Exhibit 10.1

 

THE WASHINGTON POST COMPANY

INCENTIVE COMPENSATION PLAN

 

Amended and restated effective September 9, 2004

 

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Table of Contents

 

1.  

Purposes

   2 2.  

Administration of the Plan

   2 3.  

Participation

   2 4.  

Duration of Plan

   3 5.  

Annual Incentive Provision

   3 6.  

Determination of Annual Awards

   5 7.  

Method Payment of Annual Awards and Time of Payment

   5 8.  

Long-Term Incentive Award Cycles; Awards

   6 9.  

Restricted Stock

   7 10.  

Performance Units

   11 11.  

Expenses

   14 12.  

Adjustments in Class B Common Stock

   14 13.  

Amendment

   14

 

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THE WASHINGTON POST COMPANY

 

INCENTIVE COMPENSATION PLAN

 

As Amended and Restated

 

Effective September 9, 2004

 

1. Purposes

 

The purposes of this Incentive Compensation Plan (hereinafter called the Plan)
of The Washington Post Company, a Delaware corporation (hereinafter called the
Company), are (a) to provide greater incentives to key employees to increase the
profitability of the Company and its subsidiaries and (b) to strengthen the
ability of the Company and its subsidiaries to attract, motivate and retain
persons of merit and competence upon which, in large measure, continued growth
and profitability depend.

 

2. Administration of the Plan

 

The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (hereinafter called the Committee) as constituted from
time to time by the Board of Directors. No member of the Committee shall be
eligible to participate in the Plan. The Committee shall have full power and
authority to make all decisions and determinations with respect to the Plan,
including without limitation the power and authority to interpret and administer
the Plan, adopt rules and regulations and establish terms and conditions, not
inconsistent with the provisions of the Plan, for the administration of its
business and the implementation of the Plan.

 

3. Participation

 

(a) Participation in the Plan shall be extended to senior executives, key
managers and key personnel of the Company and its subsidiaries who, in the
opinion of the Committee, are mainly responsible for the management of the
operations of the Company

 

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and its subsidiaries or who are otherwise in a position to make substantial
contributions to the management, growth and success of the business of the
Company.

 

(b) Directors as such shall not participate in the Plan, but the fact that an
employee is also a Director of the Company or a subsidiary shall not prevent his
participation.

 

(c) As used in the Plan, the term “Company” shall mean The Washington Post
Company and any subsidiary thereof.

 

(d) The Plan shall not be deemed to preclude the making of any award pursuant to
any other compensation, incentive, bonus or stock option plan which may be in
effect from time to time.

 

4. Duration of Plan

 

The Plan shall remain in effect until terminated by the Board of Directors;
provided, however, that the termination of the Plan shall not affect the
delivery or payment of any award made prior to the termination of the Plan.

 

5. Annual Incentive Provision

 

(a) For each fiscal year the Committee may make incentive awards in an aggregate
amount not to exceed the Maximum Incentive Credit (as hereinafter defined) for
such year (the Annual Award).

 

(b) The term “Maximum Incentive Credit”, as used herein, shall mean for any year
an amount determined as follows: (i) there shall first be calculated an amount
equal to twelve (12) percent of Stockholders’ Equity (hereinafter called the
“Basic Return on Equity”); (ii) there shall then be deducted from Consolidated
Profit Before Income Taxes an amount equal to the Basic Return on Equity, the
excess (if any) being hereinafter called “Incentive Profit”; (iii) the Maximum
Incentive Credit shall be ten (10) percent of Incentive Profit. The term
“Consolidated Profit Before Income Taxes”, as used herein,

 

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shall mean for any year the sum of (i) the profit before income taxes (exclusive
of special credits and charges and extraordinary items) included in the
Consolidated Statement of Income of the Company for such year and (ii) the
amount of incentive compensation provided for in computing such profit before
income taxes. The term “Shareholders’ Equity”, as used herein, shall mean for
any year the amount reported as stockholders’ equity (or the comparable item,
however designated) at the end of the preceding year as included in the
Consolidated Balance Sheet of the Company for the preceding year, with
appropriate pro rata adjustments, as approved by the Committee, for any change
during the year arising from any increase or decrease in outstanding capital
stock.

