April 30, 2010

 

Dear Fellow Shareholder:

 

I invite you to attend our annual meeting of shareholders that will be held on June 10, 2010 in the auditorium of The Belo Building at 400 South Record Street, Third Floor, Dallas, Texas. Included is a map for your use.

 

At the meeting, you will hear a report on A. H. Belo’s operations and have a chance to meet your directors and executive officers. This package includes the formal notice, proxy statement, and proxy card for the meeting, together with A. H. Belo’s 2009 annual report. The proxy statement tells you more about the agenda and voting procedures for the meeting. It also describes how the A. H. Belo Board operates and provides information about A. H. Belo’s directors, including those nominated for election at this year’s meeting.

 

As in 2009, A. H. Belo will furnish proxy materials on the Internet to participants in the A. H. Belo Savings Plan and the separate Belo Savings Plan. Thus, these shareholders will not automatically receive paper copies of our proxy materials. We will mail a Notice of Internet Availability of Proxy Materials to these shareholders with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. This notice also provides information on how these shareholders may obtain paper copies of our proxy materials free of charge, if they so choose. We believe that this approach allows us to provide these shareholders with the information they need to vote their shares while reducing delivery costs and any environmental impact.

 

For those A. H. Belo shareholders with access to the Internet, we encourage you to vote your shares on-line. Detailed instructions on how to vote over the Internet or by telephone are set forth on the Notice of Internet Availability of Proxy Materials and on the proxy card. We encourage you to elect to receive future annual reports, proxy statements, and other materials over the Internet by following the instructions in the proxy statement. This electronic means of communication is quick and convenient and reduces the Company’s printing and mailing costs.

 

Beginning this year, the rules that govern how brokers vote your shares have changed. Brokers may no longer use discretionary authority to vote shares for the election of directors and other non-routine matters if they have not received instructions from their clients. Whether or not you attend the meeting, it is important that your shares be represented at the annual meeting. I encourage you to vote your shares as soon as possible either by returning your proxy card (or voting instruction card) or by voting using the Internet or telephone voting procedures outlined in the enclosed 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 Webcast. Please see the notice on the next page for more information.

 

I hope to see you on June 10th.

 

Sincerely,

 

 

Robert W. Decherd

Chairman of the Board

President and Chief Executive Officer

 

A. H. Belo Corporation P. O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201

www.ahbelo.com Deliveries: 400 South Record Street Dallas, Texas 75202-4806

 

P. O. Box 224866

Dallas, Texas 75222-4866

www.ahbelo.com

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 10, 2010

 

 

 

To A. H. Belo Shareholders:

 

Please join us for the 2010 annual meeting of shareholders of A. H. Belo Corporation (“A. H. Belo” or the “Company”). The meeting will be held in the auditorium of The Belo Building at 400 South Record Street, Third Floor, Dallas, Texas, on Thursday, June 10, 2010, at 1:30 p.m., Dallas, Texas time. The annual meeting of shareholders will be simultaneously Webcast on A. H. Belo’s Web site (www.ahbelo.com/invest). Following the conclusion of the meeting, a replay of the Webcast will be archived on the Company’s Web site through June 24, 2010.

 

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

 

 

3. Any other matters that may properly come before the meeting.

 

All record holders of shares of A. H. Belo Series A common stock and A. H. Belo Series B common stock at the close of business on April 22, 2010 are entitled to vote at the meeting or at any postponement or adjournment of the meeting.

 

This year, we are again furnishing proxy materials on the Internet to participants in the A. H. Belo Savings Plan and the separate Belo Savings Plan. Consequently, these shareholders will not automatically receive paper copies of our proxy materials. We will instead send to these shareholders 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 reduce our printing and mailing costs and any environmental impact.

 

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; 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 a voting instruction card, free of charge.

 

By Order of the Board of Directors

 

DANIEL J. BLIZZARD

Secretary

 

April 30, 2010

 

TABLE OF CONTENTS

 

 

P. O. Box 224866

Dallas, Texas 75222-4866

www.ahbelo.com

 

 

PROXY STATEMENT

 

 

For the Annual Meeting of Shareholders

To Be Held On June 10, 2010

 

This proxy statement contains information related to the annual meeting of shareholders of A. H. Belo Corporation (“A. H. Belo” or the “Company”) to be held on Thursday, June 10, 2010, beginning at 1:30 p.m., Dallas, Texas time, in the auditorium of The Belo Building at 400 South Record Street, Third Floor, Dallas, Texas, and any postponement or adjournment of the meeting. For those shareholders receiving a Notice of Internet Availability of Proxy Materials (the “Notice”), the Notice will be mailed to those shareholders on April 30, 2010. Paper copies of this proxy statement and related proxy card (or voting instruction card) will be distributed to all other shareholders beginning on or about April 30, 2010.

 

What is the purpose of the annual meeting?

 

At the annual meeting, shareholders will act on matters outlined in the accompanying notice, including the election of two directors, the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm, and any other matters properly brought before the meeting. Management will report on A. H. Belo’s performance in 2009 and respond to questions and comments from shareholders.

