-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OfbEq9ZTUFDfiu0+tU6n8vu+C0Ld/7BiF36DXSvyCjFJLnUm3bSkyLPFBhzNv2+t Z0Q50wyekFo1k0UCZW2D2g== 0000071023-05-000014.txt : 20050624 0000071023-05-000014.hdr.sgml : 20050624 20050624103508 ACCESSION NUMBER: 0000071023-05-000014 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050708 FILED AS OF DATE: 20050624 DATE AS OF CHANGE: 20050624 EFFECTIVENESS DATE: 20050624 FILER: COMPANY DATA: COMPANY CONFORMED NAME: THOMAS NELSON INC CENTRAL INDEX KEY: 0000071023 STANDARD INDUSTRIAL CLASSIFICATION: BOOKS: PUBLISHING OR PUBLISHING AND PRINTING [2731] IRS NUMBER: 620679364 STATE OF INCORPORATION: TN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13788 FILM NUMBER: 05913988 BUSINESS ADDRESS: STREET 1: 501 NELSON PLACE CITY: NASHVILLE STATE: TN ZIP: 37214-1000 BUSINESS PHONE: 6158899000 MAIL ADDRESS: STREET 1: P O BOX 141000 CITY: NASHVILLE STATE: TN ZIP: 37214-1000 FORMER COMPANY: FORMER CONFORMED NAME: NELSON THOMAS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL PUBLISHERS INC DATE OF NAME CHANGE: 19721019 DEF 14A 1 prxy2005.txt PROXY STATEMENT FOR FY 2005 SHAREHOLDERS' MEETING THOMAS NELSON, INC. 501 Nelson Place P.O. Box 141000 Nashville, Tennessee 37214-1000 ---------------------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ---------------------------------------- The Annual Meeting of Shareholders (the "Annual Meeting") of Thomas Nelson, Inc. (the "Company") will be held at the Hilton Suites Nashville, 121 4th Avenue South, Nashville, Tennessee, at 11:00 a.m., local time, on Thursday, August 18, 2005, for the following purposes: 1. To elect TWO directors in Class Three to serve for a term of three years and until their respective successors are elected and take office, or until their earlier resignation or removal; and 2. To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. Only shareholders of record at the close of business on June 21, 2005 will be entitled to notice of and to vote at the Annual Meeting. Whether or not you plan to attend the meeting in person, please complete, date, sign, and return promptly the enclosed proxy. The proxy may be revoked at any time prior to the exercise thereof, and submitting the proxy will not affect your right to attend the Annual Meeting and vote in person. By order of the Board of Directors, /s/ Joe L. Powers Joe L. Powers Executive Vice President and Secretary Nashville, Tennessee July 8, 2005 THOMAS NELSON, INC. 501 Nelson Place P.O. Box 141000 Nashville, Tennessee 37214-1000 --------------- PROXY STATEMENT --------------- This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Thomas Nelson, Inc., a Tennessee corporation (the "Company"), to be voted at the Annual Meeting of Shareholders to be held on August 18, 2005 (the "Annual Meeting"), at the time and place and for the purposes set forth in the accompanying notice, and at any postponement or adjournment thereof. It is expected that this proxy statement, the form of proxy and the Company's Annual Report to Shareholders will be mailed to shareholders on or about July 8, 2005. Only shareholders of record at the close of business on June 21, 2005 (the "Record Date") are entitled to notice of and to vote at the Annual Meeting. On such date, the issued and outstanding voting securities of the Company consisted of 13,949,375 shares of Common Stock (the "Common Stock") and 916,362 shares of Class B Common Stock (the "Class B Common Stock"). Each share of Common Stock entitles the holder thereof to one vote on each matter presented for action at the Annual Meeting. Each share of Class B Common Stock entitles the holder to ten votes on each matter presented for action at the Annual Meeting. All proxies delivered pursuant to this solicitation may be revoked at any time prior to the voting thereof by attending the Annual Meeting and electing to vote in person, by filing with the Secretary of the Company a written revocation, or by duly executing a proxy bearing a later date. Submitting the proxy will not affect the right of the shareholder to attend the Annual Meeting and vote in person. If not revoked, all proxies that are properly signed and returned to the Company will be voted in accordance with instructions contained thereon. If no instructions are given, the persons named in the proxy will vote the shares represented thereby FOR the approval of the election as directors of all nominees set forth under PROPOSAL NO. 1. The Board of Directors knows of no other matters that are to be brought to a vote at the Annual Meeting. If any other matter does come before the Annual Meeting, the persons appointed in the proxy or their substitutes will vote in accordance with the recommendation of the Board of Directors or, if no recommendation is given, in their best judgment. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of the Record Date (unless otherwise indicated) with respect to those persons known to the Company to be the beneficial owners (as defined by the rules of the Securities and Exchange Commission (the "Commission")) of more than five percent (5%) of either Common Stock or the Class B Common Stock and with respect to the beneficial ownership of the Common Stock and Class B Common Stock by all directors and nominees, each of the executive officers named in the Summary Compensation Table and all executive officers and directors of the Company as a group. Except as otherwise specified, the shares indicated are presently outstanding, and the Company believes the beneficial owner has sole voting and investment power over the indicated shares.
Amount of Amount of Class B Common Stock Percent Common Stock Percent Beneficially of Beneficially of Name of Beneficial Owner Owned # (1)(2) Class Owned # (1)(2) Class - ----------------------- --------------- ------- -------------- ------- Sam Moore **** (3) 2,101,973 14.6% 1,013,442 75.1% Gabelli Asset Mgmt., Inc. & Subsidiaries (4) 1,682,680 12.1 - * Barclays Global Investors, N.A. (5) 1,360,397 9.8 - * Arbor Capital Management, LLC (6) 749,100 5.4 - * Thomas Nelson, Inc. Savings and Investment Plan - Employee Benefits Committee (7) 507,814 3.7 - * S. Joseph Moore** (8) 299,018 2.2 91,987 10.0 Millard V. Oakley** (9) 290,864 2.1 19,542 2.1 Jesse T. Correll** (10) 271,380 2.0 - * Brownlee O. Currey, Jr.** (11) 204,754 1.5 4,035 * Joe L. Powers*** (12) 162,512 1.2 - * Charles Z. Moore***** 143,347 1.0 66,293 7.2 Michael S. Hyatt*** (13) 107,340 * - * Vance Lawson*** (14) 67,729 * 5,000 * W. Lipscomb Davis, Jr.** (11) 31,312 * - * Jerry Park*** 24,269 * - * Ronald W. Blue** (15) 8,000 * - * All Executive Officers and Directors as a group (11 persons) (16) 3,569,152 24.1% 1,134,006 83.7% - ---------------------------- * Indicates less than 1%. ** Director. *** Named Officer. **** Director and Named Officer. ***** Former Named Officer.
