recent academic analysis, however, these rules have failed to provide
shareowners "with substantial influence" because the plans tend to be "broadly
worded" (Lucian Bebchuk and Jesse Fried, Pay Without Performance, 2004, p. 196).
Shareowners can withhold votes for members of the Compensation Committee who
stand for reelection, but we view that option as a blunt and insufficient
instrument for registering dissatisfaction with senior executive compensation.
In contrast, public companies in the United Kingdom allow shareowners to cast an
advisory vote on the "directors' remuneration report," which discloses executive
compensation. Such a vote isn't binding, but gives shareholders a clear voice
that could help shape senior executive compensation.
We are proposing that the shareowners be permitted to give the Compensation
Committee a "report card." Through voting on the question that is set forth in
the Proposal, shareowners could express their views, in an advisory referendum,
on the question of whether the Company's senior executives are being compensated
at levels that are appropriate in amount. This approach would provide the
opportunity to express dissatisfaction with the amount of compensation that has
been awarded to senior executives, and of focusing media attention on the issue
in a manner that could assist in bringing about change, while preserving the
discretion of the Board to make such changes as may be appropriate.
Please vote for this proposal.
[INQUIRY LETTER]
November 15, 2006
The E. W. Scripps Company
312 Walnut Street
28th Floor
Cincinnati, Ohio 45202
Attn: M. Denise Kuprionis
Ladies and Gentlemen:
As counsel to The E. W. Scripps Company, an Ohio corporation (the "Company"), we
have been asked to render an opinion as to whether under Ohio law and the
Company's Amended and Restated Articles of Incorporation (the "Articles"), a
holder of Class A Common Shares of the Company is entitled to vote on a proposal
requesting that the Board of Directors of the Company adopt a policy of
submitting to the holders of Class A Common Shares at each annual meeting the
following question: "Is the compensation of Scripps's named executive officers
as set forth in the Proxy Statement's Summary Compensation Table: (a) excessive;
(b) appropriate; or (c) too low?" We understand that a holder of the Company's
Class A Common Shares, Communications Workers of America Pension Plan (the
"Plan"), has submitted such a proposal (the "Plan's Proposal") for inclusion in
the Company's proxy statement for its 2007 annual meeting of shareholders and
that the Company intends to rely on this opinion in omitting the Plan's Proposal
from its proxy statement.
Under Ohio law, an Ohio corporation is permitted to limit or deny voting rights
of any class of shares in its articles of incorporation. Ohio law also provides
that shares without voting rights or with limited voting rights nonetheless have
voting rights with respect to certain specific matters set forth by statute.
Such specific matters are as follows: (i) an increase or decrease in the par
value of such shares; (ii) a change in the issued number of such shares to a
lesser number of shares of the same class or into the same or a different number
of shares of any other class; (iii) a change in the express terms of such shares
in any manner substantially prejudicial to the holders thereof; (iv) a change in
the express terms of any issued shares of any class senior to such shares in any
manner substantially prejudicial to the holders of such shares; (v)
authorization of shares of another class convertible into such shares; (vi) a
reduction or the elimination of the stated capital related to such shares; (vii)
a substantial change in the purposes of the corporation; or (viii) the
conversion of the corporation to a non-profit corporation.
The Company's Articles authorize two classes of common shares: (i) Class A
Common Shares and (ii) Common Voting Shares. The Articles provide that holders
of Class A Common Shares are entitled to elect the greater of three or one-third
of the directors of the Company and are not entitled to vote on any other matter
except as otherwise required by Ohio law. Concomitantly, the Articles provide
that the holders of Common Voting Shares have vested in them, exclusively and
solely, the entire voting power of the Company's shareholders, except as
otherwise required by Ohio law.
Under Ohio law, holders of Class A Common Shares are entitled to vote in the
election of directors as provided in the Company's Articles and otherwise only
on the specific matters delineated above; such holders are not entitled to vote
on any other matters. The Plan's Proposal is not one of the matters delineated
above on which the holders of Class A Common Shares are entitled to vote under
Ohio law.
Based on the foregoing, we are of the opinion that the holders of Class A Common
Shares are not entitled to vote on the Plan's Proposal.
