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Knight Ridder Inc – ‘10-K/A’ for 12/25/05

On:  Friday, 4/14/06, at 4:18pm ET   ·   For:  12/25/05   ·   Accession #:  898822-6-364   ·   File #:  1-07553

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/14/06  Knight Ridder Inc                 10-K/A     12/25/05    1:52K                                    Wachtell Lipton… Katz/FA

Amendment to Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      April 14, 2006 10-K/A                                 17     97K 


Document Table of Contents

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11st Page   -   Filing Submission
3Item 10. Directors and Executive Officers of the Registrant
6Item 11. Executive Compensation
10Deferred Compensation Plan
"401(k) Plan
11Pension Plan
12Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
14Item 13. Certain Relationships and Related Transactions
15Item 14. Principal Accounting Fees and Services
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 1) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 25, 2005 COMMISSION FILE NUMBER 1-7553 KNIGHT-RIDDER, INC. --------------------------------------------------------- (Exact name of registrant as specified in its charter) FLORIDA 38-0723657 --------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 50 WEST SAN FERNANDO STREET SUITE 1500 SAN JOSE, CA 95113 ---------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (408) 938-7700 Securities registered pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- COMMON STOCK, $0.02 1/12 PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED SHARE PURCHASE RIGHTS Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes [ ] No [ X ] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ X ] Accelerated Filer [ ]Non-accelerated filer [ ] The aggregate market value of voting stock, which consists solely of shares of common stock held by non-affiliates of the registrant, was approximately $3.6 billion as of June 24, 2005 (computed by reference to the closing price as reported by the New York Stock Exchange). The registrant had 67,690,269 shares of common stock (par value $0.02 1/12 per share), net of treasury stock, issued and outstanding as of March 31, 2006. 1
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EXPLANATORY NOTE This amendment on Form 10-K/A (Amendment No. 1) amends our annual report on Form 10-K for the fiscal year ended December 25, 2005, as filed with the Securities and Exchange Commission on March 9, 2005, and is being filed to include the information required by Part III of Form 10-K. The information required by Items 10-14 of Part III are no longer being incorporated by reference to our Proxy Statement. This amendment is not intended to update other information presented in this annual report as originally filed. 2
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PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following tables include certain information regarding the Company's directors and executive officers. Unless otherwise indicated, the age of each director and executive officer listed below is as of April 14, 2006. Each of the directors serves a three-year term, with the terms for Messrs. Mc Cray and Oshman and Ms. Mitchell expiring in 2006, Ms. Feldstein and Messrs. Gerrity and Valdes-Fauli expiring in 2007, and Messrs. Ernst, Prabhu, Ridder and Warnock expiring in 2008. The Board has determined that each member of the Audit Committee is "independent" and "financially literate" in accordance with the listing standards of the NYSE, and, in accordance with SEC and NYSE requirements, meets additional independence standards applicable to audit committee members. In addition, the Board has determined that Messrs. Ernst and Prabhu are "audit committee financial experts" as defined under by SEC rules. There are no family relationships among our directors or executive officers. DIRECTORS NAME AGE RECENT POSITIONS HELD AS OF APRIL 14, 2006 P. Anthony 65 Mr. Ridder has been Chairman of the Management Ridder Committee and Chairman and CEO of Knight Ridder since 1995. He served as President from 1989 to 1995 and president of the Newspaper Division from 1986 to 1995. He was Publisher of the San Jose Mercury News from 1977 to 1986. Mr. Ridder is the Chair of the Executive Committee of the Board and a member of the Environmental Affairs Committee. Mark A. Ernst 47 Mr. Ernst has served as a director of the Company since 2004 and is a member of the Audit Committee. Mr. Ernst served as Chairman of the Board of Directors of H&R Block, Inc., a provider of tax preparation, mortgage services and financial products and services, since 2002, Chief Executive Officer since 2001, President since 1999, Chief Operating Officer from September 1998 through December 2000 and Executive Vice President from September 1998 until September 1999. Prior to joining H&R Block, Inc. Mr. Ernst served as a senior executive with American Express Company. Mr. Ernst is a director of Great Plains Energy Incorporated and a member of the board of directors of numerous civic organizations. Kathleen Foley 65 Ms. Feldstein has served as a director of the Feldstein Company since 1998, is the Chair of the Nominating and Corporate Governance Committee and is a member of the Audit Committee. Ms. Feldstein has served as President of Economics Studies, Inc., a private consulting firm, since 1987. She serves as a director of BellSouth Corporation and BlackRock Closed End Mutual Funds. She is also a Trustee of the Committee for Economic Development, the Museum of Fine Arts, Boston and McLean Hospital. Thomas P. 64 Mr. Gerrity has served as a director of the Gerrity Company since 1998 and is a member of the Nominating and Corporate Governance Committee. Mr. Gerrity has served as Professor of Management at the Wharton School of the University of Pennsylvania since 1990 and served as Dean from 1990 to 1999. Mr. Gerrity serves as a director of CVS Corporation, Fannie Mae, Sunoco, Hercules Incorporated and Internet Capital Group, Inc. Ronald D. 48 Mr. Mc Cray has served as a director of the Mc Cray Company since 2003 and is a member of the Nominating and Corporate Governance Committee and the Environmental Affairs Committee. Mr. Mc Cray has served as Senior Vice President - Law and Government Affairs of Kimberly-Clark Corporation, a global health and hygiene company which produces tissue, personal care and health care products, since 2003. He is responsible for global strategic, legal management, corporate governance and internal audit matters. Mr. Mc Cray has held a variety of positions with Kimberly-Clark since 1987, including Vice President/Associate General Counsel and Secretary from 2001 to 2003, Vice President/ Chief Counsel and Secretary from 1999 to 2001, Vice President and Chief Counsel (Latin American and Neenah Operations) from 1996 to 2001. He is also a member of the Council on Foreign Relations. 3
