BLC Belo Corp.

 

 

March 28, 2011

 

Dear Fellow Shareholder:

 

I am pleased to invite you to attend our 2011 annual meeting of shareholders, which will be held on Tuesday, May 10, 2011, in The Belo Building at 400 South Record Street, Dallas, Texas. The meeting will be held on the third floor in the auditorium. A map is included for your use.

 

Materials being provided include the formal Notice of Annual Meeting, the 2011 proxy statement, and Belo’s 2010 annual report. If you requested printed versions of these materials by mail, these materials also include a proxy/ voting instruction card for the annual meeting. Most of the Company’s shareholders were mailed a Notice of Internet Availability of Proxy Materials with instructions for electronically accessing all of these proxy materials and for voting via the Internet. This approach allows us to provide our shareholders with the information needed to vote their shares while reducing delivery costs and the impact on the environment. The Notice of Internet Availability of Proxy Materials provides information on how you may obtain printed copies of our proxy materials free of charge, if you so choose.

 

The accompanying proxy statement tells you more about the agenda and voting procedures for the meeting. It also describes how the Board operates and provides information about our directors, including those nominated for election at this year’s meeting. At the meeting, you will hear a report on Belo’s operations and have a chance to meet your directors and executive officers.

 

Whether or not you attend the annual meeting, it is important that your shares be represented at the meeting. I encourage you to vote your shares as soon as possible by returning your proxy/voting instruction card or by voting using the Internet or telephone voting procedures outlined in the accompanying materials or in the Notice of Internet Availability of Proxy Materials. If you are unable to attend the annual meeting in person, you may listen to the meeting by online Webcast on our Web site (www.belo.com).

 

I hope to see you on May 10th.

 

Sincerely,

 

Dunia A. Shive

President and Chief Executive Officer

 

Belo Corp.   www.belo.com 400 South Record Street Dallas, Texas 75202-4841 Tel. 214.977.6606 Fax 214.977.6603

 

Belo Corp.
400 South Record Street
Dallas, Texas 75202
www.belo.com

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2011

 

 

To Belo Shareholders:

 

Please join us for the 2011 annual meeting of shareholders of Belo Corp. (“Belo” or the “Company”). The meeting will be held on Tuesday, May 10, 2011, at 11:00 a.m., Dallas, Texas time, in the third floor auditorium of The Belo Building at 400 South Record Street, Dallas, Texas. The annual meeting of shareholders will be simultaneously Webcast on Belo’s Web site (www.belo.com). Following the conclusion of the meeting, a replay of the Webcast will be archived on Belo’s Web site through May 24, 2011.

 

At the meeting, the holders of Belo Series A common stock and Belo Series B common stock will act on the following matters:

 

 

All record holders of shares of Belo Series A common stock and Belo Series B common stock at the close of business on March 17, 2011 are entitled to vote at the meeting or at any postponement or adjournment of the meeting.

 

As permitted by the rules of the Securities and Exchange Commission, we are furnishing our proxy materials to shareholders via the Internet. Most of the Company’s shareholders were mailed a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. The electronic delivery of our proxy materials will expedite receipt of the materials by our shareholders, reduce our printing and mailing costs, and reduce the impact on the environment.

 

The Notice of Internet Availability of Proxy Materials identifies the date, time and location of the annual meeting; the matters to be acted upon at the meeting and the Board of Directors’ recommendation with regard to each matter; a Web site where shareholders can access the proxy materials and vote their shares; and a toll-free telephone number, an e-mail address, and a Web site where shareholders can request a paper or e-mail copy of their proxy materials, including our proxy statement, annual report to shareholders, and form of proxy/voting instruction card, free of charge.

 

By Order of the Board of Directors

 

GUY H. KERR

Secretary

 

March 28, 2011

 

TABLE OF CONTENTS

 

 

 

Belo Corp.
400 South Record Street
Dallas, Texas 75202
www.belo.com

 

 

PROXY STATEMENT

 

 

For the Annual Meeting of Shareholders
To Be Held On May 10, 2011

 

This proxy statement contains information related to the annual meeting of shareholders of Belo Corp. (“Belo” or the “Company”) to be held on Tuesday, May 10, 2011, beginning at 11:00 a.m., Dallas, Texas time, in The Belo Building at 400 South Record Street, Dallas, Texas, and any postponement or adjournment of the meeting. The meeting will be held on the third floor in the auditorium.

 

A Notice of Internet Availability of Proxy Materials (the “Notice”) is being mailed or otherwise sent to Belo shareholders on or about March 28, 2011. Paper copies of this proxy statement and related proxy/voting instruction card will be distributed to shareholders beginning on or about March 31, 2011.

 

Important Notice Regarding the Availability of Proxy Materials for the 2011 Annual Meeting of Shareholders to be held on May 10, 2011. Belo’s 2011 proxy statement and 2010 annual report, which includes consolidated financial statements for the year ended December 31, 2010, are available at http://www.proxyvoting.com/blc . These documents are also posted on our Web site at www.belo.com/invest/ .

 

 

What is the purpose of the annual meeting?

 

At the 2011 annual meeting, shareholders will act on matters outlined in the accompanying notice, including the election of directors, the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, approval of an advisory resolution on executive compensation (say-on-pay), an advisory vote on the frequency of future say-on-pay votes (say-on-frequency), and any other matters properly brought before the meeting. Management will report on Belo’s performance in 2010 and respond to questions and comments from shareholders.

 

Who can attend the annual meeting?

 

Shareholders and guests of Belo may attend the annual meeting.

 

Who may vote at the meeting?

 

Only shareholders who owned Belo shares at the close of business on March 17, 2011, the record date, or their duly appointed proxies, are entitled to vote at the meeting or at any postponement or adjournment of the meeting. Our common stock is divided into two series: Series A common stock and Series B common stock. Holders of either series of common stock as of the close of business on the record date will be entitled to vote at the meeting. At the close of business on the record date, a total of 93,294,278 shares of Series A common stock and 10,272,667 shares of Series B common stock were outstanding and entitled to vote.

 

What are the voting rights of the holders of Series A common stock and Series B common stock?

 

Holders of Belo Series A and Series B common stock vote together as a single class on all matters to be acted upon at the annual meeting. Each outstanding share of Series A common stock will be entitled to one vote on each matter. Each outstanding share of Series B common stock will be entitled to 10 votes on each matter.

Why did I receive a one-page Notice of Internet Availability of Proxy Materials this year instead of a full set of proxy materials?

 

Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), the Company has elected to provide access to its proxy materials via the Internet and has sent a Notice to its shareholders. Shareholders can access the proxy materials on the Web site referred to in the Notice or request to receive free of charge a printed set of the proxy materials, including a proxy/voting instruction card. Instructions on how to access the proxy materials over the Internet or to request a printed copy are set out in the Notice. If you hold Belo shares in your Belo Savings Plan account or in your A. H. Belo Savings Plan account, the Notice also has instructions on how to provide your proxy and/or voting instructions via the Internet.

 

In addition, all shareholders may request to receive proxy materials electronically by e-mail on an ongoing basis by following the instructions in the paragraph captioned “How to Receive Future Proxy Statements and Annual Reports Online” in the “Annual Report and Additional Materials” section on page 51 of this proxy statement. The Company encourages shareholders to take advantage of the availability of the proxy materials on the Internet in order to help reduce printing and mailing costs and any environmental impact of its shareholder meetings.

 

What constitutes a quorum to conduct business at the meeting?

 

In order to carry on the business of the meeting, we must have a quorum present in person or by proxy. A majority of the voting power of the outstanding shares of common stock eligible to vote and at least one-third of the outstanding shares entitled to vote must be present at the meeting, in person or by proxy, in order to constitute a quorum.

 

Abstentions and broker non-votes are counted as present at the meeting for purposes of determining whether we have a quorum. A broker non-vote occurs when a broker or other nominee returns a proxy but does not vote on a particular proposal because the broker or nominee does not have authority to vote on that particular item and has not received voting instructions from the beneficial owner.

 

How do I cast my vote?

 

You may receive more than one Notice or voting card depending on how you hold your shares. It is important that you follow the instructions on each card or Notice and vote the shares represented by each card or Notice separately.

 

Shareholders of record.   If you hold shares directly and are listed as a shareholder on Belo’s stock records, you may vote in person if you attend the meeting or you may vote by proxy, which gives the proxy holder the right to vote your shares on your behalf. You may vote by proxy online via the Internet, by telephone, or, if you request copies of the proxy materials, by completing and returning your proxy card in the envelope provided. Shares represented by proxy cards that are properly completed and submitted will be voted in accordance with the shareholder’s instructions.