 

Who can attend the annual meeting?

 

Shareholders and guests of A. H. Belo may attend the annual meeting.

 

Who may vote at the meeting?

 

Only shareholders who owned A. H. Belo shares at the close of business on April 22, 2010, the record date, or their duly appointed proxies, are entitled to vote at the meeting. If you owned A. H. Belo shares at the close of business on April 22, 2010, you are entitled to vote all of the shares that you held on that date at the meeting, or 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 18,342,602 shares of Series A common stock and 2,525,694 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 A. H. 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.

 

Can I vote my shares of Belo Corp.?

 

No, shares of Belo Corp. are not eligible for voting at this meeting. A. H. Belo is a separate public company. Only shares of A. H. Belo are eligible to vote at the June 10, 2010 meeting.

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 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 vote by proxy, which gives the proxy holder the right to vote your shares on your behalf, or you may vote in person at the meeting.

 

You may receive more than one proxy card depending on how you hold your shares. Shares registered in your name are covered by a proxy card. If you hold shares indirectly through someone else, such as a broker, you may receive material from that person asking how you want to vote.

 

Shares held in your A. H. Belo Savings Plan account or in your Belo Savings Plan account 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 A. H. Belo Savings Plan or in the Belo Savings Plan” below.

 

It is important that you follow the instructions on each proxy card, voting instruction card, or the Notice and vote the shares represented by each card separately.

 

Why did I receive a Notice in the mail regarding the 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 over the Internet to participants in the A. H. Belo Savings Plan and the separate Belo Savings Plan. Accordingly, a Notice was sent to these shareholders. These shareholders will have the ability to 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 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. The Notice also has instructions on how to provide voting instructions to the plan trustee via the Internet.

 

In addition, all shareholders may request to receive proxy materials in printed form by mail or 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 45 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.

 

How do I vote by proxy?

 

If you vote by proxy, you may vote on-line via the Internet, by telephone, or by completing and returning your enclosed proxy card in the envelope provided. All proxy cards that are properly completed and submitted will be voted as specified.

 

If your shares are registered in your name and you sign, date, and return your proxy card but do not check any boxes, the shares represented by that card will be voted FOR all nominees standing for election as directors, FOR ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm, and, at the discretion of the proxy holders, on any other matter that properly may come before the meeting or any adjournment or postponement of the meeting.

If you hold your shares through a broker, your broker may vote your shares at its discretion on certain “routine matters.” The Company believes that the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm is a “routine matter” on which brokers will be permitted to vote. With respect to all other matters, however, your broker may not be able to vote your shares for you and the aggregate number of unvoted shares is reported as the “broker non-vote.” The Company believes that the election of directors is not a “routine matter” and brokers will not be permitted to vote any uninstructed shares on the election of directors.

 

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

 

If your shares are held indirectly, your broker or nominee may not offer voting using the Internet or telephone. Please be certain to check your voting instruction card or contact your broker or nominee to determine available voting arrangements.

 

If you participate in either the A. H. Belo Savings Plan or the Belo Savings Plan and had full shares credited to your account as of the record date, please refer to the information set forth in the question and answer “How do I vote my shares held in the A. H. Belo Savings Plan or in the Belo Savings Plan” below.

 

How do I vote in person?

 

For shares registered 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 April 22, 2010. 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 A. H. Belo Savings Plan or the Belo Savings Plan must be submitted by June 8, 2010, 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?

 

Yes. For shares registered 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 A. H. Belo Savings Plan or in the Belo Savings Plan” below.

 

Attendance at the meeting does not by itself revoke a previously granted proxy.

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

 

Fidelity Management Trust Company is the plan trustee for both the A. H. Belo Savings Plan and the separate Belo Savings Plan maintained by Belo Corp. (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 A. H. Belo 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. If you want to vote using the Internet or telephone, please follow the instructions on your Notice or your voting instruction card and have the card available when you call in or access the voting site. You can also complete, sign and return your voting instruction card in the envelope provided. 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 June 8, 2010. 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 all nominees standing for election as directors and FOR ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm. 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 June 8, 2010, 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. You may revoke or modify previously given voting instructions by June 8, 2010, 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 vote does the Board recommend?

 

The Board recommends a vote FOR all nominees standing for election as directors and FOR ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm. 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 matter?

 

4  Election of directors — 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. Previously, if you did not provide instructions as to how to vote your shares held in broker or nominee name, your broker was permitted to vote them on your behalf in uncontested director elections. Beginning this year, brokers can no longer vote on your behalf for the election of directors 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 2010 annual meeting of shareholders are incumbent directors.

 

4  Ratification of appointment of independent registered public accounting firm — 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 KPMG LLP as the independent registered public accounting firm for the Company for 2010. With respect to shares held in broker or nominee name, your broker continues to have discretion to vote any uninstructed shares on this matter.

 

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.

 

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.

 

Your proxy is being solicited on behalf of A. H. Belo’s Board of Directors. In addition to use of the mail, 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 A. H. Belo. A. H. Belo pays the costs of this proxy solicitation.