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Patricia 63 Ms. Mitchell has served as a director of the Mitchell Company since 2002, is the Chair of the Environmental Affairs Committee and is a member of the Compensation Committee. Ms. Mitchell has served as the President and Chief Executive Officer of the Museum of Television and Radio since March 2006, and previously served as the President and Chief Executive Officer of the Public Broadcasting Service from 2000 to 2006. Prior to that she served as President of CNN Productions and Time Inc. Television at Time Warner from 1992 to 2000. Ms. Mitchell serves as a director of Bank of America Corporation and is a member of the Board of Trustees of the Sundance Institute and the Women's Leadership Advisory Council of the Kennedy School of Government. M. Kenneth 65 Mr. Oshman has served as a director of the Company Oshman since 1996, is the Chair of the Compensation Committee and is a member of the Nominating and Corporate Governance Committee and the Executive Committee. Since 1989, Mr. Oshman has served as Chairman and Chief Executive Office of Echelon Corporation, a networking company providing hardware and software products that enable everyday devices to connect to each other and the Internet. Mr. Oshman co-founded Rolm Corporation in 1969 and served as Chief Executive Officer, President and Director until Rolm's merger with IBM in 1984. From 1984 to 1986, Mr. Oshman served as a vice president of IBM. He is also a director of Sun Microsystems, Inc. Vasant Prabhu 46 Mr. Prabhu has served as a director of the Company since 2003 and is a member of the Audit Committee and the Compensation Committee. Mr. Prabhu has served as Executive Vice President and Chief Financial Officer of Starwood Hotels & Resorts Worldwide, Inc., a hotel and leisure company, since January 2004. Previously, Mr. Prabhu served as Executive Vice President/Chief Financial Officer and President/E-Commerce of Safeway, Inc. from 2000 through December 2003, President/Information and Media Group at McGraw-Hill Companies from 1998 to 2000, and in various finance roles at PepsiCo, Inc. from 1992 to 1998. Gonzalo F. 59 Mr. Valdes-Fauli has served as a director of the Valdes-Fauli Company since 1992, is the Chair of the Audit Committee and is a member of the Compensation Committee. Mr. Valdes-Fauli is a retired Vice-Chairman of Barclays Capital, the investment banking division of Barclays Bank, London, England. Mr. Valdes-Fauli served as a member of the management committee of Barclays Capital from 1988 to 2001. He was Group Chief Executive of Barclays Bank Latin America from 1988 to 2001. He is a director of Blue Cross/Blue Shield of Florida, director of Gildan Activewear, Inc., Chairman of the Board of Directors of Broadspan Capital, LLC and Chairman of Banco Republic, Dominican Republic. Mr. Valdes-Fauli is a Trustee of the University of Miami. John E. Warnock 65 Mr. Warnock has served as a director of the Company since 2001 and is a member of the Nominating and Corporate Governance Committee and the Environmental Affairs Committee. Mr. Warnock is a founder of Adobe Systems, Inc., a developer of software solutions for network publishing, and has served as Chairman from 1989 to 1997 and as Co-Chairman since 1997. Mr. Warnock served as Chief Executive Officer of Adobe Systems, Inc. from 1982 through December 2000 and Chief Technical Officer from December 2000 to March 2001. Mr. Warnock is a director of Salon Media Group, Inc. and a member of the Board of Trustees of the American Film Institute and Folger Shakespeare Library. 4
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EXECUTIVE OFFICERS NAME AGE RECENT POSITIONS HELD AS OF APRIL 14, 2006 Marshall 57 Mr. Anstandig joined us in 1998 as Vice Anstandig President/Senior Labor and Employment Counsel. He previously served as a partner in the law firm of Brown & Bain, P.A. from 1996 to 1998. Art Brisbane 55 Mr. Brisbane has served as our Senior Vice President since January 2005. He previously served as Publisher of The Kansas City Star from 1997 to 2004 and Editor from 1992 to 1997. Mary Jean 53 Ms. Connors has served as our Senior Vice Connors President since 2003. She previously served as Senior Vice President/Human Resources from 1996 to 2003. Before that, she was Vice President/Human Resources from 1989 to 1996 Arden Dickey 52 Mr. Dickey has served as our Vice President/Circulation and Regional Call Centers since 2002. He previously served as Assistant Vice President/Circulation and Regional Call Centers from 2000 to 2002 and Vice President/Circulation of The Miami Herald/El Nuevo Herald from 1992 to 2000. Gary R. Effren 50 Mr. Effren has served as our Vice President/Finance since January 2005. Previously, Mr. Effren served as Senior Vice President/Finance and Chief Financial Officer from 2001 to 2004, and Vice President/Controller from 1995 to 2001. Paula Lynn 51 Ms. Ellis joined us in December 2004 as Vice Ellis President/Operations. She previously served as Publisher of The (Myrtle Beach, S.C.) Sun News from 1997 to 2004. Carole Leigh 49 Ms. Hutton joined us in September 2005 as Vice Hutton President/News. She previously served as Publisher and Editor of the Detroit Free Press from 2004 to 2005; as Executive Editor from 2002 to 2003; and as Managing Editor from 1996 to 2002. Polk Laffoon IV 60 Mr. Laffoon has served as our Vice President/ Corporate Relations since 1994 and Corporate Secretary since 1999. Tally C. Liu 55 Mr. Liu became our Vice President/Internal Audit in 