 

Shares held in broker or other nominee name (“street name”).   If you hold shares in street name, you have the right to instruct your broker or other nominee on how to vote those shares on your behalf and you will receive a Notice or, if you request, a copy of the proxy materials, including a voting instruction form, from them. Alternatively, you may vote these shares in person at the meeting by following the instructions below under “How do I vote in person.”

 

Shares held in your Belo Savings Plan account or in your A. H. Belo Savings Plan account.   These shares may be voted only by the plan trustee, but you may instruct the plan trustee on how to vote them. Information on how to provide voting instructions to the plan trustee via the Internet is set out in the Notice. The Notice also includes information on how to obtain paper copies of the proxy materials, including a voting instruction card, if you so desire. (For more information, please refer to the question and answer “ How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan ” below.)

 

If you want to vote using the Internet or telephone, please follow the instructions on each proxy/voting instruction card or the Notice and have the proxy/voting instruction card or the Notice available when you call in or access the voting site. In order to be included in the final tabulation of proxies, completed proxy/voting instruction cards must be received and votes cast using the Internet or telephone must be cast by the date and time noted on the card or in the Notice.

How do I vote in person?

 

For shares held of record in your name, you may vote in person by completing a ballot at the annual meeting. If you plan to vote in person but hold shares through a broker or other nominee, you must provide a “legal proxy” from the broker or nominee evidencing your authority to vote shares the broker held for your account at the close of business on March 17, 2011. You must contact your brokerage firm directly in advance of the annual meeting to obtain a legal proxy. Voting instructions with respect to shares held in the Belo Savings Plan or the A. H. Belo Savings Plan must be submitted by May 8, 2011, and may not be provided at the meeting.

 

Blank ballots will be available at the registration table at the meeting. Completed ballots may be deposited at the registration table and a call for completed ballots will be made during the course of the meeting prior to the close of the polls.

 

Can I change my vote or revoke my proxy prior to the final voting?

 

Yes. For shares held of record in your name, you may revoke your proxy (including an Internet or telephone vote) by:

 

 

If your shares are held through a broker or nominee, contact that broker or nominee if you wish to change your voting instructions.

 

For information on how to revoke or modify previously given voting instructions with respect to shares held through one of the Savings Plans, please see “ How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan ” below.

 

How do I vote my shares held in the Belo Savings Plan or in the A. H. Belo Savings Plan?

 

Fidelity Management Trust Company is the plan trustee for both the Belo Savings Plan and the separate A. H. Belo Savings Plan maintained by A. H. Belo (together, the “Savings Plans”). Only the plan trustee can vote the shares held by the Savings Plans. If you participate in either of these Savings Plans and had full shares of Belo Corp. common stock credited to your account as of the record date, you received a Notice in lieu of paper copies of our proxy materials. The Notice includes instructions on how to access the proxy materials over the Internet and how to request a printed set of the proxy materials, including a voting instruction card, if you desire to do so. The Notice also has information on how to provide your voting instructions to the plan trustee via the Internet or telephone. You will not be able to vote these shares in person at the annual meeting.

 

Because of the time required to tabulate voting instructions from participants in the Savings Plans before the annual meeting, the trustee must receive your voting instructions by May 8, 2011. If you sign, date, and return a paper voting instruction card but do not check any boxes on the card, the trustee will vote your shares FOR the nominees standing for election as directors named in this proxy statement, FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, FOR the approval of the advisory resolution on executive compensation (say-on-pay), and for THREE YEARS with respect to the frequency of future say-on-pay advisory votes. In addition, at its discretion, the trustee of the Savings Plans will be authorized to vote on any other matter that properly may come before the meeting or any adjournment or postponement of the meeting. If the trustee does not receive instructions from you (by Internet, telephone or voting instruction card) by May 8, 2011, the trustee will vote your shares in the same proportion as the shares in your particular Savings Plan for which voting instructions have been received from other plan participants. You may revoke or modify previously given voting

instructions by May 8, 2011, by submitting a new voting instruction by Internet or telephone, filing with the trustee either a written notice of revocation or submitting a properly completed and signed voting instruction card by that date.

 

What happens if I do not give specific voting instructions?

 

If you indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board or you sign and return a proxy card or voting instruction form without giving specific voting instructions, then the proxy holders or the trustee of the Savings Plans, as appropriate, will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement, as follows: FOR the nominees standing for election as directors named in this proxy statement, FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, FOR approval of the advisory resolution on executive compensation (say-on-pay), and for THREE YEARS with respect to the frequency of future say-on-pay advisory votes. In addition, the proxy holders or the trustee of the Savings Plans, as appropriate, may vote in their discretion on any other matter that properly may come before the annual meeting or any adjournment or postponement of the annual meeting.

 

If you hold your shares through a broker, and you do not provide any voting instructions on the Internet or by telephone and do not return a voting instruction form, your broker may vote your shares at its discretion only on certain “routine matters.” If the organization that holds your shares does not receive any voting instructions from you, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote your shares with respect to “non-routine” matters. This is generally referred to as a “broker non-vote.”

 

Which proposals are considered “routine” or “non-routine”?

 

The Company believes that Proposal Two, the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm, is a “routine matter” on which brokers will be permitted to vote uninstructed shares. With respect to all other matters, however, your broker may not vote your shares for you without instructions and the aggregate number of unvoted shares is reported as the “broker non-vote.” The Company believes that the election of directors (Proposal One), approval of the advisory resolution on executive compensation (say-on-pay) (Proposal Three), and the advisory vote on the frequency of future say-on-pay votes (say-on-frequency) (Proposal Four) are not “routine matters” and a broker or other nominee will not be permitted to vote any uninstructed shares on Proposals One, Three and Four.

 

How are broker non-votes and abstentions treated?

 

In the election of directors, abstentions and broker non-votes have no effect. For matters requiring majority approval, abstentions have the effect of negative votes, meaning that abstentions will be counted in the denominator, but not the numerator, in determining whether a matter has received sufficient votes to be approved. Broker non-votes are not treated as shares entitled to vote on matters requiring majority approval and are excluded from the calculation.

 

What vote does the Board recommend?

 

The Board recommends a vote:

 

FOR all director nominees named in this proxy statement;

 

FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm;

 

FOR approval of the advisory resolution on executive compensation (say-on-pay); and

 

To conduct future say-on-pay advisory votes every THREE YEARS.

 

With respect to any other matter that properly comes before the meeting, the proxy holders will vote in their own discretion.

What number of votes is required to approve each proposal?

 

4    Election of directors (Proposal One) — The affirmative vote of a plurality of the voting power represented at the annual meeting and entitled to vote is required for the election of directors. This means that the nominees receiving the highest number of votes cast for the number of positions to be filled are elected. You do not have the right to cumulate votes in the election of directors. In other words, you cannot multiply the number of shares you own by the number of directorships being voted on and then cast the total for only one candidate or among any number of candidates as you see fit. Votes that are instructed to be withheld with respect to the election of one or more directors will not be voted for the director or directors indicated, although they will be counted for purposes of determining whether a quorum is present. Shares held in broker or street name cannot be voted on this proposal without your instruction.

 

Additionally, if an incumbent director does not receive the affirmative vote of at least a majority of the votes cast with respect to that director’s election at the annual meeting (which for this purpose includes votes cast “for” the director’s election and votes to withhold authority with respect to the director’s election), then that director is required to promptly tender his or her resignation and the Board will act on such resignation as provided in the Company’s Corporate Governance Guidelines, the applicable portion of which is attached to this proxy statement as Appendix A. All nominees standing for election at the 2011 annual meeting of shareholders are incumbent directors.

 

4    Ratification of appointment of independent registered public accounting firm (Proposal Two) — The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for 2011. With respect to shares held in broker or street name, your broker has discretion to vote any uninstructed shares on this matter.

 

4    Approval of advisory resolution regarding executive compensation (say-on-pay) (Proposal Three) — The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required to approve this advisory resolution. Shares held in broker or street name cannot be voted on this proposal without your instruction.

 

4    Advisory vote regarding the frequency of future say-on-pay votes (say-on-frequency) (Proposal Four) — The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required to approve this advisory recommendation to the Board. Shares held in broker or street name cannot be voted on this proposal without your instruction.

 

4    Other matters — Unless otherwise required by law or the Company’s Certificate of Incorporation, the affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote is required for other matters that properly may come before the meeting.

 

Where can I find the voting results of the annual meeting?

 

The preliminary voting results will be announced at the annual meeting. The final voting results will be tallied by the inspector of election and published in the Company’s Current Report on Form 8-K, which the Company is required to file with the SEC within four business days following the annual meeting.