(1) Pursuant to the rules of the Commission, the shares subject to options held by directors and executive officers of the Company which are exercisable within 60 days of the Record Date are all deemed outstanding for the purpose of computing such director's or executive officer's percentage ownership and the percentage ownership of all directors and executive officers as a group, but are not deemed outstanding for the purpose of computing the percentage ownership of the other beneficial owners in the table. The share information further assumes that when such individuals can elect to receive either Common Stock or Class B Common Stock upon exercise of options, an election is made to receive Class B Common Stock. (2) Shares of Class B Common Stock are convertible into an equal number of shares of Common Stock at the option of the holder, and, wherever applicable, share information set forth above with respect to the Common Stock assumes the conversion of all Class B Common Stock, including options convertible into either Common Stock or Class B Common Stock at the holder's option, by the holders thereof for an equivalent number of shares of Common Stock that may be so acquired by conversion during the 60-day period commencing on the Record Date. (3) Includes shares issuable upon exercise of outstanding options to purchase 123,316 shares of Common Stock and 426,684 shares of Class B Common Stock under the Company's Amended and Restated 1992 Stock Incentive Plan (the "1992 Stock Incentive Plan") and the 2003 Stock Incentive Plan, 301,945 shares of Common Stock held by two trusts of which Mr. Moore is trustee, and 250,000 shares held by the Moore International Foundation. Sam Moore's spouse owns 31,418 shares of Common Stock and 3,435 shares of Class B Common Stock. Sam Moore's address is 501 Nelson Place, P.O. Box 141000, Nashville, Tennessee 37214-1000. (4) As reflected in a Schedule 13D filed with the Commission on November 22, 2004 by Gabelli Asset Management, Inc. The address of Gabelli Asset Management, Inc. is One Corporate Center, Rye, New York 10580-1434. (5) As reflected in a Schedule 13G filed with the Commission on February 14, 2005 by Barclays Global Investors, N.A. The address of Barclays Global Investors, N.A. is 45 Fremont Street, 5th Floor, San Francisco, CA 94105. (6) As reflected in Schedule 13G filed with the Commission on February 4, 2005 by Arbor Capital Management, LLC. The address of Arbor Capital Management is 120 South Sixth Street, Suite 1000, One Financial Plaza, Minneapolis, MN 55402. (7) Pursuant to the terms of the ESOP, the investment committee shares dispositive power with the ESOP participants. The address of Thomas Nelson, Inc. Savings & Investment Plan-Employee Benefit Committee is 501 Nelson Place, P.O. Box 141000, Nashville, Tennessee 37214-1000. (8) Includes 22,750 shares of Common Stock and 36,785 shares of Class B Common Stock held by a trust of which S. Joseph Moore is a trustee and the sole beneficiary, 23,625 shares of Common Stock and 1,000 shares of Class B Common Stock owned by S. Joseph Moore as custodian for certain of S. Joseph Moore's children. S. Joseph Moore's spouse owns 2,380 shares of Common Stock. Excluded from the table are 44,167 Class B Common shares held in trust, of which S. Joseph Moore has a 50% discretionary income interest for life; however, he has disclaimed his beneficial ownership interest of these shares. (9) Includes 24,000 shares of Common Stock issuable upon exercise of outstanding options under the 1992 and 2003 Stock Incentive Plans and 12,500 shares of Common Stock, for which Mr. Oakley disclaims any voting or dispositive power, held by Mr. Oakley's spouse. (10) Includes 10,000 shares of Common Stock issuable upon exercise of outstanding options under the 1992 and 2003 Stock Incentive Plans. Mr. Correll has decided not to stand for re-election but will serve through the end of his current term, August 18, 2005. (11) Includes 24,000 shares of Common Stock issuable upon exercise of outstanding options under the 1992 and 2003 Stock Incentive Plans. (12) Includes shares issuable upon exercise of outstanding options to purchase 128,333 shares of Common Stock under the 1992 Stock Incentive Plan. Mr. Powers' address is 501 Nelson Place, P.O. Box 141000, Nashville, TN 37214-1000. (13) Includes shares issuable upon exercise of outstanding options to purchase 105,000 shares of Common Stock under the 1992 and 2003 Stock Incentive Plans and 2,340 shares of Common Stock held by the ESOP as to which Mr. Hyatt has sole voting power. Mr. Hyatt's address is 501 Nelson Place, P. O. Box 141000, Nashville, TN 37214-1000. (14) Includes shares issuable upon exercise of outstanding options to purchase 54,433 shares of Common Stock and 5,000 shares of Class B Common Stock under the 1992 Stock Incentive Plan and 5,896 shares of Common Stock held by the ESOP, as to which Mr. Lawson has sole voting power. Mr. Lawson's address is 501 Nelson Place, P.O. Box 141000, Nashville, TN 37214-1000. (15) Includes 8,000 shares of Common Stock issuable upon exercise of outstanding options under the 1992 and 2003 Stock Incentive Plans. (16) Includes an aggregate of 8,236 shares of Common Stock held by the ESOP, and shares issuable upon exercise of options to purchase 511,082 shares of Common Stock and 431,684 shares of Class B Common Stock. PROPOSAL NO. 1 ELECTION OF DIRECTORS The Amended and Restated Charter of the Company provides that the Board of Directors shall be divided into three classes with the classes to be as nearly equal in size as possible. Each class serves for a term of three years, with the terms of office of the directors in each respective class expiring in successive years. The current Board of Directors consists of eight members, with the terms of office of the directors in Class Three expiring at the Annual Meeting. The incumbent directors whose terms of office extend beyond this Annual Meeting are as follows:
Annual Meeting Director at which Name Class term expires ---- -------- -------------- S. Joseph Moore Two 2006 Millard V. Oakley Two 2006 Sam Moore One 2007 Ronald W. Blue One 2007 Michael S. Hyatt One 2007
Class Three - ----------- Mr. Jesse T. Correll has declined to be nominated for re-election. His term will expire at this Annual Meeting. The Board has determined to decrease the size of the Board of Directors to seven members, effective upon the 2005 Annual Meeting of Shareholders. The Board of Directors, based on the recommendation of its Nominating and Corporate Governance Committee, has nominated the following two persons for re-election as directors in Class Three with terms of office of three years, expiring at the Annual Meeting of Shareholders to be held in 2008, and until their successors are elected and qualified, or until their earlier resignation or removal. Brownlee O. Currey, Jr. W. Lipscomb Davis, Jr. Mr. Currey and Mr. Davis are currently members of the Board of Directors and were each previously elected as a director by the shareholders. It is intended that proxies received in response to this solicitation will, unless otherwise specified, be voted in favor of the election of the above persons as directors of the Company for the terms set forth above and until their successors are elected and qualified, or until their earlier resignation or removal. In case any of these persons are unable or decline to serve, it is intended, in the absence of contrary direction, that the proxies will be voted for the remaining nominee(s) and for substitute nominee(s) selected by the Board of Directors. The Board of Directors has no reason to expect that any of the nominees will not be available for election at the Annual Meeting and, therefore, does not at this time have any substitute nominees under consideration. A plurality of the votes cast by the shares entitled to vote in the election is required to elect a director. Shareholders have no right to vote cumulatively for directors, but rather each shareholder may cast one vote for each share of Common Stock and ten votes for each share of Class B Common Stock held by such shareholder for each director to be elected. The Board of Directors recommends a vote FOR all nominees. The following table contains additional information concerning the incumbent directors who will remain in office and the director nominees. Except as indicated below, each director and nominee has been an employee of the firm(s) listed below as his principal occupation for more than the past five years.