2002. He previously served as Senior Vice President/Finance and Operations of Knight Ridder Digital, the Company's Internet operation, from 2000 to 2002 and Vice President/Finance of the Company from 1990 to 2000. Sharon Mandell 42 Ms. Mandell joined us as Vice President/Technology in 2004. She previously served as Chief Technology Officer of Knight Ridder Digital from 2002 to 2004, Vice President of Technology of Tribune Publishing from 2001 to 2002 and Vice President and Chief Technology Officer of Tribune Interactive from 1999 to 2001. Larry D. 52 Mr. Marbert has served as our Vice President/ Marbert Production and Facilities since 1998. John McKeon 49 Mr. McKeon joined us in October 2005 as Vice President/Marketing. He previously served as Executive Vice President and General Manager for Newsday from 2004 to 2005; Senior Vice President/General Manager of Sun Sentinel Company from 2002 to 2004; and as Senior Vice President/Advertising, Los Angeles Times from 1998 to 2001. Larry Olmstead 48 Mr. Olmstead has served as our Vice President/Staff Development and Diversity since 2002. He previously served as Assistant Vice President/News of Knight Ridder from 2001 to 2002 and Managing Editor of The Miami Herald from 1996 to 2001. Steven B. Rossi 56 Mr. Rossi has served as our Senior Vice President and Chief Financial Officer since 5
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January 2005. He previously served as President/ Newspaper Division from 2001 to 2004, Senior Vice President/Operations from 1998 to 2001 and Executive Vice President and General Manager of Philadelphia Newspapers from 1992 to 1998. Hilary 45 Ms. Schneider has served as our Senior Vice Schneider President since January 2005. She previously served as Vice President of Knight Ridder and President and Chief Executive Officer of Knight Ridder Digital, the Company's Internet operations, since 2002. Served as Chief Executive Officer of Red Herring Communications from 2000 to 2002, President and Chief Executive Officer of Times Mirror Interactive from 1999 to 2000 and General Manager of The Baltimore Sun Company from 1998 to 1999. Karen 55 Ms. Stevenson has been Chief Legal Stevenson Officer/Assistant to the Chairman and CEO since February 2006. She previously was Executive Director of Legal Aid of Napa Valley from 2005 to 2006 and a member of the board of East Bay Community Foundation since 2001. She served as our Vice President/General Counsel from 1998 to November 2000. Byron Traynor 48 Mr. Traynor has served as our Vice President/Shared Services since 2002. He was previously a partner at Andersen Business Consulting from 1996 to 2002. Alice Wang 37 Ms. Wang has served as our Vice President/Corporate Development and Treasurer since January 2005. She served as Vice President/Corporate Development from 2003 to 2005. She was previously employed by Credit Suisse First Boston Corporation as Director/ Media and Telecommunications Group in 2002 and Vice President from 1999 to 2001. Gordon Yamate 50 Mr. Yamate has served as our Vice President and General Counsel since 2000. He previously served as Vice President, General Counsel and Corporate Secretary of Liberate Technologies from 1999 to 2000 and was a partner in the law firm of McCutchen, Doyle, Brown & Enersen from 1988 to 1999. We have adopted a written code of ethics that applies to all employees and directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is available free of charge and is posted on our website, WWW.KRI.COM, on the "Corporate Governance" page, under the Investor Information section. Any amendments to, or waivers of, this code of ethics will be disclosed on our website promptly following the date of such amendment or waiver. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE The Securities Exchange Act of 1934, as amended (the "Exchange Act") requires that the Company's directors, executive officers and persons who beneficially own more than 10% of the Company's common stock (i.e., insiders) file reports of ownership and changes in ownership of the Company's equity securities with the SEC and the New York Stock Exchange ("NYSE") and furnish the Company with copies of such reports. Based solely on its review of copies of these reports, the Company believes that during 2005 all directors, executive officers and persons who beneficially own more than 10% of the Company's common stock filed on a timely basis all reports required of them with these exceptions: Hilary Schneider, Senior Vice President, and Gary R. Effren, Vice President/Finance, each filed one late report with respect to one transaction in 2005, and Carole Leigh Hutton filed a late Form 3. All of these were due to administrative oversights and the reports were promptly filed upon discovery of the oversight. ITEM 11. EXECUTIVE COMPENSATION COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth information regarding the compensation during the past three years of the Chief Executive Officer and each of the other four most highly compensated executive officers in 2005: 6
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SUMMARY COMPENSATION TABLE [Enlarge/Download Table] LONG-TERM COMPENSATION --------------------------------------------------------------- RESTRICTED SECURITIES LTIP ALL OTHER NAME/PRINCIPAL SALARY BONUS STOCK UNITS UNDERLYING PAYOUTS COMPENSATION POSITION(1) YEAR ($) ($) ($)(2) OPTIONS (#) ($)(3) ($) (4) -------------------------------- -------------------------------------------------------- ------------------------- P. Anthony Ridder 2005 980,000 281,304 1,176,230 74,000 -- 25,268 Chairman and CEO 2004 980,000 718,105 -- 155,000 -- 20,172 2003 972,405 455,637 -- 175,000 2,219,178 19,614 Steven B. Rossi 2005 602,923 101,310 445,060 28,000 -- 12,504 Senior Vice President/ 2004 673,000 370,299 -- 60,000 -- 13,112 Chief Financial Officer 2003 645,962 216,285 -- 110,000 1,370,669 10,459 Hilary Schneider 2005 593,856 101,310 445,060 28,000 -- 239,654(5) Senior Vice President 2004 432,846 498,522 -- 60,000 -- 11,238 2003 399,154 475,565 -- 30,000 -- 9,760 Art Brisbane 2005 592,308 101,310 445,060 28,000 -- 988,484(6) Senior Vice President 2004 400,000 218,930 -- 60,000 -- 8,863 2003 397,500 54,204 -- 27,000 796,293 7,570 