 

Your proxy is being solicited on behalf of Belo’s Board of Directors. In addition to use of the mails, the solicitation may also be made by use of facsimile, the Internet or other electronic means, or by telephone or personal contact by directors, officers, employees, and agents of Belo. Belo pays the costs of this proxy solicitation.

 

We have hired Morrow & Co., LLC to assist in soliciting proxies from beneficial owners of shares held in the names of brokers and other nominees, and have agreed to pay Morrow & Co., LLC a fee of $7,000 plus its related costs and expenses. We also supply brokers, nominees, and other custodians with proxy forms, proxy statements, and annual reports for the purpose of sending proxy materials to beneficial owners. We reimburse brokers, nominees, and other custodians for their reasonable expenses.

 

The following tables set forth information as of March 17, 2011, about the beneficial ownership of Belo Corp. common stock by our current directors, nominees for election as director, the executive officers named in the Summary Compensation Table on page 35 of this proxy statement (the “named executive officers” or “NEOs”), all directors and executive officers as a group, and by each person known to Belo to own more than 5% of the outstanding shares of Belo Series A or Series B common stock. At the close of business on March 17, 2011, there were 93,294,278 Series A shares, 10,272,667 Series B shares, and 103,566,945 combined Series A and Series B shares issued and outstanding.

 

Under the rules of the SEC, the beneficial ownership of a person or group includes not only shares held directly or indirectly by the person or group but also shares the person or group has the right to acquire within 60 days of the record date (to and including May 16, 2011 ) pursuant to exercisable options and convertible securities. The information below, including the percentage calculations, is based on beneficial ownership of shares rather than direct ownership of issued and outstanding shares, except as described in footnote (1) to the table below.

 

Unless otherwise indicated, each person listed below has sole voting power and sole dispositive power with respect to the shares of common stock indicated in the table as beneficially owned by such person. Series A common stock has one vote per share and Series B common stock has 10 votes per share. Consequently, the voting power of Series B holders is greater than the number of shares beneficially owned. For example, the shares of Belo common stock beneficially owned by all directors and named executive officers as a group, representing 13.6% of the outstanding shares of Series A and Series B common stock, have combined voting power of 57.8%.

 

Belo Corp. Stock Ownership of Directors and Executive Officers

 

 

 

 

 

 

Belo Corp. Stock Ownership of Other Principal Shareholders (greater than 5%)

 

 

 

 

Equity Compensation Plan Information

 

The following table provides information regarding Series A and Series B common stock authorized for issuance under Belo’s equity compensation plans as of December 31, 2010; the amounts set out in the table do not include any adjustment for risk of forfeiture:

 

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Federal securities laws require that Belo’s executive officers and directors, and persons who own more than ten percent of a registered class of Belo common stock, file reports with the SEC within specified time periods disclosing their beneficial ownership of Belo common stock and any subsequent changes in beneficial ownership of Belo common stock. These reporting persons are also required to furnish us with copies of these reports. Based on information provided to us by these reporting persons or otherwise, we believe that all filings required to be made by the reporting persons during 2010 were made on a timely basis, except the reporting on Form 5 by Henry Becton of gifts in September 2009 of 3,226 Series A shares between two family trusts for which he served as co-trustee and is a contingent beneficiary.

 

Belo’s bylaws provide that the Board of Directors comprises five to 10 directors, divided into three classes, approximately equal in number, with staggered terms of three years so that the term of one class expires at each annual meeting. The bylaws further provide that a director will retire on the date of the annual meeting of shareholders next following his or her 68th birthday.

 

Selection, Qualifications and Experience of Directors

 

The Nominating and Corporate Governance Committee of the Board of Directors is responsible for identifying director candidates and making recommendations to the Board. The Board is ultimately responsible for nominating candidates for election to the Board. The Committee employs a variety of methods for identifying and evaluating director nominees. Candidates may come to the Committee’s attention through current Board members, shareholders, or other persons. In evaluating director candidates, the Committee considers a variety of criteria, including an individual’s character and integrity; business, professional, and personal background; skills; current employment; community service; and ability to commit sufficient time and attention to activities of the Board. The Committee also may take into account any specific financial, technical, or other expertise and the extent to which such expertise would complement the Board’s existing mix of skills and qualifications. The Committee considers these criteria in the context of the perceived needs of the Board as a whole. (For more information regarding the Nominating and Corporate Governance Committee and the nominee selection and evaluation process, please see “Corporate Governance — Committees of the Board — Nominating and Corporate Governance Committee” on page 23 of this proxy statement.)

 

Based on a review of the background and experiences of the directors, we believe that each of our directors, including those proposed for election to the Board at the 2011 annual meeting, possesses the professional and personal qualifications necessary for service on the Belo Board of Directors. In the individual biographies below, we have highlighted particularly noteworthy attributes of each Board member that led to the Board’s conclusion that the person should serve as a director, in light of Belo’s business and structure. In addition, we note that several of our directors reside in local Belo markets which, together with the length of service to the Company, has provided them with significant exposure to both our business and the communities in which we operate.

 

Nominees for Belo Directors

 

The following candidates are nominated by the Board and each is an incumbent director most recently elected at the 2008 annual meeting. The independence of each director is addressed under “Corporate Governance — Director Independence” on page 22. Class I directors will be eligible to serve a three-year term until the 2014 annual meeting.

 

Each independent director serves on each of the three standing committees of the Board (Audit, Compensation, and Nominating and Corporate Governance); Mr. Decherd, Mr. Moroney, Mrs. Herndon, and Ms. Shive do not serve on any standing committee of Belo’s Board of Directors.

Class I Directors (Current terms expire at Belo’s 2011 annual meeting)

 

 

Vote Required for Approval

 

The affirmative vote of a plurality of the voting power represented at the annual meeting and entitled to vote is required for the election of directors. This means that the nominees receiving the highest number of votes cast for the number of positions to be filled are elected. For additional information, please see “ What number of votes is required to approve each proposal ?” on page 5 of this proxy statement.

 

Recommendation of the Board of Directors

 

The Board of Directors recommends a vote FOR Proposal One, for the election of each of the nominees named in this proxy statement.

Directors Continuing in Office

 

Information regarding our directors continuing in office is provided below.

 

Class II Directors (Terms expire at Belo’s 2012 annual meeting)

 

Class III Directors (Terms expire at Belo’s 2013 annual meeting)

 

 

Ernst & Young LLP served as Belo’s independent auditors for the year ended December 31, 2010. The Audit Committee has appointed Ernst & Young LLP to serve in such capacity for 2011, and as a matter of good corporate governance has determined to submit the appointment of Ernst & Young LLP for ratification by the shareholders. If the shareholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee will consider the appointment of other independent registered public accounting firms.

 

Representatives of Ernst & Young LLP will be present at the annual meeting. They will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions presented at the annual meeting.

 

The table below sets forth the Ernst & Young LLP fees related to the audits of our financial statements for the years ended December 31, 2010 and December 31, 2009 and the reviews of our financial statements for the quarterly periods within those years, and all other fees Ernst & Young LLP has billed us for services rendered during the years ended December 31, 2010 and December 31, 2009:

 

 

 

 

The Audit Committee has adopted a policy and procedures that set forth the manner in which the Audit Committee will review and approve all services to be provided by Ernst & Young LLP before the firm is retained to provide such services. The policy requires Audit Committee pre-approval of the terms and fees of the annual audit services engagement, as well as any changes in terms and fees resulting from changes in audit scope or other items. The Audit Committee also pre-approves, on an annual basis, other audit services, and audit-related and tax services set forth in the policy, subject to estimated fee levels pre-approved by the Committee. Any other services to be provided by the independent auditors must be separately pre-approved by the Audit Committee. In addition, if the fees for any pre-approved services are expected to exceed by 5% or more the estimated fee levels previously approved by the Audit Committee, the services must be separately pre-approved by the Committee. As a general guideline, annual fees paid to the independent auditors for services other than audit, audit-related, and tax services should not exceed one-half the dollar amount of fees to be paid for these three categories of services collectively. The Audit Committee has delegated to the Committee chairman and other Committee members the authority to pre-approve services in amounts up to $500,000 per engagement. Services pre-approved pursuant to delegated authority must be reported to the full Committee at its next scheduled meeting. The Company’s Chief Financial Officer reports periodically to the Audit Committee on the status of pre-approved services, including projected fees. All of the services reflected in the above table were approved by the Audit Committee.

Vote Required for Approval

 

The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote on this proposal is required for approval.