Director Name Principal Occupation Age Since - ------------------------------------------------------------------------------- Ronald W. Blue President of Christian Financial 63 2003 (A,E & N) Network, a private investment firm. Former Chairman emeritus of Ronald Blue & Co., LLC from January 2002 to July 2003; Founder and CEO of Ronald Blue & Co., LLC from 1979 to January 2002; Board of Directors of Campus Crusade for Christ, Crown Financial Ministries, and The National Christian Foundation from 1999 to current. Brownlee O. Currey, Jr. President, Currey Investments, a 76 1984 (A, C & N) private investment firm. Previously served as Chairman of the Board of The Nashville Banner Publishing Co. from January 1980 to May 1998. W. Lipscomb Davis, Jr. Partner of Hillsboro Enterprises, 73 1984 (A, C & E) a private investment firm. Board of Directors for Genesco, Inc. from 1988 to current. Michael S. Hyatt President and Chief Operating Officer 49 2004 (E) of the Company. Sam Moore Chairman of the Board and Chief 75 1961 (E) Executive Officer of the Company; Sam Moore is the father of S. Joseph Moore. S. Joseph Moore President of C.R. Gibson, Inc., 42 1995 (E) a company which designs and sells gift products, from November 2001 to present; from 1995 to October 2001, served as Executive Vice President of the Company; S. Joseph Moore is the son of Sam Moore. Millard V. Oakley Businessman managing private 75 1972 (C, E & N) investments.
- ----------------------- Member of Executive (E), Compensation (C), Nominating and Corporate Governance (N), Audit (A) Committee BOARD AND COMMITTEE MEETINGS - ---------------------------- The Board of Directors has four standing committees--the Executive Committee, the Compensation Committee, the Audit Committee, and the Nominating and Corporate Governance Committee, the members of which are indicated in the previous table. Executive Committee - ------------------- The Executive Committee has such powers and authority as may be legally delegated to the Executive Committee by the Board of Directors from time to time. Compensation Committee - ---------------------- Among other responsibilities, the Compensation Committee reviews and approves management compensation and administers the Company's retirement and incentive plans. The Board of Directors has determined that each current member of the Compensation Committee is independent within the meaning of the New York Stock Exchange (the "NYSE") corporate governance standards and the Securities and Exchange Commission's director independence standards for compensation committee members. The responsibilities of the Compensation Committee and its activities during fiscal 2005 are more fully described in the Compensation Committee Report contained in this Proxy Statement. The charter of the Compensation Committee is available on the investor relations section of our website. Nominating and Corporate Governance Committee - --------------------------------------------- The purpose of the Nominating and Corporate Governance Committee is to, among other responsibilities, identify, evaluate and recommend to the Board of Directors nominees for election to the Board of Directors, develop and recommend to the Board corporate governance principles and guidelines and oversee and advise the Board with respect to corporate governance matters. Additional information regarding the responsibilities of the Nominating and Corporate Governance Committee and its activities in fiscal 2005 is provided in the "Corporate Governance and Related Matters" section in this Proxy Statement. The charter of the Nominating and Corporate Governance Committee is available on the investor relations section of our website. The Nominating and Corporate Governance Committee will consider nominees recommended by the holders of the Common Stock and Class B Common Stock provided such proposed nominees are submitted to the Company in the manner and within the time limit for shareholder proposals as set forth within this proxy statement and the Company's bylaws and the rules and regulations of the Commission. The Board of Directors has determined that each current member of the Nominating and Corporate Governance Committee is independent within the meaning of the NYSE corporate governance standards and the Commission's director independence standards for nominating committee members. Audit Committee - --------------- The Audit Committee oversees the accounting and financial reporting processes and controls of the Company and the audits of the financial statements of the Company. Among other responsibilities, the Audit Committee (i) oversees the appointment, compensation, retention and oversight of the work performed by any independent public accountants engaged by the Company, (ii) recommends, establishes and monitors procedures designed to improve the quality and reliability of the disclosure of the Company's financial condition and results of operations and (iii) establishes procedures designed to facilitate (a) the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters and (b) the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. Additional information regarding the responsibilities of the Audit Committee and its activities in fiscal 2005 is provided in the Audit Committee Report contained in this Proxy Statement. The charter of the Audit Committee is available on the investor relations section of our website. The Board of Directors has determined that each current member of the Audit Committee is independent within the meaning of the NYSE listing standards and the Commission's director independence standards for audit committee members, has the accounting and financial related management expertise required by the NYSE listing standards, and that Mr. Blue qualifies as an "audit committee financial expert" under the rules of the Commission. Meeting Attendance - ------------------ During the last fiscal year, the Board of Directors held five meetings, the Compensation Committee held two meetings, the Nominating and Corporate Governance Committee held two meetings, the Audit Committee held five meetings, and the Executive Committee held no meetings. Each of the incumbent directors attended at least 75% of the aggregate of all Board of Director meetings and meetings of committees on which he served during the last fiscal year. Directors' Compensation - ----------------------- Directors not otherwise employed by the Company receive $1,500 per month plus $1,500 for attending, in person, each meeting of the Board of Directors or any committee, when such committee meetings are separately called and held. Directors attending such meetings by means of a telephone conference call receive $750 for each meeting. In addition, the Chairman of the Audit Committee receives $500 per month; the Chairman of the Compensation Committee receives $400 per month; the Chairman of the Executive Committee receives $400 per month; and the Chairman of the Nominating and Corporate Governance Committee receives $400 per month. Board members who are employed as officers by the Company receive no extra compensation for their services as directors or committee members. All directors are reimbursed by the Company for expenses incurred by them in connection with their service on the Board of Directors and committees. In fiscal 1998, the Company adopted the 1997 Deferred Compensation Plan for Non-Employee Directors (the "Non-Employee Directors Plan"). Pursuant to the Non-Employee Directors Plan, beginning in September 1997 directors who are not employed as officers of the Company may file with the Company an irrevocable election to defer payment of not less than fifty percent (50%) of the retainer fees to be earned during each fiscal year. Deferred amounts are invested in an account reflected in Company stock equivalent units, the number of which is computed by dividing the amount of the deferred retainer fees by the fair market value of the Company's shares on the date of deferral. Directors may elect the form and timing of payments of deferred amounts (and any earnings reflecting dividends thereon) to be paid in cash from the Company in a lump sum or installment payments after such director's sixty-fifth or seventieth birthday, based on the number of stock equivalent units in such director's account and the fair market value of the Company's shares on the first business day of the year in which payments are made. In addition, pursuant to the 2003 Stock Incentive Plan, each outside director receives a non-qualified stock option to purchase 4,000 shares of Common Stock on the date of each annual meeting of shareholders with an exercise price equal to the fair market value of the Common Stock on such date. The shares subject to such options vest on the first anniversary