Mary Jean Connors 2005 580,000 97,933 445,060 28,000 -- 10,296 Senior Vice President 2004 564,308 258,768 -- 58,000 -- 10,035 2003 540,577 180,944 -- 65,000 1,253,183 9,715 <FN> (1) Effective January 1, 2005, Mr. Rossi became Senior Vice President/Finance and Chief Financial Officer. Previously, Mr. Rossi served as the Company's President/Newspaper Division. Also effective January 1, 2005, Mr. Brisbane and Ms. Schneider became Senior Vice Presidents. Previously, Mr. Brisbane held the position of President and Publisher of The Kansas City Star; Ms. Schneider was President/Knight Ridder Digital and Vice President/Knight-Ridder, Inc. (2) Amounts represent the value of restricted stock units issued to the named executive officers under the Employee Equity Incentive Plan that was approved by shareholders on April 26, 2005. The value per share is equal to price of $63.58, the closing price on December 16, 2005. The restricted stock units have both performance-based and time-based vesting criteria. In order for the restricted stock units to vest, Knight Ridder must meet or exceed a target operating profit level for the fiscal year 2005. If the operating profit target is met, 25% of the award will vest; the remainder of the award will vest in 25% increments on the second, third and fourth anniversaries of the date of grant. Restricted stock unit awards of 18,500 shares, 7,000 shares, 7,000 shares, 7,000 shares and 7,000 shares were made to Mr. Ridder, Mr. Rossi, Ms. Schneider, Mr. Brisbane and Ms. Connors, respectively. (3) Amounts represent the value of shares and accrued dividends issued to the named executive officers in accordance with the Company's 1997 Long-Term Incentive Plan. The performance period under the Company's 1997 Long-Term Incentive Plan ended on December 31, 2002. The plan provided that none of the shares would vest unless the Company's total shareholder return ("TSR") was positive and at least equal to the median TSR of the other companies in the Company's comparison group during the performance period (January 1, 2000 through December 31, 2002). Upon satisfaction of those conditions, 15% of the shares would vest if the Company's TSR was equal to the peer group median and 100% of the shares would vest if the Company's TSR was at the 85th percentile of the peer TSR or higher. In accordance with the plan, 100% of the shares granted to the participants vested because the Company's TSR was greater than that of all other companies in the peer group during the performance period. In January 2003, the Company issued the vested shares and accrued dividends to plan participants, including the named executive officers. (4) The amounts listed for 2005, 2004, and 2003, respectively, represent (i) matching contributions to the named executive officers under the Company's 401(k) Plan as follows: Mr. Ridder, $6,300. $6,000, and $5,553: Mr. Rossi, $6,300, $6,150, and $6,000; Ms. Schneider $6,300, $9,225, and $9,000, Mr. Brisbane, $6,300, $6,150 and $6,000; and Ms. Connors, $6,300, $6,150 and $6,000; and (ii) the cost of life insurance on the lives of the named executive 7
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officers in 2005, 2004, and 2003, respectively, as follows: Mr. Ridder, $18,968, $14,172, and $14,061; Mr. Rossi, $6,204, $6,962, and $4,459; Ms. Schneider, $2,767, $2,013, and $760; Mr. Brisbane; $6,002, $2,713, and $1,570; and Ms. Connors, $3,996, $3,885, and $3,715. (5) The amount shown for 2005 includes one-time relocation payments of $230,587 to Ms. Schneider relating to costs and reimbursements associated with actual moving expenses incurred in connection with relocating Ms. Schneider. (6) The amount shown for 2005 includes one-time relocation payments of $976,182 to Mr. Brisbane of which $400,000 was a relocation bonus, $216,399 was a related tax reimbursement, and $359,783 were costs and reimbursements associated with actual moving expenses incurred in connection with relocating Mr. Brisbane. </FN>
The following table sets forth information regarding stock options granted in 2005 to the executive officers named in the Summary Compensation Table: OPTION/SAR GRANTS IN LAST FISCAL YEAR [Enlarge/Download Table] NUMBER OF TOTAL SECURITIES OPTIONS/SARS UNDERLYING GRANTED TO EXERCISE OR GRANT DATE OPTIONS/SAR EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE NAME GRANTED(#) FISCAL YEAR(%) ($/SHARE) DATE ($)(1)(2) ---- ----------- -------------- ----------- ---------- ------------- P. Anthony Ridder 74,000 7.99% $63.86 12/16/2015 $807,096 Steven B. Rossi 28,000 3.02% $63.86 12/16/2015 $305,388 Hilary Schneider 28,000 3.02% $63.86 12/16/2015 $305,388 Art Brisbane 28,000 3.02% $63.86 12/16/2015 $305,388 Mary Jean Connors 28,000 3.02% $63.86 12/16/2015 $305,388 <FN> ----------------------- (1) The "grant date present value" shown is a hypothetical value based upon application of the Black-Sholes model. This model often is used to estimate the market value of transferrable options by calculating the probability - based on the volatility of the stock subject to the option - that the stock price will exceed the option exercise price at the end of the option term. The assumptions used in calculating the Black-Sholes value of the options were: expected volatility of 0.1767; risk-free rate of return of 4.36%; dividend yield of 2.239%; and vest over a four year period from date of grant. Based on this model, the calculated value of each option on December 13, 2004 was $10.9067 per share underlying each option. (2) The stock options are not transferable. The Black-Scholes estimate notwithstanding, an option granted under the Employee Equity Incentive Plan will have value only if and to the extent the optionee exercises the option at a time when the market price of the Company's common stock is above the market price on the date the option was granted. </FN> 8