 

Recommendation of the Board of Directors

 

The Board of Directors recommends a vote FOR Proposal Two, the ratification of the appointment of Ernst & Young LLP as Belo’s independent registered public accounting firm.

 

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) provides Belo shareholders with a vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules.

 

The Company and the Belo Board of Directors recognize that executive compensation is an important matter for our shareholders. This proposal, commonly known as a “say-on-pay” proposal, gives you, as a shareholder, the opportunity to endorse or not endorse on an advisory basis our 2010 executive compensation programs and policies and the compensation paid to the named executive officers. The “Compensation Discussion and Analysis” (“CD&A”) section starting on page 28 of this proxy statement together with the executive compensation tables starting on page 35 of this proxy statement and related disclosures set forth the compensation paid to our named executive officers for 2010.

 

As described in more detail in the CD&A section, the Compensation Committee of the Belo Board of Directors oversees the Company’s overall executive compensation structure, policies and programs, and has responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy. The Compensation Committee strives to set the compensation of the Company’s executive officers to be competitive and to be consistent with the Company’s strategy, sound corporate governance principles, and shareholder interests and concerns. The core of the Company’s compensation philosophy has been and continues to be to structure our compensation programs so that the compensation our executive officers receive meets the Company’s objectives of a competitive compensation program as outlined in the CD&A. In particular, the Compensation Committee strives to make cash and equity awards based on performance metrics that are directly linked to financial performance and retention.

 

As described in the CD&A, we believe our compensation program is strongly aligned with the long-term interests of our shareholders. As you consider this proposal, we urge you to read the CD&A section and the tabular and narrative disclosures on executive compensation for additional details on executive compensation, including the more detailed information about the Company’s compensation philosophy and objectives and the past compensation of our named executive officers.

 

As discussed in the CD&A contained in this proxy statement, the Compensation Committee of the Board believes that executive compensation for 2010 is justified by the performance of the Company in an extremely difficult environment, is reasonable and reflects the Committee’s carefully considered approach.

 

In accordance with recently adopted Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a matter of good corporate governance, we are asking our shareholders to approve the following advisory resolution at the 2011 annual meeting of shareholders:

 

“RESOLVED, that the shareholders of Belo Corp. (“Belo” or the “Company”) approve, on an advisory basis, the compensation of Belo’s named executive officers as disclosed in the “Compensation Discussion and Analysis” section, the Summary Compensation Table and the related compensation tables, notes and narrative contained in the 2011 proxy statement.”

 

Vote Required for Approval

 

The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote on this proposal is required for advisory approval of this proposal.

 

The advisory vote under this Proposal Three is non-binding on the Company and its Board of Directors. The vote will not overrule any decisions by the Company or the Board, will not create or imply any change to the fiduciary duties on the part of the Company or the Board, and will not create or imply any additional fiduciary duty on the part of the Company or the Board. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our shareholders, and will carefully consider the outcome of the vote when making future compensation decisions for our named executive officers.

 

Recommendation of the Board of Directors

 

The Board of Directors recommends a vote FOR Proposal Three, approval of the advisory resolution on executive compensation.

 

Related to the advisory “say-on-pay” vote addressed in Proposal Three above, and in accordance with the recently adopted Section 14A of the Exchange Act, we are asking our shareholders to vote, on an advisory, non-binding basis, on how frequently future advisory votes on executive compensation should occur. By voting on this Proposal Four, shareholders may indicate whether they would prefer an advisory vote on executive compensation once every one, two, or three years. Shareholders may also abstain from voting on this proposal.

 

After careful consideration, the Company has determined that holding an advisory vote on executive compensation every three years is the most appropriate policy for the Company, and recommends that shareholders vote for future say-on-pay advisory votes to occur every three years (a triennial vote). We believe that this frequency is appropriate for a number of reasons. Most significantly, our compensation programs are designed to reward long-term performance and to take into account the cyclical nature of the Company’s businesses which fluctuates with advertising demand relating, for example, to election years, the Olympics and other major U.S. sports events. Thus, we encourage our shareholders also to evaluate our executive compensation programs over a multi-year horizon and to review the compensation of our named executive officers over the past three years, as reported in the Summary Compensation Table on page 35 of this proxy statement. In addition, we believe that a triennial advisory vote on executive compensation reflects the appropriate time frame to enable the Compensation Committee and the Board of Directors to evaluate the results of the most recent advisory vote on executive compensation, to discuss the implications of that vote, to develop and implement any adjustments to our executive compensation programs that may be appropriate in light of a past advisory vote on executive compensation, and for shareholders to see and evaluate any such adjustments to our executive compensation programs.

 

The Board of Directors is aware of and took into account views that some have expressed in support of conducting an annual advisory vote on executive compensation. We are aware that some shareholders believe that annual advisory votes will enhance or reinforce accountability. However, we have been in the past and will in the future continue to be open in our communications with our shareholders on a number of topics and in various forums. Thus, we view the advisory vote on executive compensation as an additional, but not exclusive, means for our shareholders to communicate with us regarding their views on the Company’s executive compensation programs. In addition, because our executive compensation programs have typically not changed materially from year-to-year absent severe changes in economic conditions and are designed to operate over the long-term and to enhance long-term performance, we are concerned that an annual advisory vote on executive compensation could lead to a near-term perspective inappropriately bearing on our executive compensation programs. Finally, although we currently believe that holding an advisory vote on executive compensation every three years will reflect the right balance of considerations in the normal course, we will periodically reassess that view and can provide for an advisory vote on executive compensation on a more frequent basis if changes in our compensation programs or other circumstances suggest that such a vote would be appropriate.

 

Vote Required for Approval

 

The affirmative vote of a majority of the voting power represented at the annual meeting and entitled to vote on this proposal is required for advisory approval of this proposal. Shareholders are not voting to approve or disapprove the Board’s recommendation. The advisory vote under Proposal Four is non-binding on the Company and its Board of Directors. The vote will not overrule any decisions by the Company or the Board of Directors, will not create or imply any change to the fiduciary duties on the part of the Company or the Board of Directors and will not create or imply any additional fiduciary duty on the part of the Company or the Board. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our shareholders, and will carefully consider the outcome of the vote when making future decisions regarding the frequency of advisory votes on executive compensation for our named executive officers.

 

Recommendation of the Board of Directors

 

With respect to Proposal Four, the Board of Directors recommends that shareholders vote to conduct future advisory say-on-pay votes every THREE YEARS.

 

Introduction

 

Our Board periodically reviews and evaluates Belo’s corporate governance policies and practices in light of the Sarbanes-Oxley Act of 2002 and subsequent legislation, SEC regulations, corporate governance listing standards adopted by the New York Stock Exchange (“NYSE”), and evolving best practices. The Board has formalized its corporate governance guidelines, approved a code of business conduct and ethics applicable to Belo’s directors, management and other Belo employees, and adopted a charter for each Board committee. The Nominating and Corporate Governance Committee reviews Belo’s corporate governance guidelines and Board committee charters annually and recommends changes to the Board as appropriate. Our corporate governance documents are posted on our Web site at www.belo.com under “About Belo — Corporate Governance,” and are available in print, without charge, upon written or oral request to Belo Corp., Attention: Secretary, 400 South Record Street, Dallas, Texas 75202, (214) 977-6606. Belo’s corporate governance documents codify our existing corporate governance practices and policies.

 

Director Independence

 

To assist it in making determinations of a director’s independence, the Board has adopted independence standards, which are set forth in Belo’s corporate governance guidelines, the applicable portion of which is attached to this proxy statement as Appendix B. These standards incorporate the director independence criteria included in the NYSE listing standards, as well as additional, more stringent criteria established by the Board. The Board has determined that the following directors are independent under these standards: Henry Becton, Judy Craven, Wayne Sanders, Anne Szostak, Mac Tichenor, and Lloyd Ward. Each of the Audit, Compensation, and Nominating and Corporate Governance Committees is composed entirely of independent directors. In accordance with SEC requirements, NYSE listing standards and the independence standards set forth in Belo’s corporate governance guidelines, all members of the Audit Committee meet additional independence standards applicable to audit committee members.

 

Meetings of the Board

 

The Board held six meetings in 2010. Each incumbent director attended at least 75% of the aggregate of (1) the total number of meetings held by the Board and (2) the total number of meetings held by all committees on which he or she served. Directors are expected to attend annual meetings of shareholders, and all of the current directors attended the 2010 annual meeting.

 

Committees of the Board

 

Each of the Board’s standing committees consists of independent directors Henry Becton, Judy Craven, Wayne Sanders, Anne Szostak, Mac Tichenor, and Lloyd Ward.