 

(c) During the last month of each fiscal year the Vice President-Finance of the
Company shall advise the Committee of the estimated Maximum Incentive Credit for
such fiscal year and the Committee shall determine the employees who are to
receive awards for such fiscal year and the amount of each such award.

 

(d) As soon as practicable after the close of each fiscal year the Company’s
independent public accountants shall calculate and certify to the Committee the
Maximum Incentive Credit for such fiscal year.

 

(e) The amount determined and reported by the Company’s independent auditors as
the Maximum Incentive Credit for any fiscal year shall be final, conclusive and
binding upon all parties, including the Company, its stockholders and employees,
notwithstanding any subsequent special item or surplus charge or credit that may
be considered applicable in whole or in part to such fiscal year; provided that
if the amount actually awarded for any fiscal year should later be determined by
a court of competent jurisdiction to have exceeded the Maximum Incentive Credit
for such fiscal year, the Maximum Incentive Credit for the fiscal year next
succeeding such determination shall be reduced by the amount of such excess. Any
such excess shall thus be corrected exclusively

 

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by adjustments of the amounts subsequently available for awards and not be
recourse to the Company, the Board of Directors, the Committee, any participant
or any other person.

 

6. Determination of Annual Awards

 

The Committee shall determine the participants to receive incentive awards for
each fiscal year, the amount and the form of each award (which shall not exceed
in value the lesser of 200% of a participant’s base earnings or $1 million), and
the other terms and conditions applicable thereto. Specifically, the Committee
shall establish performance goals related to operating income, cash flow,
earnings per share, return on assets, return on equity, operating margins,
economic value added (EVA), cash flow margins, shareholder return, cost control
and/ revenue growth measurements, which may be in respect of the Company, as a
whole, or any business unit thereof, before the commencement of the services to
which an incentive award relates and in no event later than March 31 of the year
to which the award relates or such other date as may be permitted under the
Internal Revenue Code.

 

7. Method Payment of Annual Awards and Time of Payment

 

(a) All Annual Awards shall be made in cash.

 

(b) Annual Awards may be paid in a lump sum, in annual installments, or
otherwise, or deferred until after retirement or as otherwise provided herein
below.

 

(c) When payments or distributions of Annual Awards are not to be made in a lump
sum in the year of the award, the Committee shall fix the time or times of
payments or distributions, and may impose such terms and conditions with respect
to the making of payments or distributions and forfeitures thereof, as in its
judgment will best serve the interests of the Company and the purposes of the
Plan.

 

(d) The Committee may also in its sole discretion establish terms and conditions
under which a participant may elect to defer the payment of an award in whole

 

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or in part to a period following retirement or other termination of employment
pursuant to The Washington Post Company Deferred Compensation Plan (the
“Deferred Compensation Plan”), provided that any election by an employee to
defer payment shall be irrevocably made by him at such time prior to the
beginning of the year for which such award shall be made as the Committee shall
determine and shall earn investment credits reflecting gains or losses in
accordance with a Participant’s individual Investment Election as provided in
the Deferred Compensation Plan.

 

(e) The Committee may also in its sole discretion establish arrangements, terms
and conditions under which portions of awards payable in the future may be or
may be deemed to have been invested in securities or other suitable or
appropriate property. The amount of such future payments, whether made in
installments or deferred until after retirement or other termination of
employment, shall be subject to increase or decrease to reflect income earned or
deemed earned on, and gains or losses of principal of, the funds so invested or
deemed to be so invested.

 

8. Long-Term Incentive Award Cycles; Awards

 

(a) During the term of the Plan the Committee shall from time to time establish
Award Cycles, each of which shall commence on the first day of a fiscal year of
the Company and shall consist of not less than three nor more than four fiscal
years of the Company (subject to subparagraph 9(c)(ii) below). At least two such
fiscal years shall elapse between the beginning of consecutive Award Cycles.