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The following table sets forth information regarding Company stock options exercised in 2005 by the executive officers named in the Summary Compensation Table, as well as the number of unexercised options held by each of them at the end of the 2005: AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES [Enlarge/Download Table] NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS SARS AT FISCAL YEAR-END(#)($) AT FISCAL YEAR-END(1) ------------------------------- ----------------------------- SHARES VALUE ACQUIRED ON REALIZED NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- -------- ----------- ------------- ----------- ------------- P. 80,000 $1,246,525 873,334 235,666 $3,503,530 0 Anthony Ridder Steven 3,000 $85,425 462,000 104,666 $2,250,950 0 B. Rossi Hilary 0 0 70,000 78,000 $13,400 0 Schneider Art 0 0 92,000 77,000 $57,645 0 Brisbane Mary Jean 24,000 $798,732 395,668 88,332 $2,730,261 0 Connors <FN> ----------------------- (1) The amount shown is the amount by which the market value at year-end of all shares subject to unexercised options exceeded the exercise price of those options and is based on the average of the high and low trading prices of the Company's common stock on the New York Stock Exchange on December 23, 2005. </FN> INCOME SECURITY AGREEMENTS None of our officers have employment agreements. However, certain executive officers of the Company and its subsidiaries designated by the Compensation Committee of the Board, including the named executive officers, have had income security agreements. The agreements continue through December 31 of each year and are automatically extended for additional three-year terms (a renewal date) unless we notify the executive that the agreement will not be extended 60 days prior to a renewal date. The agreement provides that each executive will be entitled to receive the following, if after a change in control (as defined in the agreements), an executive's employment is terminated for any reason other than (a) death, (b) disability, (c) cause, or (d) resignation by the executive for any reason other than good reason, each as defined in the agreement: A lump sum cash severance payment equal to three times the greater of (i) the sum of the salary and cash bonus payable to the participant for the last full calendar year preceding the severance payment or (ii) the sum of the participant's annualized salary and the maximum cash bonus the participant could have earned for the then current calendar year; Continued participation in the Company's group term life insurance plan and health plan for a period of three years following the date of termination; and Accelerated vesting of stock issued and stock options granted, in accordance with the provisions of our Employee Equity Incentive Plan, which provides that the unvested portion of any option will be deemed to have vested and become fully exercisable immediately prior to any such termination. The agreements also provide that if any payments made in connection with a change in control would be subject to excise tax imposed by Section 4999 of the Internal Revenue Code, we will "gross up" the participant's compensation for all taxes and any penalties and interest. 9
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LONG-TERM INCENTIVE PLAN In accordance with the Company's Long-Term Incentive Plan (the "LTIP"), participants who were selected to participate at the beginning of a three-year performance period will be eligible to receive an award equal to three times 75% of the participant's salary as of first day of January in the first year of the performance period. The award potential for participants added to the plan after the commencement of the performance period will be reduced from three times 75% of salary on a pro rata basis to reflect the number of full calendar months remaining in the performance period. The salary used for later-added participants will be the annual rate of salary in effect for the participant as of the first day of the month in which the award is made. The maximum amount payable under the LTIP to a participant is $5 million. Plan participants may elect to defer any portion of their award under the Company's Annual Incentive Deferral Plan, as described in more detail below under the caption "Deferred Compensation Plan." Termination of employment prior to the date of payment of an award for reasons other than death, disability or retirement will result in immediate forfeiture of any rights to receive an award from the LTIP and termination of participation in the Plan. In the event of a change in control of the Company (as defined in the plan) during a performance period, the performance period will immediately end and all awards, if any, will be calculated based on the abbreviated performance period and paid to participants. All of the named executive officers participated in the plan and in January 2006 received an award equal to three times 75% of their respective salaries in effect on January 1, 2003. DEFERRED COMPENSATION PLAN We sponsor a non-qualified unfunded Annual Incentive Deferral Plan designed to allow eligible participants to defer payment of certain elements of their compensation until a future date. Only certain members of management and other highly compensated employees of the Company and participating subsidiaries are eligible to participate in the plan. The Compensation Committee of the Board administers the plan. Participants may elect to defer up to 100% of base salary and annual bonus. Amounts deferred under the plan are credited or charged with the performance of the investment options offered under the plan and selected by participants. Participants may elect to receive distributions as a lump sum or in up to ten substantially equal annual installments at retirement or earlier as provided in the plan. In the event of a change of control, as defined in the plan, participants will receive a lump sum distribution. Each of the named executive officers participates in the Annual Incentive Deferral Plan. OTHER BENEFITS RETIREMENT PLANS 401(K) PLAN We sponsor a defined contribution retirement savings plan qualified under section 401(k) of the Internal Revenue Code (the "401(k) Plan"). Eligible employees may contribute up 75% of their earnings on a pre-tax basis and 20% on an after-tax basis, subject to certain limitations. We make matching contributions for eligible participants which are initially invested in Knight Ridder common stock. However, participants may, at their option, diversify the investment of the Company match by selling the Knight Ridder common stock held in their plan accounts and investing the proceeds in the other investment funds available under the 401(k) plan. In fiscal year 2005, we made matching contributions of $12.1 million, which includes $31,500 in the aggregate for matching contributions to named executive officers, as further described in the "All Other Compensation" column of the Summary Compensation Table on pages 6 and 7. 10