 

The Belo Board has the following committees:

 

Audit Committee.   Wayne Sanders chairs the Audit Committee. The Audit Committee is responsible for the appointment, compensation, and oversight of the independent auditors. The Audit Committee also represents the Board in overseeing Belo’s financial reporting processes, and, as part of this responsibility, consults with our independent auditors and with personnel from Belo’s internal audit and financial staffs with respect to corporate accounting, reporting, and internal control practices. The Audit Committee met six times during 2010.

 

The Board has determined that at least one member of the Audit Committee meets the NYSE standard of having accounting or related financial management expertise. The Board has also determined that at least one member of the Audit Committee, Wayne Sanders, the chairman of the Audit Committee, meets the SEC criteria of an “audit committee financial expert.”

 

Compensation Committee.   Anne Szostak chairs the Compensation Committee. The Compensation Committee evaluates the performance of the Chief Executive Officer and sets his or her compensation level

based on this evaluation. The Compensation Committee also approves the compensation of the other executive officers and compensation for non-management directors, and administers, among other plans, the Company’s 1995 Executive Compensation Plan, 2000 Executive Compensation Plan, Amended and Restated 2004 Executive Compensation Plan (collectively, “Executive Compensation Plans”), The G. B. Dealey Retirement Pension Plan, the Belo Savings Plan, the Change in Control Severance Plan, the Pension Transition Supplement Plan, and the Pension Transition Supplement Restoration Plan. The Committee also has responsibility for senior executive succession planning. The Compensation Committee met five times during 2010.

 

To assist the Committee and management in assessing and determining appropriate, competitive compensation for our executive officers and directors, the Committee annually engages an outside compensation consultant. Starting in February 2007, the Compensation Committee has annually engaged Mercer Human Resource Consulting (“Mercer”), a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (“Marsh”), as its compensation consultant. The scope of Mercer’s engagement is to assist the Committee with its responsibilities related to the Company’s executive and Board-level compensation programs. For additional information regarding the operation of the Compensation Committee, including the role of consultants and management in the process of determining the amount and form of executive compensation, see the Company’s CD&A below.

 

Mercer’s fees for executive compensation consulting to the Committee in 2010 were $105,600. These fees and the engagement of Mercer for executive compensation consulting services were pre-approved by the Committee in accordance with its Compensation/Benefits Consulting Services Pre-Approval Policy adopted in 2009. The Company has had a long-standing relationship with Mercer and/or its Marsh affiliates to provide other services, unrelated to executive compensation. These services include actuarial services, consulting, and data management for the Company’s retirement plans, and health and welfare plans, as well as services related to the Company’s property, casualty, and general liability risk analysis and insurance programs. The aggregate expense for these other services in 2010 was $234,600, exclusive of insurance premiums. The decision to engage Mercer or its Marsh affiliates for these other services unrelated to executive compensation consulting was made by Company management, and these services and related fees were not separately approved by the Compensation Committee or the Board.

 

Nominating and Corporate Governance Committee.   The Nominating and Corporate Governance Committee is chaired by Henry Becton, who also serves as the Board’s Lead Director. The responsibilities of the Nominating and Corporate Governance Committee include the identification and recommendation of director candidates and the review of qualifications of directors for continued service on the Board. The Nominating and Corporate Governance Committee also has responsibility for shaping Belo’s corporate governance practices, including the development and periodic review of the corporate governance guidelines and the Board committee charters. The Nominating and Corporate Governance Committee met three times in 2010.

 

In evaluating director nominees, the Nominating and Corporate Governance Committee considers a variety of criteria, including an individual’s character and integrity; business, professional, and personal background; skills; current employment; community service; and ability to commit sufficient time and attention to the activities of the Board. It also may take into account any specific financial, technical or other expertise and the extent to which such expertise would complement the Board’s existing mix of skills and qualifications. The Committee considers these criteria in the context of the perceived needs of the Board as a whole and seeks to achieve a diversity of backgrounds and perspectives on the Board. The Board does not have a formal diversity policy, but does endeavor to comprise itself of members with a broad mix of professional and personal backgrounds. The Committee assesses the effectiveness of its criteria and its efforts at achieving a diversity of backgrounds and perspectives on the Board when evaluating and recommending new director candidates.

 

The Nominating and Corporate Governance Committee employs a variety of methods for identifying and evaluating director nominees. The Committee reviews the size and composition of the Board as part of the annual Board evaluation process and makes recommendations to the Board as appropriate. If vacancies on the Board are anticipated, or otherwise arise, the Nominating and Governance Committee considers various potential candidates for director. Candidates may come to the Committee’s attention through current Board members, shareholders, or other persons.

The policy of the Nominating and Corporate Governance Committee, as set forth in Belo’s corporate governance guidelines, is to consider a shareholder’s recommendation for nominee(s) when the shareholder supplies the information required for director nominations under the advance notice provisions set forth in Article II of Belo’s bylaws within the time periods set forth in such Article of the bylaws. Shareholders desiring to submit a nomination for director should consult Belo’s bylaws, which are available upon request. The Committee evaluates shareholder-recommended nominees based on the same criteria it uses to evaluate nominees from other sources.

 

After the Nominating and Corporate Governance Committee identifies a potential candidate, there is generally a mutual exploration process, during which Belo seeks to learn more about a candidate’s qualifications, background, and level of interest in Belo, and the candidate has the opportunity to learn more about Belo. A candidate may meet with members of the Nominating and Corporate Governance Committee, other directors, and senior management. Based on information gathered during the course of this process, the Nominating and Corporate Governance Committee makes its recommendation to the Board. If the Board approves the recommendation, the candidate is nominated for election by Belo’s shareholders. On occasion, the Board elects a director between annual meetings of shareholders. In those instances, the new director is nominated for re-election by Belo’s shareholders at the first annual meeting after his or her interim election to the Board.

 

The Board convenes executive sessions of non-management directors without Company management at each regularly-scheduled meeting. The Lead Director is responsible for presiding at the executive sessions of the non-management directors. In addition, the independent directors meet in executive session at least annually. Board committee chairs preside at executive sessions of their respective committees.

 

Board Leadership Structure

 

In connection with the Company’s spin-off of A. H. Belo in 2008, the Belo Board decided to separate the positions of Chairman of the Board and Chief Executive Officer as it believes this Board leadership structure aligns with the current composition and experience of the Company’s Board. Robert Decherd, the Company’s former Chief Executive Officer, serves as non-executive Chairman of the Board, and Dunia Shive serves as president and Chief Executive Officer. The Board believes that having our former Chief Executive Officer serve as non-executive Chairman of the Board is appropriate because of his familiarity with the Company’s business. In addition, the Board has established the position of Lead Director in order to continue to provide a designated leadership role for an independent director on Board matters. Currently, Henry Becton serves as Lead Director. In addition to presiding at meetings of the non-management directors, the Lead Director has the authority to call executive sessions of the independent directors; serves as a liaison between the Chairman, the CEO, and the independent directors; provides input on the agenda for Board meetings; and chairs the Nominating and Corporate Governance Committee.

 

The Board is responsible for determining the appropriate Board leadership structure and evaluates the continued appropriateness of its leadership structure from time to time. The Board has determined that the current leadership structure, which consists of one individual serving as non-executive Chairman of the Board, one individual serving as Chief Executive Officer, and one individual serving as Lead Director, is effective and appropriate for the Company’s current needs.

 

Board Risk Oversight

 

At least annually, Company management provides the Audit Committee with a report regarding its enterprise risk assessment. The report identifies areas of enterprise risk, and aligns managerial and Board-level oversight, including at the Board committee level, and responsibility with various categories of risk. In order to prepare the report, the Company’s Internal Audit department interviews Belo business leaders at the corporate and operating unit level about the risk factors identified by the Company in its SEC filings, as well as other potential risks, to confirm Internal Audit’s baseline risk assessment. In addition, in 2010, the Company increased the scope of its risk assessment process by surveying general managers, directors of sales, and controllers at operating units that were not visited as part of the Company’s annual Internal Audit plan. The risk assessment results were reviewed with management to determine if any future adjustments to the audit plan were needed.

The Audit Committee discusses the report’s findings with management. The Audit Committee oversees management’s risk assessment, including reviewing the Company’s risk portfolio and evaluating management’s approach to addressing identified risks. As specified in the Audit Committee’s charter, one of the specific duties and responsibilities of the Audit Committee is to review and discuss the Company’s policies with respect to risk assessment and risk management. While the Audit Committee has primary oversight responsibility for the risk assessment and management process, various other committees of the Board also have responsibility for oversight of risk management. For example, our Human Resources department and Compensation Committee consider the risks associated with our compensation policies and practices, as discussed below. The Nominating and Corporate Governance Committee oversees risk associated with the Company’s governance structure and processes.