of the date of grant and are exercisable for a period of ten years. CORPORATE GOVERNANCE AND RELATED MATTERS Corporate Governance Principles and Guidelines - ---------------------------------------------- The Company is committed to having sound corporate governance principles, and our Board of Directors has established a set of Corporate Governance Guidelines that meet the requirements of the corporate governance standards of the NYSE. These guidelines address such matters as director qualifications, director nominations, director responsibilities, director compensation, orientation and training and other matters and are published on an investor relations page of the Company's website at www.thomasnelson.com. The Board of Directors believes that such guidelines are appropriate for the Company in its effort to promote sound corporate governance practices. Each committee of the Board of Directors (other than the Executive Committee) operates under a charter that has been approved by the Board of Directors. A current copy of each committee charter is available on the investor relations section of the Company's website: www.thomasnelson.com. A copy of these charters, and/or the Corporate Governance Guidelines and our Code of Conduct (as described below), may also be obtained, free of charge, from the Company upon a written request directed to: Thomas Nelson, Inc., 501 Nelson Place, P.O. Box 141000, Nashville, Tennessee 37214-1000, Attention: Investor Relations. The Company believes that its Board committee charters meet the requirements of the NYSE listing standards as well as the Sarbanes-Oxley Act of 2002 and the Commission's related rules. Each committee (other than the Executive Committee) reviews the appropriateness of its charter and will perform a self-evaluation of the effectiveness of the committee at least annually. Code of Business Conduct and Ethics - ----------------------------------- The Company has a Code of Business Conduct and Ethics (the "Code of Conduct") that applies to all of the Company's directors and employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The purpose of the Code of Conduct is to, among other things, provide our directors and employees written standards that are reasonably designed to deter wrongdoing and to promote honest and ethical conduct in the discharge of their duties; promote compliance with applicable laws, rules and regulations; promote prompt and good faith internal reporting of violations of the Code of Conduct; and provide accountability for adherence to the Code of Conduct. Each director and employee is required to read and certify in writing annually that he or she has read, understands and will comply with the Code of Conduct. A current copy of the Code of Conduct is available on the investor relations section of our website, and it is available in printed form free of charge to any shareholder who requests it. The Company intends to disclose amendments to or waivers from a provision of the Code of Conduct that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on the investor relations section of its website, or by such other method prescribed by applicable law or regulation. Director Independence - --------------------- The Board has determined that each member of the Board except for Sam Moore, S. Joseph Moore and Michael S. Hyatt is an "independent director" within the meaning of the listing standards of the NYSE and that each such director does not have any relationship that would preclude a finding of independence. Furthermore, the Board of Directors has determined that the composition of each of the committees of the Board of Directors complies with the requirements of the NYSE listing standards, the Commission and other applicable laws or regulations, as currently in effect. Director Qualifications - ----------------------- The Company's director nominees are recommended to the Board of Directors by a Nominating and Corporate Governance Committee (the "Nominating Committee") which is composed solely of independent directors. The Company's Board of Directors and its Nominating Committee have adopted a procedure for the evaluation of director candidates (the "Nominee Procedures") that contain certain minimum qualifications for candidates (including those candidates recommended by the Company's shareholders). The Nominating Committee will consult with the Board of Directors on an annual basis regarding the results of the annual performance evaluation of the Board and its Committees, and the qualifications of potential director candidates in accordance with the Nominating Committee's charter and the Company's related policies or guidelines regarding the nomination and evaluation of director candidates. The consideration of a candidate as a director will include the Nominating Committee's assessment of the individual' background, skills and abilities, and whether such characteristics are consistent with the Company's guidelines and fulfill the needs of the Board at that time. The Nominating Committee will be responsible for assessing shareholder proposals with respect to director nominations. The Company's Corporate Governance Guidelines may also contain additional membership criteria that apply to nominees for the Company's Board of Directors. The Nominee Procedures provide that candidates for nomination to the Board of Directors, including those recommended by shareholders in compliance with the Company's charter, bylaws and applicable law, are required to be submitted to the Nominating Committee's Chairman with as much biographical information as is available and a brief statement of the candidates' qualifications. The Nominating Committee will consider whatever factors it deems appropriate in its assessment of a candidate; however, at a minimum, a candidate must in the Committee's judgment: be able to represent the interests of the Company and all of its shareholders and not be disposed by affiliation or interest to favor any individual, group or class of shareholders or other constituency; meet the Company's minimum qualifications for directors and fulfill the needs of the Board of Directors at that time; and possess the background and demonstrated ability to contribute to the Board's performance of its collective responsibilities, through senior executive management experience, relevant professional or academic distinction, and/or a record of relevant civic and community leadership. In addition to these minimum qualifications, the Nominating Committee may also consider whether the candidate: is of the highest ethical character and shares the core values of the Company as reflected in the Company's Code of Conduct; has a reputation, both personal and professional, consistent with the image and reputation of the Company; is highly accomplished in the candidate's field; is an active or former chief executive officer of a public company or a similar business or is a leader of another complex organization; has relevant expertise and experience, and would be able to offer advice and guidance to the chief executive officer based on that expertise and experience; and has the ability to exercise sound business judgment. Process for Identifying Candidates - ---------------------------------- The Nominating Committee seeks to identify candidates for membership on the Company's Board of Directors through conversations with members of the Board of Directors, senior management and others. The Nominating Committee also considers nominees proposed by the Company's shareholders in accordance with the provisions contained in the Company's charter, bylaws and applicable law, and consistent with the Nominee Procedures. Pursuant to the Company's bylaws, any shareholder may nominate a person for election to the Company's Board of Directors at the Company's Annual Meeting of Shareholders, provided that the nomination is received by the Secretary of the Company not less than 60 days nor more than 90 days prior to the anniversary of the preceding year's Annual Meeting of Shareholders. Each notice submitted in this manner must comply with the Company's bylaws and must include the name and address of the nominee(s) and all other information with respect to the nominee as required to be disclosed in the proxy statement for the election of directors under applicable rules of the Commission, including the nominee's consent to being named as a nominee and to serving as a director, if elected. Additionally, the nominating shareholder must provide his, her or its name and address as it appears in the stock records of the Company and the number of shares of Common Stock or Class B Common Stock beneficially owned by such shareholder. Evaluation of Candidates - ------------------------ The Nominating Committee will consider