 

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 April 22, 2010, about the beneficial ownership of A. H. Belo common stock by our current directors, nominees for election as director, the executive officers named in the Summary Compensation Table in this proxy statement, all current directors, director nominees and named executive officers as a group, and by each person known to A. H. Belo to own more than 5% of the outstanding shares of A. H. Belo Series A or Series B common stock. At the close of business on April 22, 2010, there were 18,342,602 Series A shares, 2,525,694 Series B shares, and 20,868,296 combined Series A and Series B shares, issued and outstanding.

 

Under SEC rules, 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 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.

 

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 A. H. Belo common stock beneficially owned by all current directors, director nominees and named executive officers as a group, representing 15.8% of the outstanding shares of Series A and Series B common stock, have combined voting power of 59.3%.

 

A. H. Belo Corporation Stock Ownership of Current Directors, Director Nominees and Named Executive Officers

 

 

 

 

 

 

 

A. H. Belo Corporation 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 A. H. Belo’s equity compensation plans as of December 31, 2009; 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 A. H. Belo’s executive officers and directors, and persons who own more than ten percent of a registered class of A. H. Belo common stock, file reports with the SEC within specified time periods disclosing their beneficial ownership of A. H. Belo common stock and any subsequent changes in beneficial ownership of A. H. 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 2009 were timely filed, except for two reports for Moroney Management, Limited, of which James M. Moroney III is the Managing General Partner and a limited partner, as follows: Initial report on Form 3 which was due on February 8, 2008, and a report on Form 4 which was due on December 28, 2009 to disclose the disposition shares related to estate-planning transactions. Both reports were filed late, on February 8, 2010, due to administrative error.

 

A. H. 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. In accordance with this provision, Don Williams, age 69, will retire on the date of the 2010 annual meeting.

 

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 20 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 2010 annual meeting, possesses the professional and personal qualifications necessary for service on the A. H. Belo Board of Directors. In the individual biographies below, we have highlighted particularly noteworthy attributes of each Board member. In addition, we note that several of our directors based on their length of service to the Company, including prior to the 2008 spin-off of the Company by Belo Corp., have significant exposure to both our business and the communities in which we operate.

 

Nominees for A. H. Belo Directors

 

The following candidates are nominated by the Board and each is an incumbent director and will be eligible to serve a three-year term until the 2013 annual meeting. The independence of each incumbent director is addressed under “Corporate Governance — Director Independence” on page 19 of this proxy statement.

 

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

Class II Directors (Current terms expire at A. H. Belo’s 2010 annual meeting)

 

 

The Board of Directors recommends a vote FOR Proposal One for the election of each of the nominees.

Directors Continuing in Office

 

Information regarding our directors continuing in office is provided below.

 

Class III Directors (Terms expire at A. H. Belo’s 2011 annual meeting)

 

Class I Directors (Terms expire at A. H. Belo’s 2012 annual meeting)

 

 

KPMG LLP served as A. H. Belo’s independent auditors for the fiscal year ended December 31, 2009. Ernst & Young LLP served as our independent public accounting firm from February 2008 through March 2009. The Audit Committee has appointed KPMG LLP to serve in such capacity for 2010, and as a matter of good corporate governance has determined to submit the appointment of KPMG LLP for ratification by the shareholders. If the shareholders do not ratify the appointment of KMPG LLP, the Audit Committee will consider the appointment of other independent registered public accounting firms.

 

Representatives of KPMG 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 KPMG LLP and Ernst & Young LLP fees related to the audit of our financial statements for the fiscal year ended December 31, 2009, and December 31, 2008 and the reviews of our financial statements for the quarterly periods within those fiscal years:

 

 

 

 

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 KPMG 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 services provided by and all fees paid to Ernst & Young LLP prior to the spin-off on February 8, 2008 were approved by the Belo Corp. Audit Committee in accordance with Belo Corp.’s pre-approval policy. All services provided by and all fees paid to Ernst & Young LLP subsequent to February 8, 2008 were approved by our Audit Committee in accordance with our pre-approval policy. KPMG LLP has served as the Company’s independent public accounting firm since March 31, 2009. All services provided by and all fees paid to KPMG LLP in 2009 were approved by our Audit Committee in accordance with our pre-approval policy.

 

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.

 

The Board of Directors recommends a vote FOR Proposal Two for the ratification of the appointment of KPMG LLP as A. H. Belo’s independent registered public accounting firm.

 

Introduction

 

Our Board periodically reviews and evaluates A. H. Belo’s corporate governance policies and practices in light of the Sarbanes-Oxley Act of 2002, SEC regulations implementing this legislation, 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 A. H. Belo’s directors, management and other A. H. Belo employees, and adopted a charter for each Board committee. The Nominating and Corporate Governance Committee reviews A. H. 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.ahbelo.com under “About A. H. Belo — Corporate Governance,” and are available in print, without charge, upon written or oral request to A. H. Belo Corporation, Attention: Daniel J. Blizzard, Secretary, P. O. Box 224866, Dallas, Texas 75222-4866, (214) 977-8200. A. H. 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 A. H. 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: Doug Carlston, Larry Hirsch, Ty Miller, Dave Morgan, John Puerner and Don Williams. 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 A. H. 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 2009. Each 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 2009 annual meeting of shareholders.