 

The Board is kept informed of its committees’ risk oversight and related activities primarily through attendance at committee meetings and management reports. In addition, the Audit Committee escalates issues related to risk oversight to the full Board as appropriate so that the Board is appropriately informed of developments that could affect the Company’s risk profile and other aspects of its business. The Board also considers specific risk topics in connection with strategic planning and other matters. While the Board’s role in oversight of Company risk is not determinative of its leadership structure, the Board’s leadership structure helps facilitate risk assessment and review by independent directors under the leadership of the independent Lead Director.

 

Compensation Risk Assessment.   Our Human Resources department, together with the Company’s Finance, Internal Audit, Risk Management and Legal departments and independent compensation consultants, have reviewed our compensation policies and practices to determine whether those policies and practices present a significant risk to the Company. The results of this review were communicated to the Compensation Committee. Our annual incentive compensation plans have appropriate limits that discourage excessive risk taking. In addition, all leadership level employees who are in a position to affect significant policies, practices or projects have both short-term and long-term compensation at risk, which the Company believes discourages excessive risk taking and encourages supervision of risk-related activities by other employees. Our compensation policies and practices reward consistent, long-term performance by weighting leadership compensation to long-term incentives that reward operating, financial, and share price performance. Based on this review, we have concluded that Belo’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.

 

Compensation Committee Interlocks and Insider Participation

 

Henry Becton, Judy Craven, Wayne Sanders, Anne Szostak, Mac Tichenor, and Lloyd Ward served as members of Belo’s Compensation Committee during 2010. Anne Szostak has chaired the Committee since May 2009. No member of the Compensation Committee during 2010 was a current or former officer or employee of Belo or had any relationship with Belo requiring disclosure under the caption “Certain Relationships.” None of Belo’s executive officers served as a director or as a member of the compensation committee (or other committee serving an equivalent function) of any other entity that had an executive officer serving as a director or as a member of Belo’s Compensation Committee during 2010.

 

Audit Committee Report

 

As described more fully in our written charter, which is posted on the Company’s Web site at www.belo.com under “About Belo — Corporate Governance,” the Audit Committee represents the Board in its oversight of Belo’s financial reporting processes. In this context, the Audit Committee has reviewed and discussed with management and Ernst & Young LLP, the Company’s independent auditors, Belo’s audited consolidated financial statements and the audit of the effectiveness of Belo’s internal control over financial reporting. The Audit Committee has discussed with Ernst & Young LLP various matters, including the firm’s judgments as to the quality of Belo’s accounting principles and other matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee has received from Ernst & Young LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with the firm its independence from Belo and our management team.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited consolidated financial statements be included in Belo’s Annual Report on Form 10-K for the year ended December 31, 2010, for filing with the SEC.

 

Respectfully submitted,

 

Audit Committee

Wayne R. Sanders, Chairman

Henry P. Becton, Jr.

Judith L. Craven, M.D., M.P.H.

M. Anne Szostak

McHenry T. Tichenor, Jr.

Lloyd D. Ward

 

Communications with the Board

 

The Company has a process for shareholders and other interested parties to communicate with the Board. These parties may communicate with the Board by writing c/o the corporate Secretary, 400 South Record Street, Dallas, Texas 75202. Communications intended for a specific director or directors (such as the Lead Director or non-management directors) should be addressed to his, her, or their attention c/o the corporate Secretary at this address. Communications received from shareholders are provided directly to Board members at, or as part of the materials mailed in advance of, the next scheduled Board meeting following receipt of the communications. The Board has authorized management, in its discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally are not forwarded to the directors.

EXECUTIVE OFFICERS

 

Belo’s executive officers as of December 31, 2010 were as follows:

 

 

 

 

The following highlights and summarizes information regarding executive compensation and does not purport to contain all of the information that is necessary to gain an understanding of our executive compensation policies and decisions. Please carefully read the entire CD&A section and the compensation tables and related disclosures that follow for a more complete understanding of our executive compensation program.

 

Highlights of 2010

 

Belo Corp. continued to take significant steps to manage its business in an economy that has been slow to recover overall. The Company’s advertising revenue in 2010 rebounded from a very depressed 2009, aided by recovery in spot advertising and incremental political revenue. The management team continues to focus aggressively on the continued alignment of expenses with revenue to allow the Company to achieve a sustained level of profitability for its shareholders.

 

The Company produced significantly improved results in 2010 over 2009. Key results of the year included:

 

 

During 2010, the Company and A. H. Belo agreed to split The G. B. Dealey Retirement Pension Plan (the “Pension Plan”) and implemented the split effective January 1, 2011. Completion of the Pension Plan split enables the companies to manage their respective pension plans in accordance with their own considerations and strategy.

 

In 2010, the Company made certain key changes in the design and administration of its executive compensation program to improve the efficiency and effectiveness of the process. Changes were also made to recognize and reward the results of 2010, while remaining prudent in the management of our operating costs. Key changes included:

 

 

Overview of Compensation Program

 

The Compensation Committee (“Committee”) of the Belo Board of Directors oversees the Company’s overall compensation structure, policies and programs, and has responsibility for establishing, implementing and monitoring adherence to the Company’s compensation philosophy. For 2010, the primary management liaisons to the Committee were Dunia Shive, the Company’s president and Chief Executive Officer (“CEO”), and Bill Hamersly, vice president/Human Resources.

Compensation Objectives

 

The Company’s compensation policies have several important objectives:

 

 

The emphasis on some of these objectives has varied somewhat from year to year as the Company adjusts to the applicable economic operating environment.

 

Setting Executive Compensation

 

Role of the Compensation Committee.   The Committee oversees our executive compensation program, establishing and monitoring our overall compensation strategy to ensure that executive compensation supports our business objectives. In carrying out its responsibilities, the Compensation Committee, with assistance from its compensation consultant, reviews and determines the compensation (including salary, annual incentive, and long-term incentives) of our CEO and the other named executive officers of the Company. For a more complete description of the responsibilities of the Compensation Committee, see “Corporate Governance — Committees of the Board” beginning on page 22 of this proxy statement.

 

Role of the Compensation Consultant.   To assist the Committee and management in assessing and determining appropriate, competitive compensation for our executive officers, the Committee annually engages an outside compensation consultant. Since February 2007, Mercer Human Resource Consulting LLC (“Mercer”) has been retained for this purpose. Mercer reports directly to the Chair of the Compensation Committee. Design and assessment services provided by Mercer include periodic analysis of the market for total compensation of the named executive officers, including assistance in the determination of appropriate levels on long-term incentives. Mercer provides ongoing advice to the Committee with respect to executive compensation-related trends and developments within the Belo peer group, as well as best practices in broader industry, regulatory developments with respect to executive compensation and related issues, and external developments that may have an impact on Belo and its compensation programs. Mercer is also available to the Committee to provide assistance in responding to any compensation-related shareholder proposals and to maintain ongoing dialogue with the Committee Chair, attend Committee meetings as requested, and advise the Committee on any other executive compensation matters as requested by the Committee from time to time, including director compensation.

 

In December 2009, the Committee adopted a pre-approval policy that requires the Committee or the Committee Chair to pre-approve certain executive compensation consulting services and other compensation and benefit consulting services provided by the Committee’s compensation consultant. For information regarding amounts paid to Mercer or its affiliates unrelated to executive compensation consulting, see “Corporate Governance — Committees of the Board — Compensation Committee ” beginning on page 22 of this proxy statement.

 

Role of Management.   The development of proposals and recommendations for our 2010 compensation programs for our NEOs other than the CEO was handled primarily by the CEO, and the Company’s senior Human Resources executives. Management recommendations were reviewed and approved by the Compensation Committee. Proposals and recommendations for the CEO’s compensation were developed directly by the Compensation Committee, with input from Mercer, without involvement by the CEO.

 

Surveys and Determination of the Market.   In setting executive salaries for 2010, no formal review of market survey data was done. The Company’s decision to restore the reductions in salary made in 2009 was based on improved operating conditions. In a few cases where additional increases in salary were given to reflect increased responsibilities and/or promotions and when determining the share pool for usage under long-term incentive plans,

these decisions were made based on internal equity considerations and market data gathered in 2008. The data gathered in 2008 reflected information from the following group of companies:

 

 

As in prior years, given the limited size of this peer group (as discussed last year), selected data were also taken from the Towers Perrin 2009 Media Survey (“Media Survey”) and the 2009 Mercer Benchmark Database (“General Industry Data”) to supplement the decision-making process.