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PENSION PLAN The Knight Ridder Pension Plan (the "Pension Plan") is a funded, tax-qualified, noncontributory defined benefit pension plan that covers certain non-union employees, including each of the named executive officers. Benefits under the Pension Plan are based on an employee's years of service and the employee's final average earnings, i.e., average earnings over the five years for which earnings are the highest during the employee's final ten years of service. Earnings covered by the Retirement Plan include base salary and bonus paid under an annual bonus program. The amount of annual earnings that may be considered in calculating benefits under the Pension Plan is limited by law. For 2005, the annual limit was $210,000. Contributions to the Retirement Plan are paid into a trust from which the benefits of participants are paid. We also sponsor an unfunded benefit restoration plan that provides out of our general assets for the difference between the amount that would have been payable under the Pension Plan absent legal limits and the amount actually payable under the Pension Plan. We do not have any other arrangements to pay any significant supplemental pension amount to a named executive officer, although payments may be made after retirement under equity awards or deferred compensation arrangements. The following table shows, for the final average earnings and years of service indicated, the estimated annual benefits payable beginning upon retirement at age 65 under the current benefit formula of the Pension Plan. The estimated benefits are calculated based on the assumption that payments will be made as a single-life annuity to an officer, hired prior to January 1, 1989 and retiring in 2005 at age 65 with a specified combination of final average earnings (salary and bonus) and years of service. The benefits shown are not subject to any reduction for Social Security or other offset amounts. A change in benefit formula applies to employees hired on and after January 1, 1989 and is reflected in the column for 15 years of credited service. ESTIMATED ANNUAL RETIREMENT BENEFITS YEARS OF SERVICE AT AGE 65 ------------------------------------------------------------ FINAL AVERAGE EARNINGS 15 20 25 30 35 40 OR MORE ---------------- ------- ------- ------- ------- ------- ---------- 125,000 24,825 39,350 44,500 49,649 52,774 55,899 200,000 41,700 65,600 74,500 83,399 88,399 93,399 300,000 64,200 100,600 114,500 128,399 135,899 143,399 400,000 86,700 135,600 154,500 173,399 183,399 193,399 500,000 109,200 170,600 194,500 218,399 230,899 243,399 600,000 131,700 205,600 234,500 263,399 278,399 293,399 700,000 154,200 240,600 274,500 308,399 325,899 343,399 900,000 199,200 310,600 354,500 398,399 420,899 443,399 1,000,000 221,700 345,600 394,500 443,399 468,399 493,399 1,300,000 289,200 450,600 514,500 578,399 610,899 643,399 1,600,000 356,700 555,600 634,500 713,399 753,399 793,399 1,900,000 424,200 660,600 754,500 848,399 895,899 943,399 As of the end of 2005, Mr. Ridder had 44 years of service with the Company; Mr. Rossi 18 years; Mr. Brisbane 23 years; Ms. Schneider 3 years and Ms. Connors 26 years. DIRECTOR COMPENSATION Director compensation is established in accordance with the Company's Compensation Plan for Non-employee Directors (the "Director Plan"). Our Board of Directors adopted the Director Plan effective July 1, 1997. Only non-employee directors are eligible to receive awards under the Director Plan. As described below, the Director Plan provides that non-employee directors receive the following compensation: (1) an annual retainer fee payable one half in Knight Ridder common stock and one half in cash or stock, at the director's election; (2) board and 11
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committee meeting attendance fees; (3) an annual stock option grant; and (4) and in certain cases, retirement benefits. Currently, non-employee directors receive an annual retainer of $60,000. Half of this retainer is paid in our common stock, and a director may choose to receive the balance in cash or stock. The annual retainer fee is paid in equal quarterly installments. Employee directors do not receive any compensation for serving as a member of our Board of Directors. Non-employee directors receive a fee of $1,500 for each Board meeting and meeting of shareholders and $1,000 for each committee meeting attended except for Audit Committee members who receive $1,500 per meeting. Each non-employee director who chairs a committee receives the following annual fee: Audit Committee $10,000; Compensation Committee $8,000; Nominating and Corporate Governance Committee $8,000; and Environmental Affairs Committee $5,000. The Company also reimburses directors for travel and other expenses incurred in attending meetings. Each December, each non-employee director is granted an option to purchase 5,000 shares of the Company's common stock at the fair market value of the Company's common stock on the date the option is granted. Options have a term of ten years and vest in equal annual installments over a three-year period from the date of grant. Vested options may be exercised: (1) while serving as a director; (2) within five years after termination of service due to disability or retirement; (3) the earlier of three years after death or five years after termination of service if a director dies while serving on the Board; or (4) within three months after an optionee ceases to be a director for any other reason. Payment is required upon exercise of an option and may be made in cash or by delivery to the Company of shares of the Company's common stock or a combination of cash and shares. In accordance with the Director Plan, directors who met the following eligibility requirements when they retired from the Board receive an annual lifetime benefit commencing upon retirement from the Board if: (i) they were never employed by the Company; (ii) were age 65 or older on July 1, 1996; and (iii) had at least five years of service (or, if disabled, following at least two years of service) when they retired from the Board. The benefit ranges from 50% of the annual retainer fee for directors who retired after five years of service to 100% of the annual retainer fee for directors who retired with ten or more years of service. None of our current non-employee directors are eligible for this retirement benefit. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2005, the Compensation Committee was comprised of the following five non-employee directors: M. Kenneth Oshman, Chair, Thomas P. Gerrity, Patricia Mitchell, Vasant Prabhu and Gonzalo Valdes-Fauli. No member of the Compensation Committee served as an officer or employee of the Company or any of its subsidiaries during 2005. In addition, during 2005, no executive officer of the Company served as a director or as a member of the compensation committee of a company which employs a director of the Company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS On November 14, 2005, we announced the Board of Directors' decision to explore strategic alternatives to enhance shareholder value, including a possible sale of the company. We have been working with Goldman, Sachs & Co., our long-time advisor, and Morgan Stanley in this process. On March 12, 2006, we entered into an Agreement and Plan of Merger with The McClatchy Company pursuant to which the Company would merge into McClatchy. The completion of the Merger is subject to various customary conditions, including obtaining the approval of Company shareholders and termination or expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The Board of Directors also amended our bylaws to provide that shareholders may submit proposals for consideration, and/or nominations for directors at our 2006 Annual Meeting of Shareholders no earlier than 60 days nor later than 45 days prior to the date of the meeting. At a meeting on January 29, 2006, the Board decided to postpone the 2006 Annual Meeting of Shareholders from the date previously scheduled, April 18, 2006, until a future date yet to be determined. 12
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PRINCIPAL HOLDERS OF THE COMPANY'S STOCK The following table sets forth all persons known to the Company to be the beneficial owners of more than 5% of the Company's common stock as of March 31, 2006. As of March 31, 2006, there were 67,690,269 shares of the Company's common stock outstanding. SHARES NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY PERCENT OF OWNERS OF COMMON STOCK OWNED CLASS ------------------------------ ------------ ---------- Private Capital Management 12,153,658(1) 18% 8889 Pelican Bay Boulevard, Suite 500 Naples, FL 34108 Southeastern Asset Management, Inc. 5,075,100(2) 7.5% 6410 Poplar Avenue, #900 Memphis, TN 38119 Torray LLC 3,618,400(3) 5.3% 7501 Wisconsin Ave., #1100 Bethesda, MD 20814-6523 -------------------- (1) According to a Schedule 13D filed February 17, 2006, Private (1) Capital Management, a registered investment adviser, has shared dispositive power over all of the shares and shared voting power over 8,750,000 shares. (2) According to a Schedule 13G filed March 14, 2006, Southeastern Asset Management, Inc., a registered investment adviser, has sole voting power over 2,217,400 shares, shared voting power over 2,311,000 shares, no voting power over 546,700 shares, sole dispositive power over 2,759,100 shares, shared dispositive power 2,311,000 shares and no dispositive power over 5,000 shares. (3) According to a Form 13F filed February 14, 2006, Torray LLC, an institutional investment manager, has sole dispositive power over 3,618,400 shares, sole voting power over 3,491,100 shares and no voting power over 127,300 shares. 13
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the number of shares of the Company's common stock beneficially owned as of March 31, 2006 by each director, nominee and executive officer named in the Summary Compensation Table, and by all directors, nominees and executive officers as a group. Except as noted, each person has sole voting and investment power over the shares shown in the table. [Enlarge/Download Table] SHARES TOTAL SHARES OTHER COMMON COMMON SUBJECT TO BENEFICIALLY STOCK NAME STOCK OPTIONS(1) OWNED EQUIVALENTS(5) ----------------------------- ------- ---------- ------------- -------------- Art Brisbane 7,629 92,000 99,629 22,222 Mary Jean Connors 52,789 395,668 448,457(2) 13,912 Mark A. Ernst 1,883 1,667 3,550 0 Kathleen Foley Feldstein 4,145 21,001 25,146 3,330 Thomas P. Gerrity 2,896 13,001 15,897 3,330 Ronald D. Mc Cray 2,071 5,001 7,072 160 Patricia Mitchell 1,918 9,001 10,919 644 M. Kenneth Oshman 35,791 23,001 58,792(3) 4,384 Vasant Prabhu 1,480 5,001 6,481 160 P. Anthony Ridder 231,772 873,334 1,105,106(2) 0 Steven B. Rossi 19,916 462,000 481,91(2) 13,382 Hilary Schneider 6,397 70,000 76,397 10,296 Gonzalo F. Valdes-Fauli 4,471 23,001 27,472 4,563 John E. Warnock 3,499 9,001 12,500 807 All directors and executive officers as a group (29 persons including those named above) 484,997 2,995,051 3,480,048(4) 121,070 <FN> ----------------------- (1) Represents stock options that are exercisable on March 31, 2006 or become exercisable within 60 days of March 31, 2006. As of the Company's fiscal year end 2005, the in-the-money value of options held by each of Mr. Ridder, Mr. Rossi, Ms. Schneider, Mr. Brisbane and Ms. Connors was $3,503,530, $2,250,950, $13,400, $57,645 and $2,730,261, respectively. (2) Includes shares owned by, or jointly owned with spouses as (2) follows: (a) 2,736 shares owned by Ms. Connor's husband; (b) 3,477 shares owned by Mr. Ridder's wife, 898 shares jointly owned by Mr. Ridder and his wife, and 18,925 shares held in trust of which Mrs. Ridder is the trustee; and (c) 15,168 shares jointly owned by Mr. Rossi and his wife. Ms. Connors and Mr. Ridder disclaim beneficial ownership of the shares owned by their respective