You may submit a copy of this opinion to the staff of the Securities and
Exchange Commission and to the Plan in connection with your correspondence with
them regarding the Plan's Proposal.
Sincerely,
/s/
Baker & Hostetler LLP
WA/mas
[INQUIRY LETTER]
November 15, 2006
Mr. Larry Cohen
Trustee
Communications Workers of America
AFL-CIO, CLC
501 Thrrd Street, N. W.
Washington, DC 20001-2797
Re: Shareholder Proposal2007 annual meeting
Dear Mr. Cohen:
This letter acknowledges receipt of your letter to me dated November 9, 2006
that included the text of a resolution which you ask us to include, on behalf of
the Communications Workers of America's Pension Plan ("CWA"), in the proxy
statement for our 2007 annual meeting. The CWA's resolution requests that our
Board of Directors adopt a policy which would require the submission of the
following question at each annual meeting of shareholders: "Is the compensation
of Scripps' named executive officers as set forth in the proxy statement's
summary compensation table: (a) excessive; (b) appropriate; or (c) too low?"
Under Rule 14a-8(b) of the Securities Exchange Act of 1934, at the time you
submitted the proposal the CWA was required, among other things, to be a record
or beneficial owner of at least one percent or $2,000 in market value of shares
entitled to vote on the proposal at the shareholders' meeting, and was to have
held such shares for at least one year prior to submission of the proposal.
As I am sure you are aware, we have two classes of common shares outstanding:
(i) Class A Common Shares, which are listed for trading on the New York Stock
Exchange; and (ii) Common Voting Shares, which are privately held. While I note
that the CWA does not appear on our list of record stockholders, I have received
verification of CWA's beneficial ownership of over $2,000.00 in market value of
Scripps' Class A Common Shares from Sun Trust. According to our records,
however, CWA does not own any Common Voting Shares.
Under Ohio law and our Articles of Incorporation, holders of Class A Common
Shares (such as CWA) are not entitled to vote on any matters other than election
of certain of the directors of the company and certain matters specifically
required under Ohio law. The CWA's proposal is not a matter on which Ohio law
requires holders of Class A Common Shares to be allowed to vote. Therefore,
since CWA's proposal is not a matter on which holders of Class A Common Shares
are entitled to vote, and since CWA does not own any Common Voting Shares, we
will not be including the proposal in our proxy statement.
For your information, the compensation committee of the Board of Directors
annually reviews the compensation level of the company's senior managers. The
committee considers, among other factors, the company's overall annual financial
and operating performance as well as total shareholder return, the overall role
and responsibility of each senior manager, the impact of each individual's
contributions as well as the compensation levels of comparable positions at
other media companies. This responsibility is detailed in their charter, which
is available for review on our company's Web site.
A copy of our submission to the Securities and Exchange Commission regarding the
CWA's proposal is enclosed, together with a copy of our Articles of
Incorporation and the opinion of our legal counsel on this matter.
I trust you will understand and accept the necessity of abiding by the proxy
rules. If you have any questions, please do not hesitate to write or call me.
Very truly yours,
/s/
Mary Denise Kuprionis
Vice President/Corporate Secretary and Director of Legal Affairs
MDK:mak
Enclosures:
1. Copy of November 15, 2006 letter to the Securities and Exchange Commission
2. The E. W. Scripps Company's Articles of Incorporation
3. Opinion of Baker & Hostetler LLP
STAFF REPLY LETTER]
December 4, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The E. W. Scripps Company Incoming letter dated November 15, 2006
The proposal relates to executive compensation.
There appears to be some basis for your view that Scripps may exclude the
proposal under rule 14a-8(b). You represent that holders of Scripps' Class A
Common Stock are entitled to vote only on certain matters, which do not include
the subject of this proposal. Rule 14a-8(b) requires that in order to be
eligible to have a proposal included, a shareholder must hold "at least $2,000
in market value, or 1%, of the company's securities entitled to be voted on the
proposal." Accordingly, we will not recommend enforcement action to the
Commission if Scripps omits the proposal from its proxy materials in reliance on
rule 14a-8(b).
Sincerely,
/s/
Tamara M. Brightwell
Special Counsel
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