all candidates nominated in accordance with the processes described above. The Chairman of the Nominating Committee may preliminarily assess a candidate's qualifications and suitability and report such assessment as promptly as practicable to the Nominating Committee. When feasible, the Chairman of the Nominating Committee will interview candidates whom the Chairman believes are likely to meet the criteria for Board membership as part of the preliminary assessment process. If it is the consensus of the Nominating Committee that a candidate is likely to meet the criteria for Board membership and fulfill the needs of the Board at that time, the Chairman of the Nominating Committee or other representative of the Board will advise the candidate of the Committee's preliminary interest and, if the candidate expresses sufficient interest, will arrange interviews of the candidate with one or more members of the Nominating Committee, the Board or management, and request such additional information from the candidate as the Nominating Committee deems appropriate. The Nominating Committee will consider the candidate's qualifications and whether such characteristics are consistent with the Company's guidelines and fulfill the needs of the Board at that time, and such other factors as it deems appropriate in order to confer and reach a collective assessment as to the qualifications and suitability of the candidate for Board membership. On the basis of its assessment, and taking into consideration input from senior management, the Nominating Committee will formally consider whether to recommend the candidate's nomination for election to the Board of Directors. Communications with Members of the Board - ---------------------------------------- The Company's Board of Directors has established procedures for the Company's shareholders to communicate with members of the Board of Directors. Shareholders may communicate with any of the Company's directors, including the chairman of any of the committees of the Board of Directors, by writing to such director(s) c/o Thomas Nelson, Inc., 501 Nelson Place, P.O. Box 141000, Nashville, Tennessee 37214-1000, Attention: Corporate Secretary. Appropriate communications will be forwarded to such director(s) by the Corporate Secretary. Board Member Attendance at Annual Meetings - ------------------------------------------ The Company strongly encourages each member of the Board of Directors to attend the Annual Meetings of Shareholders. All of the Company's directors attended the 2004 Annual Meeting of Shareholders. Executive Sessions of Independent Directors - ------------------------------------------- In accordance with the NYSE corporate governance standards, the Board of Directors has instituted a policy stating that executive sessions of the independent directors will be held following each regularly scheduled in-person meeting of the Board of Directors. Executive sessions do not include any employee directors of the Company. Mr. Oakley (the "Chairman") is currently responsible for chairing the executive sessions. Interested shareholders may communicate directly with the Chairman in the manner described above under "Communications with Members of the Board." General Information - ------------------- For more information regarding the Company's corporate governance policies, you are invited to access the investor relations section of our website at www.thomasnelson.com. However, we do not intend to incorporate the contents of the website into this Proxy Statement. Compensation Committee Interlocks and Insider Participation - ----------------------------------------------------------- The members of the Compensation Committee of the Board of Directors during fiscal 2005 were Brownlee O. Currey, Jr. (Chairman), W. Lipscomb Davis, Jr. and Millard V. Oakley. No member of the Compensation Committee has ever served as an officer of, or been employed by, the Company. During 2005, Mr. Currey, Mr. Davis and Mr. Oakley did not have any relationship requiring disclosure by the Company. There is no interlock with respect to Mr. Currey, Mr. Davis and Mr. Oakley. COMPENSATION COMMITTEE REPORT Decisions concerning the compensation of the Company's executives are made by the Compensation Committee of the Board of Directors. Each member of the Compensation Committee is a non-employee director. The Compensation Committee is responsible for reviewing and setting the compensation of the Company's senior executives and for establishing general executive compensation policies for the Company. Compensation Philosophy and Policies for All Executive Officers - --------------------------------------------------------------- The Compensation Committee believes that the primary objectives of the Company's executive compensation policy should be: * to attract and retain talented executives by providing a compensation program that is competitive with the compensation provided to executives at companies of comparable size and position in the publishing business, while maintaining compensation within levels that are consistent with the Company's business plan, financial objectives and operating performance; * to provide appropriate incentives for executives to work towards the achievement of the Company's annual performance targets established in the Company's business plan; and * to more closely align the interests of its executives with those of shareholders by providing long-term incentive compensation in the form of stock awards and options or other equity-based, long-term incentive compensation. The Compensation Committee believes that the Company's executive compensation policies should be reviewed during the first quarter of the fiscal year when the financial results of the prior fiscal year become available. The policies should be reviewed in light of their consistency with the Company's financial performance, its business plan and its position within the publishing industry, as well as the compensation policies of similar companies in the publishing industry. The compensation of individual executives should then be reviewed annually by the Compensation Committee in light of its executive compensation policies for that year. In setting and reviewing compensation for the executive officers, the Compensation Committee considers a number of different factors designed to assure that compensation levels are properly aligned with the Company's business strategy, corporate culture and operating performance. Among the factors considered are the following: * Comparability--The Compensation Committee considers the compensation packages of similarly situated executives at companies deemed to be most comparable to the Company. The objective is to maintain competitiveness in the marketplace in order to attract and retain the highest quality executives. This is a principal factor in setting base levels of compensation. * Payment for Performance--The Compensation Committee believes that compensation should be in part directly linked to operating performance. To achieve this link with regard to short-term performance, the Compensation Committee has relied on cash bonuses which have been determined on the basis of certain objective and subjective factors after receiving the recommendations of senior management. * Equity Ownership--The Compensation Committee believes that an integral part of the executive compensation program at the Company is equity-based compensation plans which encourage and create ownership of the Company's stock by its executives, thereby aligning executives' long-term interests with those of the shareholders. These long-term incentive programs are principally reflected in the Company's stock-based incentive plans. The Compensation Committee believes that significant stock ownership is a major incentive in building shareholder value and reviews awards of equity-based incentives with that goal in mind. * Qualitative Factors--The Compensation Committee believes that, in addition to corporate performance and specific division performance, it is appropriate to consider in setting and reviewing executive compensation the personal contributions that a particular individual may make to the success of the corporate enterprise. Such qualitative factors as leadership skills, planning initiatives, development skills, public affairs and civic involvement have been deemed to be important qualitative factors to take into account in considering levels of compensation. In connection with the annual review of the Company's executive compensation policies, the Compensation Committee deemed it appropriate to engage a nationally recognized compensation consulting firm (the "Consultant") to assist the Compensation Committee in its review and to provide advice with respect to the