 

Committees of the Board

 

Each of the Board’s three standing committees currently consists of Doug Carlston, Larry Hirsch, Ty Miller, Dave Morgan, John Puerner and Don Williams, each of whom is an independent director under the NYSE listing standards and under the independence standards set forth in A. H. Belo’s corporate governance guidelines. The Board has three standing committees, as follows:

 

Audit Committee.  Don Williams chairs the Audit Committee. Ty Miller will become chair of the Audit Committee effective with the 2010 annual meeting of shareholders. The Audit Committee is responsible for the appointment, compensation and oversight of the independent auditors. The Audit Committee also represents the Board in overseeing A. H. Belo’s financial reporting processes, and, as part of this responsibility, consults with our independent auditors and with personnel from A. H. Belo’s internal audit and financial staffs with respect to corporate accounting, reporting, and internal control practices. The Audit Committee met eight times during 2009.

 

As specified in the Audit Committee 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. To facilitate and assist the Audit Committee with its risk oversight responsibilities, the Audit Committee, at least annually, receives a report from Company management regarding its enterprise risk assessment and discusses the findings with management. The report identifies areas of enterprise risk, and

aligns managerial and Board-level oversight, including at the Board committee level, and responsibility with the type of risk.

 

The Board has determined that each member of the Audit Committee meets both the SEC and the NYSE standards for independence. In addition, 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, Ty Miller, meets the SEC criteria of an “audit committee financial expert.”

 

Compensation Committee.  Doug Carlston chairs the Compensation Committee. The Compensation Committee evaluates the performance of the Chief Executive Officer and sets his compensation level based on this evaluation. The Compensation Committee makes recommendations to the Board for base salaries of other executive officers and compensation for non-management directors, approves bonus levels and stock option awards for executive officers, and administers, among other plans, the Company’s 2008 Incentive Compensation Plan, the A. H. Belo Savings Plan, the A. H. Belo Change in Control Severance Plan, the A. H. Belo Pension Transition Supplement Plan, and the A. H. Belo Pension Transition Supplement Restoration Plan. It also has responsibility for senior executive succession planning. The Compensation Committee met six times during 2009.

 

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. Beginning in February 2008, the Compensation Committee engaged Mercer Human Resources Consulting (“Mercer”), a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (“Marsh”), as its compensation consultant. The scope of Mercer’s engagement was to undertake a comprehensive review of A. H. Belo’s executive and board of director compensation programs, and to assist the Committee in executive compensation recommendations for 2008 and 2009. 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 Compensation Discussion and Analysis below.

 

Mercer’s fees for executive compensation consulting to the Committee in 2009 were $27,213. During 2009, the Company also retained Mercer and its Marsh affiliates to provide other services, unrelated to executive compensation. The aggregate 2009 expense for these other services was $449,438. Besides Mercer’s consulting services for executive compensation, Marsh or one of its affiliate companies provided services related to post-retirement benefit auditing and compliance, processing of employee benefits data, and insurance brokerage services. The foregoing amount is exclusive of insurance premiums.

 

Nominating and Corporate Governance Committee.  The Nominating and Corporate Governance Committee is chaired by John Puerner, who also serves as 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 A. H. 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 four times during 2009.

 

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 may also 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 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 A. H. 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 A. H. 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 A. H. Belo’s bylaws, which are available upon request, for more specific information prior to submitting a nomination. 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 A. H. Belo seeks to learn more about a candidate’s qualifications, background, and level of interest in A. H. Belo, and the candidate has the opportunity to learn more about A. H. 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 A. H. 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 A. H. 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

 

Currently, Robert Decherd serves as Chairman of the Board and Chief Executive Officer (“CEO”). The Board believes that the Company and its shareholders are best served by a leadership structure in which Mr. Decherd serves as Chairman and CEO and the Board has an independent Lead Director. Combining the roles of Chairman and CEO makes clear that the person serving in these roles has primary responsibility for managing the Company’s business, under the oversight and review of the Board. Under this structure, the Chairman and CEO chairs Board meetings, where the Board discusses strategic and business issues. The Board believes that this approach makes sense because the CEO is the individual with primary responsibility for implementing the Company’s strategy and managing its day-to-day operations. This structure also enables the CEO to act as a bridge between management and the Board, helping both to act with a common purpose.

 

At the same time, the Board believes that strong, independent Board leadership is a critical aspect of effective corporate governance. Accordingly, to provide independent leadership, the Board has established the position of Lead Director. The Lead Director is an independent director elected annually by the independent directors. John Puerner currently serves as the Lead Director. The Lead Director’s responsibilities and authority include:

 

 

The Board believes that a combined Chairman/CEO, together with a Lead Director, is the most appropriate leadership structure for the Board at this time. The Board also believes that it is in the best interests of the Company for the Board to make a determination about whether to separate or combine the roles of Chairman and CEO based upon the Company’s circumstances at a particular time. Rather than taking a “one-size fits all” approach to Board leadership, the Company’s Bylaws permit the roles of Chairman and CEO to be filled by the same or different individuals. This allows the Board flexibility to determine whether the roles should be combined or separated based upon the Company’s needs.

