Common Stock And Stock Plans

12 Months Ended

Dec. 25, 2011

Common Stock And Stock Plans [Abstract]

Common Stock And Stock Plans

NOTE 9. COMMON STOCK AND STOCK PLANS  

The Company's Class A and Class B Common Stock participate equally in dividends. Holders of Class B are entitled to one vote per share and to elect as a class 75% of the Board of Directors, rounded down to the nearest whole number. Holders of Class A Common Stock are entitled to one-tenth of a vote per share and to elect as a class 25% of the Board of Directors, rounded up to the nearest whole number. Class B Common Stock is convertible at the option of the holder into Class A Common Stock on a share-for-share basis.

The holders of shares of Class B Common Stock are parties to an agreement, the intent of which is to preserve control of the Company by the McClatchy family. Under the terms of the agreement, the Class B shareholders have agreed to restrict the transfer of any shares of Class B Common Stock to one or more "Permitted Transferees," subject to certain exceptions. A "Permitted Transferee" is any current holder of shares of Class B Common Stock of the Company; any lineal descendant of Charles K. McClatchy (1858 to 1936); or a trust for the exclusive benefit of, or in which all of the remainder beneficial interests are owned by, one or more lineal descendants of Charles K. McClatchy.

Generally, Class B shares can be converted into shares of Class A Common Stock and then transferred freely (unless, following conversion, the outstanding shares of Class B Common Stock would constitute less than 25% of the total number of all outstanding shares of common stock of the Company). In the event that a Class B shareholder attempts to transfer any shares of Class B Common Stock in violation of the agreement, or upon the happening of certain other events enumerated in the agreement as "Option Events," each of the remaining Class B shareholders has an option to purchase a percentage of the total number of shares of Class B Common Stock proposed to be transferred equal to such remaining Class B shareholder's ownership percentage of the total number of outstanding shares of Class B Common Stock. If all the shares proposed to be transferred are not purchased by the remaining Class B shareholders, the Company has the option of purchasing the remaining shares. The agreement can be terminated by the vote of the holders of 80% of the outstanding shares of Class B Common Stock who are subject to the agreement. The agreement will terminate on September 17, 2047, unless terminated earlier in accordance with its terms.

During fiscal 2011 the Company had five stock-based compensation plans, which are described below.

The Company's Amended Employee Stock Purchase Plan (the Purchase Plan) reserved 4,625,000 shares of Class A Common Stock for issuance to employees. Eligible employees may purchase shares at 85% of "fair market value" (as defined) through payroll deductions. The Purchase Plan can be automatically terminated by the Company at any time. In the third quarter of 2011 the Company issued shares from its Amended Employee Stock purchase Plan that exhausted substantially all of the shares reserved under the plan for issuance and the Company suspended the plan at that time.

The Company has two stock option plans which reserved Class A Common shares for issuance to key employees—the 1994 and 1997 plans (Employee Plans). Terms of each of the Employee Plans are substantially the same. Options are granted at the market price of the Class A Common Stock on the date of grant. The options vest in installments over four years, and once vested are exercisable up to 10 years from the date of grant. Although the plans permit the Company, at its sole discretion, to settle unexercised options by granting stock appreciation rights, the Company does not intend to avail itself of this alternative for option grants made under these plans. Both of these plans (which had 683,000 outstanding grants at December 25, 2011) have expired and have been replaced by the 2004 stock incentive plan (see the discussion below).

The Company's amended and restated stock option plan for outside directors (the 2001 Director Plan) provided for the issuance of shares of Class A Common Stock. Generally, under this plan each non-employee director was granted, at the conclusion of each regular annual meeting of stockholders, an option to purchase shares of Class A Common Stock at fair market value on the date of the grant. Terms of the 2001 Director Plan are similar to the terms of the Employee Plans. This plan (which had 157,000 outstanding grants at December 25, 2011) expired and was replaced by the 2004 stock incentive plan (see the discussion below).

The Company has a stock incentive plan (the 2004 plan) that reserves 9,000,000 Class A Common shares for issuance to key employees and outside directors. Terms of the 2004 plan are similar to the former employee and directors' plans, except that the 2004 plan permits the following type of incentive awards in addition to common stock, stock options and stock appreciation rights: restricted stock, unrestricted stock, stock units and dividend equivalent rights. Beginning in fiscal 2005, the Company awarded stock-settled stock appreciation rights (SARs) in lieu of stock options. The SARs were granted at fair market value, have a 10-year term and generally vest in four equal annual installments beginning on March 1 following the year for which the award was made.