Company's compensation arrangements for the Company's senior executive officers for fiscal 2005. The peer group, which the Compensation Committee utilized for purposes of evaluating compensation for executive officers, consisted of publishing companies. Compensation of Executive Officers - ---------------------------------- The Compensation Committee believes that the compensation for each of its executive officers should consist of a base salary, the potential for an annual cash bonus and equity-based long-term incentive compensation. The Compensation Committee has applied the policies described herein to fiscal 2005 compensation for executive officers, including the Named Officers. Base Compensation. In determining whether an increase in base compensation for its executive officers was appropriate for fiscal 2005, the Compensation Committee reviewed salary ranges recommended by the Consultant and sought the advice of the Chief Executive Officer. The Compensation Committee subjectively determined base compensation on the basis of discussions with the Chief Executive Officer, a review of the base compensation of executive officers of comparable companies, the advice of the Consultant, the committee's experience with the Company and in business generally, and what it viewed to be appropriate levels of base compensation after taking into consideration the performance of the Company and the contributions of each executive officer. As a result of this review, the base salaries for the Named Officers for fiscal 2005 increased 5% from fiscal 2004 in total, with specific changes varying from 0% to a 29% increase, reflecting the Compensation Committee's subjective judgment as to the competitive level of the compensation being paid to each executive, the executive's contribution to the Company's performance and the responsibilities undertaken by the executive officer. As a result of these increases, base salaries for the Named Officers were set for fiscal 2005 at approximately the 50th to the 75th percentile of the base compensation of executives with similar responsibilities at comparable companies. The Compensation Committee did not assign any relative weight to the quantitative and qualitative factors, which it applied subjectively in reaching its base compensation decisions. Annual Incentive and Bonus Compensation. For fiscal 2005, the Compensation Committee established performance goals for awarding cash incentive payments, including targeted pre-tax profits for the Company, improvements in the Company's return on assets ratio and, for certain Named Officers, pre-determined margin contributions for specific divisions of the Company. The amount of any potential award varied with each executive officer. Based on these performance goals, the Named Officers earned an aggregate of $735,500 in annual incentive payments for fiscal 2005. Long-Term Incentive Compensation. The Compensation Committee believes the Company should make it a part of its regular executive compensation policies to grant annual awards of long-term, equity based incentives to executive officers and other key employees as part of the compensation package that is reviewed annually for each executive officer. In making these awards, the Compensation Committee establishes guidelines at the time of the annual review and takes into account the recommendations of the Chief Executive Officer prior to approving annual awards of long-term, equity-based incentive compensation to the other executive officers. As part of the Compensation Committee's annual review of the Company's executive compensation policies for fiscal 2005 and based upon the recommendations of the Consultant, the Compensation Committee determined to grant stock options with an exercise price based on the fair market value of the Common Stock on the date of grant as long-term, equity-based incentive compensation to the Company's management team. Accordingly, during fiscal 2005, the Compensation Committee considered, with the assistance of the Consultant, the amount of stock option holdings by its senior executives in relation to the holdings by senior executives of comparables companies. As a result of this analysis, the Compensation Committee granted to the Named Officers annual stock option awards ("Annual Options") to purchase an aggregate of 50,000 shares of Common Stock. The Annual Options vest at a rate of 33 1/3% on the first through third anniversaries of the date of grant, subject to certain performance goals, and vest in full if the executive is employed on the third anniversary of the date of grant, regardless of whether such goals are met. Chief Executive Officer Compensation. Based on the fiscal 2004 stock option grant and the related agreement between the Compensation Committee and Mr. Moore, Mr. Moore's base salary shall remain at $450,000 through fiscal 2007. Per this agreement, Mr. Moore shall not receive any additional stock option grants during this same period of time. Based on meeting certain performance goals, Sam Moore earned a cash incentive payment award in the amount of $289,300 during fiscal 2005. Federal Income Tax Deductibility Limitations. Section 162(m) of the Internal Revenue Code of 1986, enacted as part of the Omnibus Budget Reconciliation Act in 1993 ("OBRA"), generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to the Company's Chief Executive Officer and four other most highly compensated executive officers. The statute, however, exempts qualifying performance-based compensation from the deduction limit if certain requirements are met. The Compensation Committee believes it is appropriate to take into account the $1,000,000 limit on the deductibility of executive compensation and to seek to qualify executive compensation awards as performance-based compensation excluded from the $1,000,000 limit. Stock options and other equity-based incentives granted under the Company's stock incentive plans are intended to qualify as performance-based compensation; however, the Compensation Committee recognizes that interpretations of the Internal Revenue Service with respect to Section 162(m) matters may result in compensation related to certain options not qualifying for exclusion from the $1,000,000 limit. During fiscal 2005, none of the executive officers received compensation that exceeded the $1,000,000 limit on deductibility. Respectfully submitted, Brownlee O. Currey, Jr., Chairman W. Lipscomb Davis, Jr. Millard V. Oakley EXECUTIVE COMPENSATION The following table provides information as to annual, long-term and other compensation during fiscal years 2005, 2004 and 2003 for the Company's Chief Executive Officer and the persons who, in fiscal 2005, were the other most highly compensated executive officers of the Company (the foregoing are collectively defined as the "Named Officers"). Summary Compensation Table --------------------------
Long-Term Compensation Awards ------------ Annual Compensation Securities All ----------------------------- Underlying Other Other Annual Options/ Compen- Name and Bonus Compensation SARs sation Principal Position Year Salary ($) ($) ($) (#) (1) ($) (2) - ------------------ ---- --------- -------- ------------ ------- ------- Sam Moore 2005 $450,000 $289,300 $ 36,712(3) 0 $12,344 Chief Executive 2004 450,000 521,900 26,339(3) 300,000 12,944 Officer 2003 400,000 196,300 53,929(3) 100,000 7,077 Michael S. Hyatt 2005 300,000 161,000 0 50,000 4,844 President and Chief 2004 232,000 248,000 0 50,000 4,098 Operating Officer 2003 200,000 80,500 0 60,000 0 Joe L. Powers 2005 230,000 95,900 0 0 14,721 Executive Vice 2004 230,000 228,300 0 35,000 13,278 President, Secretary 2003 225,000 136,300 0 20,000 8,343 and Treasurer Vance Lawson 2005 175,000 60,000 0 0 12,462 Senior Vice 2004 175,000 144,000 0 5,000 9,906 President 2003 175,000 61,100 0 15,000 5,355 Jerry Park 2005 175,000 133,300 0 0 11,295 Executive Vice 2004 155,000 90,600 0 5,000 10,214 President and Chief 2003 151,000 22,800 0 5,000 6,356 Marketing Officer
(1) Represents the number of stock options granted under the Company's 1992 Stock Incentive Plan and the 2003 Stock Incentive Plan. (2) Represents amounts contributed to the Company's 401(k)/ESOP Plan by the Company. (3) For 2005, represents various perquisites, net of taxes, including reimbursements of travel expenses ($14,635), life insurance premiums paid ($6,997) and automobile expenses ($15,080). For 2004, represents reimbursements of travel expenses ($12,009) and automobile expenses ($14,330). For 2003, represents reimbursements of travel expenses ($28,631) and automobile expenses ($16,644). Option/SAR Grants in Last Fiscal Year ------------------------------------- This table provides information as to options granted to the Named Officers during fiscal year 2005.