 

(b) For each Award Cycle the Committee shall

 

(i) designate the participants who are to receive awards of Restricted Stock for
such Award Cycle and, subject to paragraph 9(a), the number of shares of
Restricted Stock awarded to each such participant,

 

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(ii) designate, subject to paragraph 10(a), the participants who are to receive
awards of Performance Units for such Award Cycle and the number of Performance
Units awarded to each such participant, and

 

(iii) establish, subject to paragraph 10(b), the method for determining at the
end of such Award Cycle the value of a Performance Unit awarded at the beginning
of such Award Cycle.

 

9. Restricted Stock

 

(a) To each participant designated to receive an award of Restricted Stock for
an Award Cycle there shall be (1) issued (subject to subparagraph (b) below) a
stock certificate, registered in the name of such participant, or (2) a book
entry made in the name of such participant, in each case representing such
number of restricted shares of Class B Common Stock of the Company (hereinafter
called Common Stock) as the Committee shall determine (hereinafter called
Restricted Stock); provided, however, that such number of shares shall not
exceed 10,000.

 

(b) Within 30 days after the effective date of a Restricted Stock award, each
recipient of such an award shall deliver to the Company (i) an executed copy of
a Restricted Stock Agreement containing the terms and provisions set forth in
subparagraph (c) below and (ii) a stock power executed in blank. Upon receipt of
such agreement and stock power executed by the participant, the Company shall
cause the stock certificate referred to in subparagraph (a) to be issued in the
name of the participant and delivered to the Secretary of the Company in custody
for such participant or the book entry referred to in subparagraph (a) to be
made in the name of the participant on the books of the Company. The failure of
a participant to return such agreement and stock power within such 30-day period
without cause shall result in cancellation of the Restricted Stock Award

 

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to such participant, and no stock certificate therefor shall be issued in his
name or book entry be made in his name.

 

(c) Each Restricted Stock Agreement accompanying an award of Restricted Stock
made for an Award Cycle shall contain the following provisions, together with
such other provisions as the Committee shall determine:

 

(i) Except as hereinafter provided, none of the shares of Restricted Stock
subject thereto may be sold, transferred, assigned, pledged or otherwise
disposed of before the day following the end of such Award Cycle (hereinafter
called the Vesting Date).

 

(ii) Except as provided below, if the participant is continuously employed by
the Company until the end of the Award Cycle, the restriction set forth in
subparagraph (c)(i) above shall terminate on the Vesting Date as to all the
shares of Restricted Stock. In the event that the participant takes a leave of
absence at any time during an Award Cycle (for Award Cyles after September 9,
2004), the Vesting Date for such grant may, in the sole discretion of the
Compensation Committee, be extended by a period up to the equivalent number of
days that the participant was out on a leave of absence (the “Extended Vesting
Date”) and the restrictions set forth in subparagraph (c)(i) above shall
terminate on such Extended Vesting Date. Notwithstanding the foregoing, in the
case of a participant who is an executive officer of the Company at the time of
the award, the Committee shall, prior to the beginning of each Award Cycle,
establish a formula based on cash flow, operating income, earnings per share,
economic value added (EVA), return on assets, total return on equity of the
Company, operating margins, cash flow margins, shareholder return, cost control
and/or revenue

 

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growth measurements over the period of the Award Cycle, which will have to be
achieved if the restriction set forth in subparagraph (c)(i) above is to
terminate as provided in this subparagraph (c)(ii).

