mni8-k2009penfreeze.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): February 4, 2009
(Exact
name of registrant as specified in its charter)
|
|
|
|
|
DELAWARE
(State
or other jurisdiction of
incorporation
or organization)
|
|
1-9824
(Commission
File
Number)
|
|
52-2080478
(I.R.S.
Employer
Identification
No.)
|
2100
Q Street
Sacramento,
CA 95816
(Address
of principal executive offices, zip code)
Registrant’s
telephone number, including area code (916) 321-1846
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
Amendment
to The McClatchy Company Supplemental Executive Retirement Plan and the
Supplemental SERP Benefit for Mr. Pruitt
On February 5, 2009, The McClatchy
Company (the “Company”) announced that it will freeze its qualified defined
benefit plans effective March 31, 2009. On February 4, 2009, the
Compensation Committee (the “Committee”) of the Board of Directors of The
McClatchy Company (the “Company”) approved amendments to each of the following
non-qualified plans of the Company (collectively, the “Plans”) covering one or
more named executive officers (“NEOs”):
·
|
The
McClatchy Company Supplemental Executive Retirement Plan (the “McClatchy
SERP”); and
|
·
|
The
supplemental retirement benefits for Mr. Pruitt (the “CEO SERP”) provided
pursuant to the Amended and Restated Employment Agreement between the
Company and Mr. Pruitt (the “CEO”) dated October 20, 2003, as amended on
December 16, 2008 (the “CEO Employment
Agreement”).
|
The purpose of the amendments to the
Plans is to freeze the future accruals of supplemental retirement income under
the Plans, effective as of February 4, 2009, such that no additional benefits
shall accrue following February 4, 2009. The amendments to the
McClatchy SERP and the CEO SERP are filed as Exhibits 10.1 and 10.2,
respectively, hereto. The amendment to the CEO SERP takes the form of
an amendment to the CEO Employment Agreement. The summary of the
amendments to the Plans set forth above is qualified in its entirety by
reference to the text of the amendments.
Description of Plans Prior
to the Freeze Amendment
McClatchy SERP
Prior to the freeze amendment the
McClatchy SERP operated in tandem with The McClatchy Company Retirement Plan
(the “Pension Plan”). (As noted above, benefits under the Pension
Plan will be frozen effective March 31, 2009). Under the Pension
Plan, benefits accrue at a rate of 1.3% of “average monthly earnings” times
years of benefit service up to a maximum of 35 years. For purposes of
the Pension Plan, “average monthly earnings” means the monthly base pay averaged
over the five consecutive calendar years that produces the highest
average.
The Company maintained the McClatchy
SERP in order to provide post-retirement income commensurate with years of
service to the Company and taking into consideration the NEO’s actual income
levels. The Internal Revenue Code limits the maximum benefit that may
be paid under the Pension Plan, by subjecting annual earnings that can be taken
into account in the pension formula to a cap (for 2009, $245,000) and by
limiting the amount of benefit that can be paid from the plan (for 2009, an
annuity at normal retirement age cannot exceed $195,000). The
McClatchy SERP also provided an enhanced pension
formula. Accordingly, the McClatchy SERP benefits are determined
without regard to the compensation limit applicable to the Pension Plan and
without regard to the maximum annuity payout limit applicable to the Pension
Plan. Furthermore, the McClatchy SERP formula provides a benefit
accrued at normal retirement age equal to 1.5% of “enhanced average monthly
earnings” multiplied by years of McClatchy SERP participation service, up to a
maximum of 35 such years. For purposes of the McClatchy SERP,
“enhanced average monthly earnings” take into account both base salary and the
annual incentive compensation. The monthly average is determined for the 36
consecutive months of Pension Plan participation that produces the highest
monthly average. The overall McClatchy SERP benefit is offset by the
benefit accrued under the Pension Plan.
Pursuant to the Company’s freeze of the
McClatchy SERP, benefits under the SERP will remain at the amount accrued as of
February 4, 2009. This means that no NEO will receive a benefit under
the McClatchy SERP attributable to any increase in earnings after February 4,
2009 or to service to the Company and its affiliates after February 4,
2009.
The CEO SERP
The CEO SERP (the terms of which are
set forth in the CEO Employment Agreement) provides that the CEO will receive
the McClatchy SERP benefits as described above, however, his benefit accrues at
a rate of 2% of enhanced monthly average compensation, with a benefit service
maximum of 30 years. Under the CEO SERP, Mr. Pruitt would be entitled
to unreduced benefits at age 57, which is the earliest unreduced retirement age
under the CEO SERP. On June 1 of each year, the term of the agreement
automatically extends for one year so that effective on each June 1, the
remaining term of employment is a full three-year period. The Board of Directors
can elect to terminate the automatic extension feature of the agreement;
however, that election would apply only to term extensions that would become
effective more than 60 days after notice. Currently, the term of the
CEO Employment Agreement will expire on June 1, 2012.
Notwithstanding the terms of the CEO
Employment Agreement and the rights Mr. Pruitt has under the CEO Employment
Agreement to benefits provided by the CEO SERP through June 1, 2012, Mr. Pruitt
has requested, and the Compensation Committee has agreed, that benefits under
the CEO SERP will be frozen and will remain at the amount accrued as of February
4, 2009. This means that Mr. Pruitt will not receive a benefit under
the CEO SERP attributable to any increase in earnings after February 4, 2009 or
to service to the Company and its affiliates after February 4, 2009
notwithstanding the terms of the CEO Employment Agreement.