Potential Percent of Realizable Value Total At Assumed Annual Number of Options Rates of Stock Securities Granted Price Appreciation Underlying in Exercise For Option Term Option Fiscal Price Expiration --------------------- Name Granted Year ($/Sh)(3) Date 5% 10% ----------- ------ --------- ---------- ---------- ---------- Sam Moore - 0% n/a n/a - - Michael Hyatt 50,000(1) 31.1% $19.80 08/10/2014 640,500 1,690,000 Joe L. Powers - 0% n/a n/a - - Vance Lawson - 0% n/a n/a - - Jerry Park - 0% n/a n/a - - - --------------------------------------------------------------------------------
(1) Option to purchase Common Stock was granted on August 10, 2004, purusant to the 2003 Stock Incentive Plan. These options typically vest one third on each of the first, seocnd and third anniversary dates of the grant, or as otherwise provided in the specific option agreement. Fiscal Year-End Option Values The following table provides information as to the aggregate number of shares of Common Stock and Class B Common Stock covered by both exercisable and unexercisable stock options granted to the Named Officers as of March 31, 2005, and the values for the "in-the-money" options, which represent the positive spread between the exercise price of any such existing stock options and the year-end price of the Common Stock or Class B Common Stock.
Number of Securities Underlying Value of Unexercised Shares Unexercised Options In-The-Money Options Acquired at Fiscal Year-End (#) at Fiscal Year-End ($)(1) on Value ----------------------- ------------------------- Exercise Realized Unexercis- Unexercis- Name (#) ($) Exercisable able Exercisable able - ---- -------- -------- ----------- ----------- ----------- ------------ Sam Moore - - 416,666 233,334 5,803,911 2,595,978 Michael Hyatt 20,000 277,475 51,667 103,333 544,755 779,494 Joe L. Powers - - 110,000 30,000 1,622,728 337,197 Vance Lawson - - 52,766 8,333 710,303 88,849 Jerry Park - - 12,667 6,667 162,795 72,099
(1) Certain outstanding options are exercisable for either Common Stock or Class B Common Stock and, where appropriate, the value of unexercised options reflects gains based on the closing price of either stock depending on which option to purchase stock was "in-the-money" at fiscal year end. On March 31, 2005, the closing prices of the Common Stock and Class B Common Stock on the New York Stock Exchange were $23.65 and $23.75, respectively. EQUITY COMPENSATION PLAN INFORMATION The following table summarizes certain information concerning the Company's equity compensation plans as of March 31, 2005. The Company does not maintain any equity compensation plans under which stock may be issued except those approved by the Company's shareholders.
A B C ----------------------------------------------------------------- Number of securities Number of securities to be issued upon remaining available for exercise of Weighted-average future issuance under outstanding options, exercise price of equity compensation warrants and rights outstanding plans (excluding --------------------- options, warrants securities reflected Plan Category Common Class B and rights in Column A) - -------------------------------------------------------------------------------- Equity compensation 1,326,480(1) 300,000 $11.94 539,000 plans approved Common and by securites Class B Common holders - --------------------------------------------------------------------------------
(1) Includes 231,684 options that can be exercised for either Class B or Common shares. Employment and Termination Agreements - ------------------------------------- The Company has employment agreements with each Named Officer that provide for an annual base salary, fringe benefits, life insurance and the opportunity to receive incentive and bonus compensation. The employment agreements of Sam Moore, Michael S. Hyatt and Joe L. Powers each contain provisions that entitle them to receive certain payments including a severance payment and (at the employee's election) the cash out of certain stock and stock-based awards under Company incentive plans in the event they are involuntarily terminated or resign with good reason within contracted time periods following a change in control of the Company. Sam Moore's severance payment is equal to 2.99 times his then current base salary and prior year's bonus; Michael S. Hyatt's and Joe L. Powers' severance payments are equal to 2 times their then current base salaries and prior year's bonuses. In addition, if Sam Moore retires after the expiration of his employment agreement, he will be entitled to a lump sum payment by the Company equivalent to two years' base salary, in special recognition of his service to the Company. AUDIT COMMITTEE REPORT The Audit Committee reviews the Company's financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. The Company's independent auditors are responsible for expressing an opinion on the conformity of our audited financial statements with U.S. generally accepted accounting principles. During this last fiscal year, this committee met and held discussions with representatives of management, the internal audit staff and the independent auditors concerning the matters over which this committee has been delegated oversight responsibility. In particular during fiscal 2005, management completed the documentation, testing and evaluation of the Company's system of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The committee was kept apprised of the progress of that evaluation and provided oversight and advice to management during the process. At the conclusion of the process, the committee reviewed and discussed management's report on the effectiveness of the Company's internal control over financial reporting and the related independent auditors' report. The Audit Committee has also reviewed and discussed with management and the independent registered accounting firm the audited consolidated financial statements, as well as the selection, application and disclosure of critical accounting policies used in such consolidated financial statements. The Audit Committee has discussed with its independent registered accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended by Statement on Auditing Standards No. 90 (Audit Committee Communications). In addition, the Audit Committee has received from its independent registered accounting firm the written disclosures required by Independence Standards Board No. 1 (Independence Discussions with Audit Committees) and discussed with them their independence from the Company and its management. The Audit Committee has considered whether the independent registered accounting firms' non-audit services to the Company are compatible with maintaining the independent registered accounting firms' independence. The Audit Committee discussed with the Company's independent registered accounting firm the overall scope and plans for their audit. The Audit Committee meets with external auditors, with and without management present, to discuss the results of their examinations, the evaluations of the Company's internal controls and the overall quality of the Company's financial reporting. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended March 31, 2005, for filing with the Securities and Exchange Commission. The Company has appointed KPMG LLP as its independent registered accounting firm for fiscal 2006. Respectfully submitted, W. Lipscomb Davis, Jr., Chairman Ronald W. Blue Brownlee O. Currey, Jr. The foregoing report of the audit committee shall not be deemed incorporated by reference by any general statement incorporating by reference the Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP, the Company's independent registered public accounting firm, has been selected as the independent registered accounting firm of the Company for the 2006 fiscal year. The company has been informed that representatives of KPMG LLP plan to attend the Annual Meeting. Such representatives will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions by shareholders. Fees Billed to the Company by KPMG LLP During Fiscal 2005 and 2004 - ------------------------------------------------------------------ Audit Fees. Audit fees include fees paid by the Company to KPMG LLP in connection with the annual audit of the Company's consolidated financial statements and KPMG LLP's review of the Company's interim financial statements, as well as fees related to the audit on internal control over financial reporting, which was required by the Sarbanes-Oxley Act of 2002. Audit fees also include fees for services performed by KPMG LLP that are closely related to the audit and, in many cases, could only be provided by the Company's independent registered accounting firm. Such services include comfort letters and consents related to registration statements filed with the Securities and