 

(iii) If the participant’s employment by the Company terminates before the
Vesting Date or Extended Vesting Date, as the case may be, the restriction set
forth in paragraph (c)(i) shall terminate on the date his employment terminates
(including by reason of death or disability) as to a percentage of the number of
shares of Restricted Stock originally awarded (rounded to the nearest whole
share) determined as set forth below (and ownership of all shares of Restricted
Stock as to which such restriction shall not so terminate shall forthwith revert
to the Company):

 

(A) if termination is by reason of death, disability or retirement at Normal
Retirement Age (as defined in the Company’s Retirement Plan), the percentage
determined by dividing (i) the number of full months elapsed from the effective
date of the award to the date of such termination (less, at the discretion of
the Compensation Committee, the period of full months that a participant was on
a leave of absence during the Award Cycle (for Award Cycles commencing after
September 9, 2004) by (ii) the number of full months from such effective date to
the Vesting Date for such Award Cycle (such percentage being hereinafter called
the Pro-Rated Percentage);

 

(B) if termination is by reason of retirement at or after age 55, but prior to
Normal Retirement Age (as defined

 

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in the Company’s Retirement Plan), such percentage (not greater than the
Pro-Rated Percentage) as the Committee may in its sole discretion determine;

 

(C) if termination occurs for any other reason (voluntary or involuntary) more
than two years from the effective date of the award, such percentage, if any,
(but not greater than the Pro-Rated Percentage) as the Committee may in its sole
discretion determine; and

 

(D) if termination occurs for any other reason (voluntary or involuntary) within
two years from the effective date of the award, ownership of all the shares of
Restricted Stock shall revert to the Company.

 

(iv) Promptly after the restriction set forth in subparagraph (c)(i) shall
terminate as to any shares of Restricted Stock, the participant to whom such
shares were awarded (or his estate) shall pay to the Company the amount of all
Federal, state and local withholding taxes payable on the compensation
represented by such shares, and upon receipt of such payment the Company shall
deliver to the participant a stock certificate or certificates for such shares.
Alternatively, pursuant to rules established by the Compensation Committee, a
participant may elect to receive all or a portion of his award in the form of
cash in lieu of shares, based on the fair market value (the mean between the
high and low price per share on the New York Stock Exchange) of such shares on
the date the restrictions set forth in subparagraph (c)(i) shall terminate; and
the Company will deduct the amount of all withholding taxes payable on the
compensation represented

 

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by such shares from the cash value of the shares to be paid to the participant.

 

(v) As long as shares of Restricted Stock remain registered in the name of a
participant he shall be entitled to all the attributes of ownership of such
shares (subject to the restriction on transfer referred to above), including the
right to vote such shares and to receive all dividends declared and paid on such
shares.

 

(d) All shares of Common Stock issued to recipients of Restricted Stock awards
shall be issued from previously issued and outstanding shares held in the
Treasury of the Company.

 

(e) The total number of shares of Common Stock that may be awarded as Restricted
Stock under the Plan shall not exceed 275,000 shares; provided, however, that
effective November 1, 1991, shares which revert to the Company in accordance
with paragraph 5(c)(iii) shall be deemed to have been awarded as Restricted
Stock for purposes of determining the number of shares of Restricted Stock
remaining available to be awarded hereunder.

 

10. Performance Units

 

(a) To each participant designated to receive an award of Performance Units for
an Award Cycle there shall be issued a Performance Unit Certificate representing
such number of Performance Units with a nominal value of $100 each as the
Committee shall determine; provided, however, that the total nominal value of
Performance Units awarded to a participant for any Award Cycle shall not exceed
300% of such participant’s base salary at the date of such award.

 

(b) No later than 90 days after the beginning of each Award Cycle the Committee
shall establish a method for determining the earned value of a Performance

 

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Unit at the end of such Award Cycle (hereinafter called the Payout Value) based
on performance goals over the period of the Award Cycle related to operating
income, cash flow, shareholder return, return on assets, return on equity,
operating margins, cost control, customer satisfaction, economic value added
(EVA) and/or revenue growth measurements, which may be in respect of the
Company, as a whole, or any business unit thereof; provided, however, that such
method shall provide that (i) no Payout Value may exceed $200 and (ii) the
payment of an award of Performance Units to any participant at the end of an
Award Cycle shall be the lesser of $4 million or the amount determined by
multiplying the Payout Value times the number of Performance Units granted to
such participant.