 

The Board evaluates the continued appropriateness of its leadership structure from time to time. In addition, the Board believes that the issue of Board leadership is part of the succession planning process, and considers its leadership structure as part of the process of planning for succession to the positions of Chairman and CEO.

 

Audit Committee Report

 

As described more fully in our written charter, which is posted on our Web site at www.ahbelo.com under “About A. H. Belo — Corporate Governance,” the Audit Committee represents the Board in its oversight of A. H. Belo’s financial reporting processes. In this context, the Audit Committee has reviewed and discussed with management and KPMG LLP, our independent auditors, A. H. Belo’s audited consolidated financial statements and the audit of the effectiveness of A. H. Belo’s internal control over financial reporting. The Audit Committee has discussed with KPMG LLP various matters, including the firm’s judgments as to the quality of A. H. Belo’s accounting principles and other matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. In addition, the Audit Committee has received from KPMG LLP the written disclosures and the letter required by applicable requirements of the PCAOB regarding their communications with the Audit Committee concerning independence, and has discussed with the firm its independence from A. H. 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 A. H. Belo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, for filing with the SEC.

 

Respectfully submitted,

 

Audit Committee

J. McDonald Williams, Chairman

Douglas G. Carlston

Laurence E. Hirsch

Tyree B. Miller

David R. Morgan

John P. Puerner

 

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, P. O. Box 224866, Dallas, Texas 75222-4866. 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.

 

A. H. Belo’s executive officers as of December 31, 2009 were as follows:

 

 

 

 

The following executive summary highlights and summarizes information from this Compensation Discussion and Analysis 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 Compensation Discussion and Analysis section and the compensation tables that follow for a more complete understanding of our executive compensation program.

 

Overview

 

A. H. Belo is one of the leading independent newspaper publishers in the United States, anchored by three award-winning daily newspapers and related online businesses. A. H. Belo became a separate public company following its spin-off from Belo Corp. on February 8, 2008.

 

The newspaper industry continues to experience substantial change caused by factors such as the effect of the Internet and other transformational technologies on consumers and advertisers and the rapid ascent of new media businesses. These business challenges have become more pronounced given the impact of the recent economic conditions in the U.S. and the additional stresses that these economic conditions continue to place on our advertisers and consumers. From an executive compensation perspective, this challenging business environment underscores the importance of retaining both experienced and high-potential executives, and rewarding superior individual performance that may not presently be reflected in the Company’s stock price, revenues or operating profit.

 

The significant downturn in the U.S. economy that began during 2008 and continued into 2009 negatively affected the Company’s revenues, profitability and stock price. As a result, the Company’s senior management and the Compensation Committee of the Board of Directors (the “Compensation Committee”) have made significant changes to the Company’s compensation programs in the past two years. During 2008, the Company took actions designed to align expenses with expected lower revenues in 2009, including actions to lower compensation expense. In September 2008, the Company amended the A. H. Belo Savings Plan to eliminate the Company’s two percent match under its 401(k) plan, and instead provided for a discretionary Company profit sharing contribution that will depend on the Company’s profitability. In addition, the Company announced in October 2008 a wage freeze that impacted all levels of the organization, including our executive officers.

 

As economic conditions deteriorated in 2009, the Compensation Committee and senior management took additional steps to respond to declining revenues. Effective January 1, 2009, the Company adopted the A. H. Belo Severance Plan (“2009 Severance Plan”) to provide for a severance framework applicable both to employees generally and to our executive officers. The benefits payable under the 2009 Severance Plan represent a reduction from the Company’s prior severance guidelines. In addition, on March 31, 2009, the Company approved an amendment to the A. H. Belo Corporation Change in Control Severance Plan (“CIC Plan”) to, among other things, reduce the severance multiple payable under that plan. And in April, the Company suspended the discretionary match in the A. H. Belo Savings Plan and contributions to the Pension Transition Supplement Plan (“PTS Plan”) and the Pension Transition Supplement Restoration Plan (“PTS Restoration Plan”).

 

The Compensation Committee and senior management also took action to reduce the base salary levels of all employees earning over $25,000, with the greatest reductions implemented for our named executive officers. In the face of these unprecedented industry conditions compounded by the downturn in the U.S. economy generally, the Company’s top management with the support of the Compensation Committee continues to proactively address executive compensation policies and practices in a manner that considers both the interests of shareholders and the need to retain a talented and experienced management team.

 

Overview of Compensation Program

 

The Compensation Committee oversees the Company’s overall compensation structure, policies and programs, and has responsibility for establishing, implementing and continually monitoring adherence to the Company’s compensation philosophy. The primary management liaisons to the Committee in 2009 were the Company’s Chief Executive Officer, Robert Decherd, and its senior vice president, Dan Blizzard.