Exchange Commission and other capital-raising activities. The aggregate fees billed to the Company by KPMG LLP for audit services rendered to the Company and its subsidiaries for fiscal 2005 and 2004 were $302,500 and $146,500, respectively. Audit-Related Fees. Audit-related services include due diligence and audit services related to mergers and acquisitions, accounting consultations, internal control review, employee benefit plan audits and certain attest services. The aggregate fees billed to the Company by KPMG LLP for audit-related services rendered to the Company and its subsidiaries for fiscal 2005 and 2004 were $0 and $3,000, respectively. Tax Fees. Tax fees include corporate tax compliance and counsel and advisory services. The aggregate fees billed to the Company by KPMG LLP for the tax related services rendered to the Company and its subsidiaries for fiscal 2005 and 2004 were $10,000 and $42,000, respectively. All Other Fees. For fiscal 2005 and 2004, KPMG LLP did not bill any fees to the Company for any other services, other than those set forth above. The Audit Committee of the Board of Directors has considered and determined that the provision of the foregoing non-audit services by KPMG LLP was compatible with maintaining KPMG LLP's independence in the conduct of its audit. The Audit Committee has also adopted a formal policy concerning approval of audit and non-audit services to be provided by the Company's independent registered public accounting firm. The policy requires that all services that the Company's independent auditor may provide to the Company, including audit services and permitted audit-related and non-audit services, be pre-approved by the Committee. The Audit Committee approved all audit and non-audit services provided by KPMG LLP during fiscal 2005 and 2004 prior to KPMG LLP performing such services. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers, directors and persons who own more than 10% of a registered class of the Company's equity securities to file reports of ownership and changes in ownership with the Commission. Executive officers, directors and greater than 10% beneficial owners are required by regulations of the Commission to furnish the Company with copies of all Section 16(a) reports so filed. Based solely upon a review of the Forms 3, 4 and 5 and amendments thereto, and certain written representations furnished to the Company, the Company believes that, during the fiscal year ended March 31, 2005, its executive officers, directors and greater than 10% beneficial owners complied with all applicable filing requirements, except one Form 4 for David Moberg, Senior Vice President, that was filed later than the 2-day requirement due to a delayed broker confirmation. Performance Graph The following graph compares the five-year cumulative returns of $100 invested on March 31, 2000, assuming the reinvestment of all dividends, in (i) the Common Stock, (ii) the Class B Common Stock, (iii) the Russell 2000 Index ("Russell 2000 Index"), (iv) Standard & Poor's SmallCap 600 Index ("S&P SMALLCAP 600 Index") and (v) an index compiled by the Company and composed of the publicly traded common stock of selected publishing companies (the "Peer Group Index"). The returns on the common stock of each member of the Peer Group Index have been weighted to reflect relative stock market capitalization. (LINE GRAPH PLACED HERE REPRESENTING DATA BELOW)
2000 2001 2002 2003 2004 2005 ---- ---- ---- ---- ---- ---- Thomas Nelson, Inc. - Common Stock (TNM) $100 $ 83 $158 $111 $356 $313 Thomas Nelson, Inc. - Class B Common Stock (TNMB) 100 80 149 167 339 299 S&P SMALLCAP 600 Series 100 99 120 91 142 160 Russell 2000 Index 100 85 97 70 115 122 Peer Group Index 100 100 116 80 102 116
The Peer Group Index is comprised of the following six publicly traded companies: Courier Corp. Reader's Digest Assoc. Value Line, Inc. Meredith Corp. Scholastic Corporation John Wiley & Sons, Inc. DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE PRESENTED AT 2006 ANNUAL MEETING OF SHAREHOLDERS Shareholder proposals intended to be presented at the Annual Meeting of Shareholders to be held in 2006 must be received in writing by the Company at its executive offices at 501 Nelson Place, Nashville, Tennessee 37214-1000. not later than March 15, 2006, in order to be included in the Company's proxy statement and proxy for that meeting. For other shareholder proposals to be timely (but not considered for inclusion in the Company's proxy statement), a shareholder's notice must be received in writing by the Company at its executive offices not less than 60 days nor more than 90 days prior to the meeting of shareholders; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of such meeting is given or made to the shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the date on which such notice of the day of the meeting was mailed or such public disclosure was made. For proposals that are timely filed, the Company retains discretion to vote proxies it receives provided (i) it includes in the proxy statement advice on the nature of the proposal and how the Company intends to exercise its voting discretion and (ii) the proponent does not issue a proxy statement. METHOD OF COUNTING VOTES Unless a contrary choice is indicated, all duly executed proxies will be voted in accordance with the instructions set forth on the proxy card. A broker non-vote occurs when a broker holding shares registered in street name is permitted to vote, in the broker's discretion, on routine matters without receiving instructions from the client, but is not permitted to vote without instructions on non-routine matters, and the broker returns a proxy card with no vote (the "non-vote") on the non-routine matter. Under the rules and regulations of the New York Stock Exchange, the election of directors is a routine matter on which a broker has the discretion to vote if instructions are not received from the client in a timely manner. Abstentions and broker non-votes will be counted as present for purposes of determining the existence of a quorum. Directors will be elected by a plurality of the votes cast in the election by the holders of the Common Stock and Class B Common Stock. Broker non-votes will not be counted as votes for or against a director nominee and will, therefore, have no effect on the voting for the election of directors. MISCELLANEOUS The cost of this solicitation of proxies will be borne by the Company. It is anticipated that the solicitation will be made primarily by mail, but regular employees or representatives of the Company may, without additional compensation, also solicit proxies by telephone, telegram, or personal interview and arrange for brokerage houses and other custodians, nominees, and fiduciaries to send proxies and proxy material to their principals at the Company's expense. The Company may also engage an outside proxy solicitation service in connection with this solicitation. However, the Company has not obtained, and does not currently intend to obtain, such outside proxy solicitation services in connection with this Proxy Statement. The Board of Directors is not aware of any business other than that described in this Proxy Statement to be presented for action at the Annual Meeting, but the persons named in the proxy intend to vote or act with respect to any other proposal that may be properly brought before the Annual Meeting in accordance with their judgment. The Annual Report to Shareholders for the year ended March 31, 2005, is being mailed to all shareholders entitled to vote at the Annual Meeting. Additional information is contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2005, filed with the Commission. The Company will furnish without charge to any shareholder a copy of its complete Annual Report on Form 10-K, including the financial statements and schedules thereto, upon written request to Joe L. Powers, Executive Vice President and Secretary, Thomas Nelson, Inc., P. O. Box 141000, Nashville, Tennessee 37214-1000. Some banks, brokers, and other nominee record holders may be participating in the practice of "householding" proxy statements and annual reports. This means that only one copy of this Notice of Annual Meeting and Proxy Statement and the 2005 Annual Report may have been sent to multiple stockholders in your household. However, even if your household has received only one Annual Report and one Proxy Statement, a separate proxy card should have been provided for each shareholder account. Each separate proxy card should be signed, dated and returned in the enclosed, self-addressed, postage-paid envelope. If you would prefer to receive separate copies of a proxy statement or annual report either now or in the future, please contact your bank, broker or other nominee. July 8, 2005 -----END PRIVACY-ENHANCED MESSAGE-----