 

(c) If a participant’s employment by the Company terminates before the end of an
Award Cycle for which he was granted Performance Units, after the end of such
Award Cycle, he shall be entitled to a percentage of the Payout Value of said
Performance Units determined as set forth below:

 

(A) if termination is by reason of death, disability or retirement at Normal
Retirement Age (as defined in the Company’s Retirement Plan), the Pro-Rated
Percentage;

 

(B) if termination is by reason of retirement at or after age 55, but prior to
Normal Retirement Age (as defined in the Company’s Retirement Plan), such
percentage (not greater than the Pro-Rated Percentage) as the Committee may in
its sole discretion determine;

 

(C) if termination occurs for any other reason (voluntary or involuntary) more
than two years after the effective date of the award, such percentage, if any
(but not greater than the Pro-Rated Percentage), as the Committee may in its
sole discretion determine; and

 

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(D) if termination occurs for any other reason (voluntary or involuntary) within
two years from the effective date of the award, no percentage of the Payout
Value shall be paid.

 

(d) As promptly as practicable after the end of each Award Cycle, the Payout
Value of a Performance Unit awarded at the beginning of such Award Cycle shall
be calculated and paid (unless otherwise deferred as provided herein) in cash to
the recipients awarded such Performance Units after deduction of all Federal,
state and local withholding taxes payable on the compensation represented
thereby. Notwithstanding the foregoing, in the event a participant takes a leave
of absence at any time during an Award Cycle (for Award Cycles commencing after
September 9,2004), the payment of the Payout Value of his Performance Units may,
in the sole discretion of the Compensation Committee, be deferred by a period up
to the equivalent number of days that the participant was out on a leave of
absence. In addition, the Committee may, in its sole discretion, establish terms
and conditions under which a participant may elect to defer the payment of the
Payout Value of a Performance Unit in whole or in part pursuant to the Deferred
Compensation Plan to a period following retirement or other termination of
employment, provided that any election by a participant to defer payment shall
be irrevocably made by him at such time prior to the beginning of the year for
which such award shall be made as the Committee shall determine and shall earn
investment credits reflecting gains or losses in accordance with a Participant’s
individual Investment Election as provided in the Deferred Compensation Plan.

 

(e) At the end of each Award Cycle the Committee may, in its sole discretion,
award to those senior executives of the Company and its subsidiaries who are not
executive officers of the Company and whose performance during such Award Cycle
the Committee believes merits special recognition cash bonuses in an aggregate
amount

 

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not to exceed 10% of the aggregate Payout Value of all Performance Units that
become vested and payable with respect to such Award Cycle.

 

11. Expenses

 

The expenses of administering this Plan shall be borne by the Company.

 

12. Adjustments in Class B Common Stock

 

In the event of any change or changes in the outstanding shares of Common Stock
by reason of any stock dividend, split-up, recapitalization, combination or
exchange of shares, merger, consolidation, separation, reorganization,
liquidation or the like, the class and aggregate number of shares that may be
awarded as Restricted Stock under the Plan after any such change shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.

 

13. Amendment

 

The Board of Directors of the Company shall have complete power and authority to
amend, suspend or discontinue this Plan, provided, however, that the Board of
Directors shall not, without the approval of the holders of a majority of the
voting stock of the Company entitled to vote thereon, (A) increase either (i)
the maximum number of shares of Restricted Stock that may be awarded under the
Plan, (ii) the maximum number of shares of Restricted Stock or Performance Units
that may be awarded to a participant, (iii) the maximum Payout Value of a
Performance Unit, or (iv) the percentage ceiling on the aggregate amount of
bonuses which may be awarded pursuant to paragraph 11(e) or (B) make any
amendment which would permit the incentive provision of any year provided in
paragraph 5 hereof to exceed the limitations set forth in said paragraph.

 

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