Objectives of Our Program

 

Following the spin-off from Belo Corp. in 2008, A. H. Belo adopted compensation policies to achieve the following objectives:

 

 

The achievement of some of these objectives has been postponed due to the difficult economic conditions noted above. However, decisions made in the past year considered the program’s objectives.

 

Role of the Compensation Committee

 

The Compensation Committee administers our executive compensation program. The Compensation Committee establishes and monitors 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 executive compensation consultant, Mercer, reviews and determines the compensation (including salary, annual incentive, long-term incentives and other benefits) of our CEO and the named executive officers of the Company. References to “CEO” in this Compensation Discussion and Analysis (“CD&A”) are to Robert Decherd. References to our named executive officers (“NEOs”) include Mr. Decherd along with Messrs. Moroney, Cass and Blizzard, and Ms. Engel. For a more complete description of the responsibilities of the Compensation Committee, see “Corporate Governance — Committees of the Board” beginning on page 19 of this proxy statement.

 

Role of the Compensation Consultant

 

The Compensation Committee has retained Mercer as its outside consultant to advise the Compensation Committee on executive compensation matters. Mercer regularly attends Compensation Committee meetings, and reports directly to the Compensation Committee on matters relating to compensation for our executive officers, including our CEO.

 

During 2009, the Compensation Committee requested that Mercer:

 

 

Role of Company Management

 

The Compensation Committee makes the final decisions on CEO compensation, with advice from Mercer, as appropriate. Our senior management, including the CEO, develops preliminary recommendations regarding compensation matters with respect to all key executives other than the CEO and provides these recommendations to the Compensation Committee, which makes the final decisions. The management team is responsible for the administration of the compensation programs once Compensation Committee decisions are finalized.

The Compensation Program

 

The key components of our current compensation program for our key executives are:

 

 

Following our spin-off in 2008, our overall program was established in part based on the practices within a group of comparable newspaper publishing companies. These companies included the following:

 

 

Given the business challenges in 2009, the Committee did not undertake any detailed analysis to calibrate the program relative to market practices for base salary and annual bonus. Throughout 2009, the Compensation Committee did review and monitor, with the assistance of its compensation consultant, trends in the industry, trends for companies facing similar business challenges as a result of the economy, and trends in the market generally to determine appropriate compensation policies and recommendations to address deteriorating market and economic conditions.

 

As a result, salary reductions were implemented and the annual bonus program was in effect suspended as the Committee and senior management focused on actions to align the Company’s expenses with declining revenues. With respect to long-term incentive awards, the Committee and senior management utilized selected information provided by Mercer regarding approaches being used by other leading newspaper publishing companies. However, as described further below, final decisions and timing regarding any long-term incentive awards were guided primarily by balancing cost, dilution and retention considerations.

 

Base Salary

 

Base salary is designed to compensate our key executives in part for their roles and responsibilities and also to provide a stable level of compensation that serves as a retention tool throughout the executive’s career. Assuming a normal operating environment, salaries are targeted at the median of the market for similar positions in the peer companies. Prior to 2008, adjustments were made annually based on individual performance.

 

As mentioned earlier, salary reductions were implemented throughout most of the Company in 2009 as A. H. Belo worked aggressively to match its costs to declining revenues. Based on management’s recommendation, the salary of our CEO was reduced by 20%, and the salaries for our other NEOs were reduced by 15%. While a number of other companies in our industry either froze or reduced salaries, these reductions at A. H. Belo were as great or greater than any other leading company in the industry. The result of these reductions is that base salaries for our CEO and other NEOs are below the median of the market.

 

Incentive Programs — Overview

 

The formal structure of A. H. Belo’s executive compensation program is set forth in the A. H. Belo 2008 Incentive Compensation Plan and administered by the Compensation Committee. This plan was approved by shareholders in 2009. The Company refers to the Incentive Compensation Plan as the ICP. The A. H. Belo ICP provides for two elements of compensation: short-term cash incentives (performance bonus), and long-term equity-based compensation. Awards under the ICP are supplemental to an ICP participant’s base salary. Officers of A. H. Belo and its subsidiaries, including A. H. Belo’s CEO and its other NEOs, are eligible to participate in the ICP. Additional ICP

participants may be selected by the Compensation Committee based on management’s evaluation of an individual’s ability to affect significantly A. H. Belo’s results.

 

Annual Cash Incentive Program

 

Historically, each A. H. Belo executive officer has been eligible to receive annual cash incentive compensation based on financial performance objectives established in the annual financial plan (the “Financial Plan”) approved by A. H. Belo’s Board of Directors. The financial performance objectives may vary from year to year and reflect the cyclical nature of A. H. Belo’s businesses due to fluctuating advertising demand and changes in newspaper circulation, changes in media usage habits by consumers and advertisers, and other competitive conditions, including recruiting and retaining talent.

 

Specific Program for 2009

 

At the beginning of the year, the Compensation Committee, in consultation with management and the Committee’s consultant, determined that the Company’s projected operating results and the extreme difficulties of the existing economic environment did not warrant an annual cash incentive opportunity. Thus, no specific plan was established. The Compensation Committee at the time reserved the right to make cash incentive awards at year-end if either the Company’s results for the year represented a significant improvement over the projected results, or to reward outstanding accomplishments during the year by a key officer, including any named executive officer.