spouses. Mr. Ridder shares voting and investment power with his spouse as to those shares jointly owned. (3) Includes 30,000 shares owned by a partnership in which Mr. (3) Oshman has a 97% income interest. Mr. Oshman has the power to vote these shares and the power to direct their disposition and he claims beneficial ownership as to 97% of the shares. (4) Except for Mr. Ridder who beneficially owned 1.6% of the (4) Company's common stock, no director or executive officer beneficially owned more than 1% of the Company's common stock. All directors and executive officers as a group owned 4.9% of the Company's common stock. (5) Includes common stock units held in Knight Ridder stock (5) accounts under the Company's Annual Incentive Deferral Plan and Compensation Plan for Nonemployee Directors. </FN> ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS From time to time, the Company and its subsidiaries engage in transactions with companies where one of the Company's executive officers or directors or a member of his or her immediate family has a direct or indirect interest. All of these transactions, including those described below, are in the ordinary course of business and at competitive rates and prices. 14
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Mark Ernst, a director of the Company, is Chairman, President and Chief Executive Officer H&R Block, and Vasant Prabhu, a director of the Company, is Executive Vice President/Chief Financial Officer of Starwood Hotels & Resorts Worldwide, Inc., each of which purchases advertising from certain of the Company's newspapers. Gonzalo F. Valdes-Fauli, a director of the Company, is a former Vice-Chairman of Barclays Capital and former Group Chief Executive Officer of Barclays Bank, Latin America, an affiliate of Barclays Bank plc, which provides certain pension management services to the Company. Peter B. Ridder, President and Publisher of THE CHARLOTTE OBSERVER, is a brother of the Company's Chairman and Chief Executive Officer, P. Anthony Ridder, and Par Ridder, President and Publisher of the ST. PAUL PIONEER Press, is the son of P. Anthony Ridder. In 2005, Peter B. Ridder and Par Ridder received aggregate compensation of $540,465 and $429,196, respectively. In November 2005, at the Company's request, Peter Ridder postponed his announced December 31, 2005 retirement and continued his role as Chairman and Publisher of The Charlotte Observer until the close of any strategic transaction that may take place in 2006. Mr. Ridder's agreement with the company provides that he will receive a lump-sum cash payment equal to 50% of his annual base salary, but he is not eligible for an income security agreement. Payment will be made at the date of the close of a strategic transaction or at the time the Board of Directors decides to no longer pursue a strategic transaction. In November 2005, the Company and Par Ridder entered into an agreement similar to that of similarly situated publishers with the Company that would provide Mr. Ridder a separation package if a change in control of the company occurs and Mr. Ridder is terminated from employment within 18 months of the change in control. The separation package would be payable only if both events take place and would consist of a lump-sum payment equal to two times his annual base salary of $306,800 and two times his target annual incentive award (which is calculated as 50% of base pay). ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES FEES AND SERVICES OF ERNST & YOUNG For the fiscal years 2005 and 2004, fees for professional services provided by Ernst & Young were as follows (in thousands): 2005 2004 ------ ------ Audit Fees(1) 1,667 2,122 Audit-Related Fees(2) 449 350 Tax Fees(3) -- 80 All Other Fees -- -- ------ ------ Total $2,116 $2,552 ====== ====== ------------------------ (1) Includes fees associated with the annual audit of the (1) Company's consolidated financial statements, reviews of the Company's quarterly reports on Form 10-Q, fees related to regulatory filings and in 2004, the audit of internal controls over financial reporting. (2) Audit-related fees relate principally to audits of Company-sponsored employee benefit plans, as well as other audits and audit-related services for subsidiaries and affiliates. (3) Tax fees relate to tax compliance services. AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES In accordance with the SEC's requirements regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided Ernst & Young. 15
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Under the policy, particular services or categories of services are pre-approved, subject to a specific budget. During 2005, all services provided by Ernst & Young were approved by the Audit Committee pursuant to this policy. 16
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Knight-Ridder, Inc. (Registrant) Dated: April 14, 2006 /s/ P. Anthony Ridder ---------------- ------------------------------------ By: P. Anthony Ridder Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNER TITLE DATE ---------------------------- ----------------------------- -------------- /s/ P. Anthony Ridder Principal Executive Officer April 14, 2006 ------------------------ Chairman and Chief Executive Officer /s/ Steven B. Rossi Principal Financial Officer April 14, 2006 ------------------------ Senior Vice President/ Finance and Chief Financial Officer /s/ Gary R. Effren Principal Accounting Officer April 14, 2006 ------------------------ Vice President/Finance Mark A. Ernst* Director Kathleen Foley Feldstein* Director Thomas P. Gerrity* Director Ronald D. Mc Cray* Director Patricia Mitchell* Director M. Kenneth Oshman* Director Vasant Prabhu* Director Gonzalo F. Valdes-Fauli* Director John E. Warnock* Director The Board of Directors *By /s/ Steven B. Rossi -------------------------- Steven B. Rossi Attorney-in-fact April 14, 2006 17

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3/31/06114
3/14/0613425,  8-K,  SC 13G
3/12/0612
2/17/0613SC 13D/A
2/14/06133
1/29/0612
12/31/051511-K
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6/24/051
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3/9/0524,  4/A
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