 

Elements of 2010 Executive Compensation

 

For 2010, the principal elements of compensation for Belo NEOs were:

 

 

The annual cash incentives (annual performance bonus) and long-term equity-based incentive compensation are provided under the Belo Amended and Restated 2004 Executive Compensation Plan (referred to as the “ECP” or the “2004 Plan”), which was approved by the Company’s shareholders in 2004 and re-approved by the Company’s shareholders at the 2009 annual meeting. Officers of the Company and its subsidiaries, including Belo’s CEO and its other executive officers, are eligible to participate in the ECP. The Committee establishes an annual performance-based incentive pool for each executive officer, as permitted by the ECP and in compliance with the performance-based compensation exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). This performance pool (3% of Belo’s consolidated adjusted net income for Ms. Shive and 1.5% of Belo’s consolidated adjusted net income for each of Mr. Hendrickson, Mr. Diaz and Mr. Kerr) provides a maximum amount for the grant of awards of cash and time-based equity incentives under the ECP that are not earned through financial performance targets, and is designed to allow for tax deductibility of the compensation awarded within the pool. It is from this pool that the Committee may approve annual cash awards of up to 25% of the target bonus allocation attributable to non-financial performance objectives and time-based restricted stock units.

 

Base Salary.   Historically, base salaries for our NEOs were reviewed annually, with adjustments made based on performance and available market compensation information. As stated earlier, in April 2009, based on continuing economic challenges, base salaries of all ECP participants were reduced by 5%, including the NEOs. These NEO salary reductions were restored in 2010. The Company’s decision to restore the salary reductions made in 2009 was based on improved operating conditions. In addition, salary increases of 14.4% and 23.8% were made to the salaries of Messrs. Diaz and Hendrickson, respectively, to reflect their expanded duties. Mr. Hendrickson was promoted to senior vice president/Chief Financial Officer in March 2010, and Mr. Diaz was promoted to president/Media Operations in April 2010. In setting executive salaries for 2010, no formal review of current market survey data was done. Following the restorations and increases, the base salaries for Ms. Shive, Mr. Hendrickson and Mr. Diaz were below the market median and the base salary for Mr. Kerr was above the median relative to the market data gathered in 2008.

 

Annual Cash Incentive Opportunity.   Consistent with our objective of motivating and rewarding executives for achievement of the Company’s financial and non-financial performance objectives, each executive officer is eligible to receive annual cash incentive compensation based on financial and non-financial performance objectives established in the annual financial plan, as submitted to the Compensation Committee and the Board at the beginning of the year. These performance objectives are established for each of our executive officers at the beginning of each year. The financial performance objectives vary from year to year and reflect the cyclical nature of the Company’s businesses due to fluctuating advertising demand, for example, relating to election years, the Olympics and other U.S. sports events, in addition to taking into consideration industry factors that include changes

in media usage habits by consumers and advertisers. Non-financial performance objectives establish a direct relationship between executive officer annual performance priorities and the overall strategic direction of the Company.

 

In December 2009, the Committee established 2010 target bonus opportunities expressed as a percentage of base salary for each of the NEOs as follows: Ms. Shive, 90%; Mr. Hendrickson, 40%; Mr. Diaz, 55%; and Mr. Kerr 55%. All of these targets were between market median and 75th percentile relative to the market data gathered in 2008 except for Mr. Hendrickson, who was below the median in light of his brief initial tenure in the CFO position.

 

Of the target bonus opportunities available to each executive officer, 75% is measured against the financial performance of the Company, specifically earnings per share (“EPS”) for 2010, as adjusted. The remaining 25% is earned through the achievement of non-financial objectives established for each individual executive. Achievement of both financial and non-financial objectives is payable within a range from zero to a maximum of 200% of the underlying target amount.

 

The Committee believes that linking bonus opportunity directly to financial performance, with an opportunity to earn a 200% payout of target bonus amount if maximum performance is achieved, provides participants with significant motivation to achieve the Company’s financial objectives while providing specific non-financial objectives for each executive serves to reward strategic and other accomplishments that benefit the long-term success of the organization.

 

Financial Performance Component.   Historically, performance at “plan” yielded a bonus at 100% of the target award opportunity. However, given that the Company’s financial plan for 2010 was below historic levels due to expected economic conditions, management recommended and the Committee approved a structure for 2010 where performance at “plan” produced an incentive payout at 75% of the target bonus opportunity rather than 100%. The rest of the payout scale was recalibrated accordingly. The resulting 2010 EPS goals based on the Company’s financial plan are shown in the table below.

 

 

The Compensation Committee determined 2010 EPS to be $0.82 for this purpose, which exceeded the maximum performance level. The EPS results reflect adjustments made at the discretion of the Compensation Committee related to unplanned retransmission revenue, tax refund-related items, and performance-based compensation expense. Without the adjustment, EPS as reported by the Company was $0.83. The Compensation Committee confirmed the financial performance results achieved for 2010 and awarded the financial performance component of the annual cash incentive for the executive officers at 200% of target. Based on financial performance, annual incentive payouts for this component were $1,046,250 for Ms. Shive; $180,000 for Mr. Hendrickson; $412,500 for Mr. Diaz; and $412,500 for Mr. Kerr.

 

Non-Financial Performance Component.   The 2010 individual non-financial objectives for Ms. Shive and the other named executive officers encompassed objectives related to strategic investments and relationships; human resource initiatives, including organizational alignment, leadership talent, compensation and benefits of non-executive employees; asset and operations reviews; separation of the Pension Plan; investor relations; risk management; and, other matters. At the end of 2010, Ms. Shive and the other executive officers provided the directors with self-assessments of their individual performance with respect to their non-financial objectives. The Committee discussed this information and the evaluations of Ms. Shive submitted by each director. Based on this and other information, the Committee determined to award Ms. Shive a bonus amount of $261,563 for achievement of most of her individual non-financial objectives for 2010.

 

As to the other named executive officers, each of whom reports to Ms. Shive, she evaluated their individual 2010 performance, discussed her evaluations with the Committee, and recommended bonus awards for each at the maximum level. Based on this and other information, the Committee determined to award the named executive

officers other than Ms. Shive the following bonus amounts for achievement of substantially all of their respective 2010 individual non-financial objectives: Mr. Hendrickson ($60,000); Mr. Diaz ($137,500); and Mr. Kerr ($137,500).

 

Additionally, as disclosed in the Company’s 2010 proxy statement, in March 2010, Dennis Williamson was granted a special award of $200,000 in recognition of his 27 years of service to Belo Corp. (and its predecessors) and to commemorate his retirement from the Company effective March 5, 2010.

 

Long-Term Equity Incentive Compensation.   Historically, the Company has awarded long-term equity incentive grants, or LTI compensation, to executive officers as part of its overall compensation package. These awards are designed to offer competitive compensation that encourages the retention and motivation of key executives, and rewards them based upon market-driven results. Generally, the Committee determines each executive officer’s intended annual LTI compensation value, and then determines the allocation of the LTI compensation award among the types of equity instruments available under the ECP, which include stock options, time-based restricted stock units (“TBRSUs”), performance-related restricted stock units (“PBRSUs”), and a variety of other forms of LTI. The Committee believes these awards support the Company’s compensation objectives as follows: stock options encourage and reward strong stock price performance, thus aligning executive’s interests with those of shareholders, TBRSUs encourage executives to remain with the Company and to focus on its long-term success, and PBRSUs reward financial and operating performance. Additional details on these awards are outlined below.

 

Stock Option Awards.   Generally, stock option awards are granted for shares of Belo Series B common stock at an exercise price equal to the closing market price of Belo’s Series A common stock on the date of grant. Option awards to executive officers and other eligible Company employees vest 40% on the first anniversary of the date of grant, an additional 30% on the second anniversary, and the remaining 30% on the third anniversary of the date of grant. All options expire on the tenth anniversary of the date of grant.

 

Time-Based Restricted Stock Unit Awards.   TBRSUs awarded to ECP participants, including executive officers, are based on continued employment with the Company and vest 100% at the end of a three-year period. The Committee believes that the three-year cliff vesting feature of the TBRSUs optimizes the retention benefit of this form of award, and because the ultimate value of the award depends on Belo’s stock price, aligns the recipient’s interest with the maximization of shareholder value. TBRSU awards made to executive officers are granted following determination of the performance incentive pool amount set for each executive, as discussed previously.