 

Results for 2009

 

Although the Company’s financial performance met some, but not all, targets for 2009, the Committee’s continuing concerns about the newspaper publishing industry caused them to suspend annual cash bonuses for 2009.

 

Long-Term Equity Incentive Compensation

 

Historically, as a part of Belo Corp. and in 2008 following the spin-off, the Company awarded long-term equity incentive grants, or LTI compensation, to executive officers as part of its overall compensation program. 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. The ICP provides the Compensation Committee with discretion to require performance-based standards to be met before awards vest. According to the ICP structure, the Compensation Committee determines each executive officer’s intended LTI compensation value, then determines the allocation of the LTI compensation award among three available types of equity instruments: stock options, time-based restricted stock units, referred to as TBRSUs, and performance-related restricted stock units, referred to as PBRSUs. Stock options encourage and reward stock price performance, thus aligning the executive’s interests with those of shareholders. PBRSUs reward the achievement of A. H. Belo’s cumulative annual financial performance goals. TBRSUs encourage executives to remain with the Company and to focus on its long-term success. Since the ultimate value of the LTI compensation awards depends upon the performance of A. H. Belo common stock, the interests of the A. H. Belo executive officers are aligned with the financial interests of A. H. Belo’s shareholders.

 

Specific Program for 2009

 

No LTI awards were made in 2009. However, as described in last year’s CD&A, the Compensation Committee made awards of stock options to the CEO and the other NEOs in December 2008, in consideration of 2009 compensation. The Company’s executive officers received option grants in the following amounts: Robert Decherd — 120,000; Jim Moroney — 100,000; Skip Cass — 100,000; Ali Engel — 90,000; and Dan Blizzard — 50,000. The option awards made in December 2008 vest 40 percent on the first anniversary of the date of grant, an additional 30 percent on the second anniversary, and the remaining 30 percent on the third anniversary.

 

In developing the LTI recommendations during 2008, it became clear that the Compensation Committee had to change its initial approach of targeting the median in determining the size and type of LTI awards to ICP participants, otherwise, the resulting awards would have been too costly and had an excessive dilutive effect.

Instead, the Compensation Committee, upon advice of its compensation consultant, determined that the Compensation Committee should target aggregate LTI awards for ICP participants, including its NEOs, that would not result in approximately more than 5% dilution of the Company’s outstanding Series A Common Stock. Utilizing that pool of awards, the Compensation Committee, with the assistance of its compensation consultant, then developed LTI award recommendations for its NEOs that resulted in award recommendations at or below the 25th percentile of the market. The Compensation Committee determined the amount of Mr. Decherd’s award, and reviewed and approved the recommendations of Mr. Decherd for the remaining participants including the other NEOs. The final awards were made in stock options, in large part to minimize the expense associated with the awards.

 

Although the December 2008 option awards were in consideration of 2009 compensation, it should be noted that due to new SEC reporting requirements, the value of these awards are now reported in the year granted, and as such there are no dollar amounts reported for 2009 for stock option awards in the Summary Compensation Table on page 30. The amounts in the Summary Compensation table for the year 2008, under the column “Option Awards,” include the grant date fair value of these options.

 

Retirement Benefits

 

Prior to the spin-off, Belo Corp. offered pension benefits to certain of its employees through The G. B. Dealey Retirement Pension Plan (the “Pension Plan”). In March 2007, Belo froze the Pension Plan and all affected employees were provided with transition benefits. In connection with the Pension Plan freeze, at the time of the spin-off, A. H. Belo adopted two separate defined contribution plans which were designed to provide supplemental pension benefits for all A. H. Belo employees who were participants in the Pension Plan, including Messrs. Decherd, Moroney and Cass. The A. H. Belo PTS Plan, is an account-balance plan intended to qualify under the provisions of Section 401(a) of the Internal Revenue Code. The A. H. Belo PTS Restoration Plan, is a non-qualified plan and is intended to cover any pension supplement payments that exceed IRS limits to all qualified plan accounts.

 

Contributions to the PTS Plan and PTS Restoration Plan were suspended for 2009. For additional discussion of the PTS Plan and the PTS Restoration Plan, see “Post-Employment Benefits” on page 35 of this proxy statement.

 

Change in Control and Severance Benefits

 

Employment Agreements.  A. H. Belo does not have any individual employment agreements with any of its executive officers.

 

Change in Control Benefits.  The Committee believes that severance benefits and change of control benefits are necessary in order to attract and retain the caliber and quality of executives A. H. Belo needs in its most senior positions. These benefits are particularly important in an industry undergoing significant restructuring, providing for continuity of senior management and helping executives focus on business results, managing costs, and strategic initiatives. The levels of payments and benefits available upon termination were originally set to be comparable to those provided at similar companies. However, as noted earlier, in March 2009, the Company reduced the severance benefits payable as part of its ongoing effort to manage compensation expense. 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 termination occurred on December 31, 2009, is found under “Potential Payments on Termination of Employment or Change in Control at December 31, 2009” table on page 40 of this proxy statement.