In 2011 and 2010, the Company granted 15,000 and 10,000 shares of Class A Common Stock to each non-employee director at the conclusion of the regular annual meeting of stockholders in each year, respectively, resulting in the issuance of 150,000 shares in 2011 and 110,000 shares in 2010 from the 2004 plan.

The Company granted restricted stock units (RSUs) at fair market value on the date of grant to certain key employees from the 2004 plan as summarized below. The RSUs vest on March 1 two years after the date of grant.

	RSU's			Weighted Average Price
Granted December 15, 2009		845,000		$	3.42
Granted February 23, 2011		740,000		$	4.08
Forfeited		(140,000	)	$	3.70
Outstanding December 25, 2011		1,445,000		$	3.73

As of December 25, 2011, there were $1.8 million of unrecognized compensation costs for non-vested RSUs, which are expected to be recognized over 1.06 years.

Outstanding options and SARs are summarized as follows:

	Options/ SARs			Weighted Average Exercise Price		Aggregate Intrinsic Value (in  thousands)
Outstanding December 28, 2008		6,557,350		$	30.97	$	—
Granted		1,136,000		$	3.41
Forfeited		(312,000	)	$	11.95
Expired		(341,500	)	$	27.93
Outstanding December 26, 2009		7,039,850		$	26.79	$	3,086
Granted		10,000		$	4.96
Exercised		(119,250	)	$	1.70
Forfeited		(44,250	)	$	7.07
Expired		(254,150	)	$	40.53
Outstanding December 26, 2010		6,632,200		$	26.82	$	6,060
Granted		1,078,500		$	4.08
Exercised		(152,750	)	$	1.73
Forfeited		(132,250	)	$	3.99
Expired		(702,450	)	$	47.86
Outstanding December 25, 2011		6,723,250		$	22.01	$	874
Vested and Expected to Vest December 25, 2011		6,494,902		$	22.65	$	848
Options exercisable:
December 27, 2009		2,987,725				$	2
December 26, 2010		3,572,450				$	869
December 25, 2011		4,082,500				$	397

As of December 25, 2011, there were $4.3 million of unrecognized compensation costs related to options and SAR's granted under the Company's plans. The cost is expected to be recognized over a weighted average period of 1.8 years.

The following tables summarize information about stock options and SARs outstanding in the stock plans at December 25, 2011:

Range of Exercise Prices	Options/ SARs Outstanding		Average Remaining Contractual Life		Weighted Average Exercise Price		Options/ SARs Exercisable		Weighted Average Exercise Price
$1.5 - $3.42		2,361,500		6.94	$	2.47		937,750	$	2.33
$3.63 - $42.5		2,869,250		6.42	$	16.65		1,652,250	$	24.47
$47.22 - $73.36		1,492,500		2.29	$	63.21		1,492,500	$	63.21
$1.5 - $73.36		6,723,250		5.69	$	22.01		4,082,500	$	33.55

The weighted average remaining contractual life on options exercisable at December 25, 2011, was 4.64 years. The weighted average remaining contractual life of options vested and expected to vest at December 25, 2011, was 5.86 years. The fair value of the stock options and SARs granted was estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. The expected life of the options represents the period of time that options granted are expected to be outstanding using the historical exercise behavior of employees. The expected dividend yield is based on historical dividends declared per year, giving consideration for any anticipated change and the estimated stock price over the expected life of the options based on historical experience. Expected volatility was based on historical volatility for a period equal to the stock option's expected life for shares granted. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	2011			2010			2009
Expected life in years		6.16			6.10			6.06
Dividend yield		NIL			NIL			NIL
Volatility		0.87			0.83			0.82
Risk-free interest rate		2.53	%		2.77	%		2.72	%
Weighted average exercise price of options/SARs granted	$	4.08		$	4.96		$	3.41
Weighted average fair value of options/SARs granted	$	3.03		$	3.57		$	2.43

The Company also offered eligible employees the option to purchase Class A Common Stock under the Purchase Plan through its third fiscal quarter of 2011. The expense associated with the plan was computed using a Black-Scholes option valuation model with similar assumptions to those described for stock options, except that volatility is computed using a one-year look back given the short-term nature of this option. Expense associated with the Purchase Plan is included in the stock-related compensation.