 

Performance-Related Restricted Stock Unit Awards.   PBRSUs may be awarded, and historically have been earned, based upon the same performance criteria, financial performance achievement levels, and payout levels established annually for short-term cash incentives. After the actual number of PBRSUs earned is determined following the close of the fiscal year, the PBRSUs typically vest at a rate of 33 1 / 3 % per year over a three-year period.

 

2010 Awards.   For 2010, to improve the efficiency and effectiveness of the executive compensation process, Belo made certain adjustments to its past practices with respect to the timing of compensation decisions and actions that affect participants in the ECP so that all elements of executive compensation, and in particular, long-term incentive awards for the NEOs, are established in the first quarter of the year. Previously, the Committee would grant equity at the end of the year based on an assessment of performance over the year. This streamlined approach for decision-making and reporting eliminated the historical two-step approach to granting equity awards that was followed in previous years.

 

The determination of LTI grant levels for 2010 reflected several factors. Considering the unprecedented decline in the stock market and the impact on the television industry sector, management recommended and the Committee agreed to establish a target pool of shares representing an appropriate dilution level for making LTI award recommendations. In determining the size of the pool of shares, the Company also reviewed the 2008 peer group data, the 2009 Media Survey and the General Industry Data referenced above. Mercer also provided analysis and counsel for this process. However, overall determination as to the size of the pool was based primarily on the Company’s desire to maintain the overall dilutive effect at an acceptable level.

Based primarily on dilution considerations, the Company targeted aggregate LTI awards for all LTI program participants, including the NEOs, that would not exceed 2% dilution of the Company’s outstanding common stock. Utilizing that pool of LTI awards, management then developed LTI award recommendations for eligible LTI program participants, including its NEOs. Management recommended and the Committee determined that LTI awards for 2010 be allocated 50% in stock options and 50% in TBRSUs. Although PBRSUs have been granted in prior years, none were granted for 2010 performance due to the difficulty of setting performance goals in an uncertain environment.

 

These individual recommendations were further adjusted based on individual performance levels of eligible LTI program participants. These recommendations were presented by management to the Committee, which had full access to Mercer, Ms. Shive and senior Human Resources management who were involved in the formulation of recommendations. The Committee and the non-management members of the Board evaluated the recommendations and the Committee determined the LTI awards for the NEOs. As noted earlier, Ms. Shive did not participate in any discussions regarding the awards for her as the president and CEO.

 

Changes to Executive Compensation Program for 2011.   The Company granted both TBRSUs and PBRSUs in 2011, with an LTI mix of 40% and 60%, respectively. While cash incentives continue to be measured by EPS performance, the PBRSUs will be earned based on achievement of an adjusted, consolidated EBITDA target set by the Compensation Committee. For 2011, performance at “plan” will yield a bonus at 100% of the target award opportunity for both PBRSUs and cash incentives. The Compensation Committee does not intend to grant stock options to existing management in 2011.

 

Retirement Benefits.   All Belo employees, including each of the NEOs, are eligible to participate in the Belo Savings Plan, the Company’s qualified 401(k) plan. Prior to April 2009, all employee contributions up to 6% of eligible pay were matched at a rate of 75% by the Company, subject to IRS compensation limits. However, based on the economic challenges experienced by the Company during 2009, the decision was made to suspend Company matching contributions beginning in April 2009. Employees were still afforded the opportunity to make tax-deferred contributions to the Belo Savings Plan and manage the investment of their savings through an independent record keeper. Effective January 1, 2011, the Compensation Committee reinstated Company matching contributions at a rate of 35% on the first 6% of eligible pay, subject to IRS compensation limits.

 

Through March 31, 2007, the Company offered pension benefits to participating employees through its tax qualified Pension Plan. Effective March 31, 2007, the Pension Plan was frozen and all affected employees were provided with transition benefits, including the granting of five years of additional credited service.

 

In connection with the freeze of the Pension Plan, Belo adopted two separate defined contribution plans, which are designed to provide supplemental pension benefits over a five-year period for all employees who were participants in the Pension Plan at the time it was frozen. The Belo Pension Transition Supplement Plan, or PTS Plan, is an account-balance plan intended to qualify under the provisions of Section 401(a) of the Internal Revenue Code. The Belo Pension Transition Supplement Restoration Plan (the “PTS Restoration Plan”) is a non-qualified plan and is intended to cover any transition supplement payments that exceed IRS limits to all qualified plan accounts. A participant in either plan must be actively employed on the last day of the plan year in which the contribution was earned in order to receive a contribution.

 

In response to the difficult financial circumstances of 2009, the Company amended the PTS Plan and PTS Restoration Plan to suspend the 2009 benefit for all plan participants, including the NEOs who participate in the PTS Plan and PTS Restoration Plan, for an undefined period of time. Because the PTS Plan and PTS Restoration Plan were not terminated, this action effectively postponed the termination of the 5-year contribution plan by one year. No amounts were paid or contributed pursuant to the PTS Plan or the PTS Restoration Plan in 2010. Effective January 1, 2010, the PTS Plan and the PTS Restoration Plan (defined below) benefits were reinstated for all participants and accrued benefits for 2010 will be contributed in 2011.

 

Change in Control and Severance Benefits

 

Employment Agreements.   The Company does not presently have any individual employment severance agreements with its executive officers.

Change in Control Severance Plan.   The Company provides for severance benefits for designated participants under the Change in Control Severance Plan (the “Severance Plan”). The current participants, as designated by the Compensation Committee, are the continuing NEOs of Belo. Additional participants may be designated by the Committee from time to time. Belo does not design its other elements of compensation in anticipation of a change in control, but instead change in control payments are designed to provide security to executives in the event of job loss in a triggering transaction. The Severance Plan provides for a severance multiple of 2 for the CEO and 1.5 for all other designated participants, and amounts are payable only upon a qualifying termination of employment following a change in control. Additional information regarding the severance and change in control payments, including a definition of key terms and quantifications of benefits that would have been received by our NEOs had a qualifying termination occurred on December 31, 2010, is found under “Change in Control Arrangements and Other Agreements Upon Termination of Employment” beginning on page 43 of this proxy statement. This information also includes the change in control benefits provided through both the ECP and the PTS Restoration Plan.

 

Tax Treatment

 

Under section 162(m) of the Internal Revenue Code, the Company generally receives an annual federal income tax deduction for compensation paid to the CEO and the other three most highly paid executives (excluding the CFO) only if the compensation is less than $1 million or is performance-based. The awards granted under the ECP for 2010 are fully tax-deductible since the applicable compensation over $1 million for all covered named executive officers is performance-based. The Company intends to continue seeking a tax deduction to the extent possible for all executive compensation, as long as it is in the best interests of Belo and its shareholders.

 

Stock Ownership Guidelines

 

In 2009, the Board established stock ownership guidelines for the Company’s directors and executive officers. Under these guidelines, the required minimum ownership level of common stock of the Company is 75,000 shares for the Company’s CEO, 25,000 shares for each other Section 16-reporting executive officer, and 10,000 shares for each director. For purposes of meeting these ownership guidelines, issued and outstanding RSU shares are counted as shares owned, but shares subject to unexercised stock options are not. The ownership guidelines are to be achieved by the later of August 1, 2014 or the conclusion of the fifth year following such officer’s or director’s first election to such position. See “Belo Corp. Stock Ownership of Directors and Executive Officers” beginning on page 6 for additional information.

 

Compensation Committee Report

 

In accordance with its written charter adopted by our Board, the Compensation Committee has oversight of the Company’s overall compensation structure, policies and programs. In exercising its oversight responsibility, the Committee has retained a compensation consultant to advise the Committee regarding market and general compensation trends.

 

The Committee, after consultation with its compensation consultant, has reviewed and discussed the Compensation Discussion and Analysis (CD&A) with management, which has the responsibility for preparing the CD&A. Based upon this review and discussion, the Committee recommended to our Board that the CD&A be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2010.

 

COMPENSATION COMMITTEE

 

M. Anne Szostak, Chair

Henry P. Becton, Jr.

Judith L. Craven, M.D., M.P.H.

Wayne R. Sanders

McHenry T. Tichenor, Jr.

Lloyd D. Ward

SUMMARY COMPENSATION TABLE

 

The following information summarizes annual and long-term compensation awarded to, earned by or paid to Belo’s principal executive officer, principal financial officers, and its two other most highly-paid executive officers (collectively, the “named executive officers”) for services in all capacities to Belo for the years ended December 31, 2010, 2009 and 2008, respectively.

 

 

 

 

 

 

The following table summarizes cash-based and equity awards that were granted under the ECP during 2010. Dennis Williamson retired March 5, 2010 and did not receive any plan-based awards in 2010.