Adoption
of The McClatchy Company Benefit Restoration Plan and The McClatchy Company
Bonus Recognition Plan
On February 4, 2009, the Compensation
Committee approved the adoption of the following two new executive supplemental
retirement plans to provide benefits at significantly reduced levels compared to
the McClatchy SERP:
·
|
The
McClatchy Company Benefit Restoration Plan;
and
|
·
|
The
McClatchy Company Bonus Recognition
Plan.
|
The
benefits under these plans are described below. Mr. Pruitt will
participate in each of the two new executive supplemental retirement
plans. As noted above, Mr. Pruitt will not receive a benefit
replacing the CEO SERP.
The McClatchy Company Benefit
Restoration Plan
An employee of the Company and its
affiliates whose compensation in any calendar year exceeds the applicable limit
of annual earnings that can be taken into account in a pension formula (for
2009, $245,000) automatically becomes a participant in The McClatchy Company
Benefit Restoration Plan (the “Benefit Restoration Plan”). Each NEO
would be eligible to participate in the Benefit
Restoration Plan. The Benefit Restoration Plan is filed as
Exhibit 10.3 hereto. The summary of the Benefit Restoration Plan set forth below
is qualified in its entirety by reference to the text of the Benefit Restoration
Plan.
The plan provides that, for each
calendar year for which the Company makes a matching contribution to salaried
employees under The McClatchy Company Deferred Compensation and Investment Plan
(the “401(k) Plan”) generally, the Company will make a matching contribution
under the Benefit Restoration Plan to each participant who remains employed by
the Company or its affiliates on the last day of such calendar year or who
terminated employment during the calendar year on account of retirement on or
after age 55, death or disability. The matching contribution under
the Benefit Restoration Plan will equal the rate of any matching contribution
applied under the 401(k) Plan for such calendar year multiplied by the
participant’s base salary for the calendar year, minus the maximum matching
contribution allocable to the participant under the 401(k) Plan for the calendar
year. On February 5, 2009, the Company announced that it will temporarily
suspend the matching contribution to its 401(k) plans effective March 31,
2009. So long as there is no matching contribution for employees
under the 401(k) Plan, there is no matching contribution made for any
participant under the Benefit Restoration Plan.
In addition, the plan provides that for
each year for which the Company makes a profit sharing contribution to salaried
employees under the 401(k) Plan generally, the Company may make a supplemental
contribution under the Benefit Restoration Plan to each participant who remains
employed by the Company or its affiliates on the last day of such calendar year
or who terminated employment during the calendar year on account of retirement
on or after age 55, death or disability. The supplemental
contribution under the Benefit Restoration Plan will equal the supplemental
contribution percentage applied under the 401(k) Plan for such year, if any,
multiplied by the participant’s base salary for the calendar year, minus the
maximum profit sharing contribution allocable to the participant under the
401(k) Plan for the calendar year. If there is no supplemental
contribution made for employees under the 401(k) Plan, there is no supplemental
contribution made for any participant under the Benefit Restoration
Plan.
Any
Company contributions under the Benefit Restoration Plan will be credited to a
participant’s bookkeeping account, which account will be adjusted to reflect
increases or decreases based on the allocation of the account in one or more
investment indexes selected by the Plan Administrator. A participant’s benefits
under the Benefit Restoration Plan vest under a three-year vesting
schedule. Except in the case of termination of employment due to a
participant’s death, a participant’s vested benefits under the plan will be
distributed in three equal annual installments commencing in January of the
calendar year following his or her termination date or, if later, as of the
first day of the seventh month following his or her termination
date. In the case of a termination of employment due to a
participant’s death, the full amount of the participant’s account will be paid
to the participant’s beneficiary in a single lump sum.
The McClatchy Company Bonus Recognition
Plan
The McClatchy Company Bonus Recognition
Plan (the “Bonus Recognition Plan”) contains provisions that are identical to
the Benefit Restoration Plan except that participation in the Bonus Recognition
Plan is limited to those executives of the Company and its affiliates who are
designated from time to time to participate in the plan. In addition,
the rate of Company matching contributions and supplemental contributions, if
any, will be applied to a participant’s annual incentive payment. As
with the Benefit Restoration Plan, if there are no matching contributions or
supplement contributions under the 401(k) Plan, there are no matching or
supplemental contributions under the Bonus Recognition Plan. Each NEO would be
eligible to participate in the Bonus Recognition Plan. The Bonus
Recognition Plan is filed as Exhibit 10.4 hereto. The summary of the Bonus
Recognition Plan set forth below is qualified in its entirety by reference to
the text of the Bonus Recognition Plan.
Item
9.01 Financial
Statements and Exhibits.
(a) Not
applicable.
(b) Not
applicable.
(c) Not
applicable.
(d) Exhibits.
Exhibit
No. Description
10.1 Amendment
to The McClatchy Company Supplemental ExecutiveRetirement Plan
10.2 Second
Amendment to the Amended and Restated Employment Agreementbetween Gary Pruitt
and The McClatchy Company
10.3 The
McClatchy Company Benefit Restoration Plan
10.4 The
McClatchy Company Bonus Recognition Plan
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
February
10, 2009
|
The
McClatchy Company
|
|
By:
|
/s/
Patrick J. Talamantes
|
|
|
Patrick
J. Talamantes
Vice
President and Chief Financial
Officer
|
EXHIBIT
INDEX
Exhibit
No. Description
10.1 Amendment
to The McClatchy Company Supplemental Executive Retirement Plan
10.2 Second
Amendment to the Amended and Restated Employment Agreementbetween Gary Pruitt
and The McClatchy Company
10.3 The
McClatchy Company Benefit Restoration Plan
10.4 The
McClatchy Company Bonus Recognition Plan