 

2009 Severance Plan.  Effective January 1, 2009, the A. H. Belo Management Committee, under the authority of the Board of Directors, adopted the 2009 Severance Plan which provides for severance payments for both officers and non-officer employees of A. H. Belo and its subsidiary companies in the event of termination of employment due to general involuntary terminations including, but not limited to, reduction-in-force and cost reengineering actions. Under the 2009 Severance Plan, the NEOs, as well as all vice presidents and above, who are terminated due to such an action are eligible for a lump sum severance pay plus a certain amount of benefits coverage. For additional discussion, see “Termination of Employment and Change in Control Arrangements” at page 37 of this proxy statement.

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 applicable awards granted under the ICP qualify as performance-based compensation and thus typically are fully tax-deductible for the Company, except for TBRSUs. The Compensation Committee 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 A. H. Belo and its shareholders.

 

Compensation Committee Interlocks and Insider Participation

 

Doug Carlston (Chairman), Larry Hirsch, Ty Miller, Dave Morgan, John Puerner and Don Williams served as members of A. H. Belo’s Compensation Committee during 2009. No member of the A. H. Belo Compensation Committee during 2009 was a current or former officer or employee of A. H. Belo or had any relationship with A. H. Belo requiring disclosure under “Director Compensation — Certain Relationships.” None of A. H. 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 A. H. Belo’s Compensation Committee during 2009.

 

Compensation Committee Report

 

In accordance with its written charter adopted by our Board of Directors, 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 CD&A with management, which has the responsibility for preparing the CD&A. Based upon this review and discussion, the Committee recommended to the 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 fiscal year ended December 31, 2009.

 

COMPENSATION COMMITTEE

 

Douglas G. Carlston, Chairman

Laurence E. Hirsch

Tyree B. Miller

David R. Morgan

John P. Puerner

J. McDonald Williams

 

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

 

 

 

 

 

The PTS Plan and PTS Restoration Plan contributions noted above represent payments made in 2009 on behalf of the NEOs. These contributions represent additional transition benefits earned by the NEOs who were participants in Pension Plan on March 31, 2007, the date the plan was frozen. The amounts represent an actuarially-determined percent of eligible compensation earned by the executive during the year ended December 31, 2008. For more information, see “Post-Employment Benefits” on page 35 of this proxy statement.

 

Additionally, amounts in the All Other Compensation column (i) for 2008 and 2009 include $8,760 and $8,760, respectively, for life insurance purchased for Robert Decherd by A. H. Belo and $3,150 and $1,882, respectively, for tax gross-ups. The total value of executive perquisites and personal benefits paid by A. H. Belo in 2008 and 2009 did not exceed $10,000 for any NEO.

 

Equity Holdings and Value Realization

 

Effective with the spin-off on February 8, 2008, equitable adjustments were made with respect to stock options and restricted stock units (“RSUs”) originally relating to Belo Corp. common stock. As a result, securities exercisable for or settled in A. H. Belo’s common stock were issued to each of the NEOs pursuant to the anti-dilution adjustment provisions of their previously outstanding Belo Corp. stock option and RSU awards. (Information regarding the A. H. Belo option and RSU awards received by the NEOs as a result of the spin-off was disclosed in the “A. H. Belo Corporation Outstanding Equity Awards at Fiscal Year-End 2008” table of the Company’s 2009 Proxy Statement.) Subsequent to the spin-off, A. H. Belo made awards of stock options to the NEOs in December 2008. No LTI awards were made in 2009.

The following table contains information on all A. H. Belo equity awards that were outstanding as of December 31, 2009.

 

 

 

 

 

 

Scheduled vesting of all outstanding A. H. Belo RSU awards for each of the NEOs is as follows:

 

 

 

 

 

Equity Holdings and Value Realization of Belo Corp. Securities related to Spin-Off.  Pursuant to the anti-dilution adjustment provisions of the Belo Corp. stock option and RSU awards that they held at the effective date of the spin-off, the NEOs continue to hold equity awards exercisable for or settled in Belo Corp. common stock. (Information regarding the Belo Corp. option and RSU awards held by the NEOs immediately following the spin-off was disclosed in the “Belo Corp. Outstanding Equity Awards at Fiscal Year-End 2008” table of A. H. Belo’s 2009 Proxy Statement.)

 

The Belo Corp. option awards that the NEOs retained as a result of the spin-off and that remained outstanding as of December 31, 2009 were as follows: Robert Decherd, 1,611,456; Jim Moroney, 467,500; Skip Cass, 165,500; Ali Engel, 3,500; and Dan Blizzard, 30,600. All of the options are fully-vested and have exercise prices ranging from $13.8627 to $22.3725 and expire on or before December 2016. Any amounts realized by the NEOs during fiscal year 2009 from the Belo Corp. option and RSU awards they retained as a result of the spin-off are presented below in the “Option Exercises and Stock Vested in 2009” table.

The scheduled vesting of the Belo Corp. RSU awards that the NEOs retained as a result of the spin-off and that remained outstanding as of December 31, 2009 is as follows: