SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS, AND MANAGEMENT
The following table shows the number of shares of the Company’s common stock beneficially owned as of March 24, 2020, by: (i) all those known by us to be beneficial owners of more than 5% of our outstanding common stock; (ii) each director as of such date; (iii) each of the Named Executive Officers listed in the “2019 Summary Compensation Table”; and (iv) the current directors and executive officers as a group as of such date. Unless otherwise indicated, beneficial owners listed in the table may be contacted at the Company’s corporate headquarters at 160 N. Stetson Avenue, Chicago, Illinois 60601.
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Number of
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Shares
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Percentage of
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Beneficially
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Outstanding
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Name
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Owned (1)
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Shares (1)
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More Than 5% Stockholders:
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Alden Global Capital LLC (2)
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11,544,213
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31.7
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%
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885 Third Avenue
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New York, BY 10022
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Nant Capital LLC (3)
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8,743,619
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24.0
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%
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9922 Jefferson Boulevard
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Culver City, CA 90232
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PRIMECAP Management Company (4)
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2,170,676
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6.0
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%
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177 E. Colorado Blvd, 11th floor
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Pasadena, CA 91105
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BestReviews Inc. (5)
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1,913,438
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5.2
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%
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8985 Double Diamond Parkway, Unit B7
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Reno, Nevada 89521
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Non-Employee Directors:
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Carol Crenshaw (6)
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63,321
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*
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David Dreier (7)
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144,143
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*
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Philip G. Franklin (8)
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59,183
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*
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Eddy W. Hartenstein (9)
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157,893
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*
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Christopher Minnetian (10)
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4,660
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*
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Dana Goldsmith Needleman (11)
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4,660
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*
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Richard A. Reck (12)
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73,806
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*
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Named Executive Officers:
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Justin C. Dearborn
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—
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*
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Terry Jimenez (13)
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308,230
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*
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Timothy P. Knight (14)
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328,848
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*
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Ross Levinsohn
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31,794
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*
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Julie K. Xanders (15)
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72,445
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*
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All current directors and executive officers as a group (10 persons) (16)
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901,295
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2.5
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%
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*Represents beneficial ownership of less than 1%
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(1)
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Beneficial ownership is determined in accordance with SEC rules. For the number of shares beneficially owned by each of the “More Than 5% Stockholders,” we rely on each of such stockholder’s statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Exchange Act, as described in the footnotes below. For each person, entity, or group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person, entity, or group by the sum of 36,456,742 shares of the Company’s common stock outstanding as of March 24, 2020, plus the number of shares of common stock, if any, that such person, entity, or group had the right to acquire pursuant to the exercise of stock options or vesting of RSUs or other rights within 60 days of March 24, 2020. Except as indicated by footnote, and subject to marital community property laws where applicable, we believe that the persons or entities named in the table above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
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(2)
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Information presented is based on a Schedule 13D/A (Amendment No. 1) filed with the SEC on December 2, 2019, and a Form 4 filed with the SEC on November 25, 2019 by Alden Global Capital LLC (“Alden”) and Heath Freeman Pursuant to the filings the reporting persons beneficially own 11,544,213 shares. Alden Global Opportunities Master Fund, L.P. (“AGOMF”), of which Alden is the investment manager, holds 6,345,288 shares of the Company’s common stock. Alden Global Value Recovery Master Fund, L.P. (“AGVRMF”), of which Alden is the investment manager, holds 5,198,925 shares
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of the Company’s common stock. Mr. Freeman is President of Alden. Mr. Freeman and Alden have shared voting power and dispositive power over and aggregate of 11,544,213 shares held by AGOMF and AGVRME.
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(3)
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Information presented is based on a Schedule 13D/A (Amendment No. 7) filed with the SEC on January 18, 2019 by Dr. Patrick Soon-Shiong, Nant Capital, LLC (“Nant Capital”), and California Capital Equity, LLC (“CalCap”). Nant Capital beneficially owns, in the aggregate, 7,650,000 shares of the Company’s common stock. CalCap and Dr. Soon-Shiong may be deemed to beneficially own, and share with Nant Capital the power to vote and direct the vote, and the power to dispose or direct the disposition of, the 7,650,000 shares beneficially owned by Nant Capital. Dr. Soon-Shiong also directly beneficially owns 1,093,619 shares of the Company’s common stock. Dr. Soon-Shiong has the sole power to vote or direct the vote, and the sole power to dispose or direct the disposition, of all such 1,093,619 shares. As a result, Dr. Soon-Shiong may be deemed to beneficially own, in the aggregate, 8,743,619 shares of the Company’s common stock.
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(4)
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Information presented is based on a Schedule 13G/A (Amendment No. 8) filed with the SEC on February 12, 2020 by PRIMECAP Management Company (“Primecap”) as of December 31, 2019. Pursuant to the filing, Primecap has sole voting power over 2,169,451 shares of the Company’s common stock and sole dispositive power over 2,170,676 shares.
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(5)
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Information presented is based on a Schedule 13G filed with the SEC on February 13, 2018 by BestReviews Inc. Based on this Schedule 13G, BestReviews Inc. beneficially owns, and has sole power to vote and direct the vote of, and the sole power to dispose or direct the disposition of, 1,913,438 shares of the Company’s common stock.
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(6)
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The number of shares beneficially owned by Ms. Crenshaw includes (a) 12,833 shares of unvested restricted stock and (b) 31,790 shares (attributable to deferred director fees converted to stock units) issuable within 60 days of March 24, 2020 if during such period (i) her service as a director of the Company terminates or (ii) there is a change in control (as defined in the Omnibus Incentive Plan).
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(7)
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The number of shares beneficially owned by Mr. Dreier includes 12,833 shares of unvested restricted stock.
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(8)
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The number of shares beneficially owned by Mr. Franklin includes 12,833 shares of unvested restricted stock.
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(9)
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The number of shares beneficially owned by Mr. Hartenstein includes (a) 12,833 shares of unvested restricted stock and (b) 52,333 shares subject to options that are currently exercisable or that will become exercisable within 60 days of March 24, 2020.
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(10)
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The number of shares beneficially owned by Mr. Minnetian includes 4,660 shares of unvested restricted stock.
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(11)
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The number of shares beneficially owned by Ms. Needleman includes 4,660 shares of unvested restricted stock.
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(12)
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The number of shares beneficially owned by Mr. Reck includes (a) 12,833 shares of unvested restricted stock and (b) 32,275 shares (attributable to deferred director fees converted to stock units) issuable within 60 days of March 24, 2020 if during such period (i) his service as a director of the Company terminates or (ii) there is a change in control (as defined in the Omnibus Incentive Plan).
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(13)
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The number of shares beneficially owned by Mr. Jimenez includes 112,500 shares subject to options that are currently exercisable or that will become exercisable within 60 days of March 24, 2020.
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(14)
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The number of shares beneficially owned by Mr. Knight includes 112,500 shares subject to options that are currently exercisable or will become exercisable within 60 days of March 24, 2020.
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(15)
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The number of shares beneficially owned by Ms. Xanders includes (a) 20,301 shares subject to options that are currently exercisable or will become exercisable within 60 days of March 24, 2020 and (b) 5,289 shares issuable on the vesting of RSUs within 60 days of March 24, 2020.
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(16)
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The number of shares beneficially owned by all current directors and current executive officers as a group as of March 24, 2020 includes (a) 185,134 shares subject to options that are currently exercisable or that will become exercisable within 60 days of March 24, 2020, (b) 73,485 shares of unvested restricted stock, (c) 8,414 shares issuable upon the vesting of RSUs within 60 days of March 24, 2020, and (d) 64,065 shares issuable within 60 days of March 24, 2020 if during such period (i) the director’s service as a director of the Company terminates or (ii) there is a change in control (as defined in the Omnibus Incentive Plan).
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis describes material elements of our compensation philosophy, summarizes our executive compensation program, and reviews compensation decisions for the following 2019 Named Executive Officers (the “Named Executive Officers” or “NEOs”):
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Name
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Title
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Timothy P. Knight
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President, Chief Executive Officer
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Terry Jimenez
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Executive Vice President, Chief Financial Officer
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Julie K. Xanders
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Executive Vice President, General Counsel and Secretary
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Justin C. Dearborn
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Chief Executive Officer and Chairperson of the Board (Former)
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Ross Levinsohn
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Chief Executive Officer, Tribune Interactive, LLC (Former)
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Effective January 31, 2020, Mr. Knight stepped down as President, Chief Executive Officer, Mr. Jimenez was appointed Chief Executive Officer and President and Mr. Lavey was appointed Interim Chief Financial Officer. In addition, effective January 17, 2019, Mr. Dearborn and Mr. Levinsohn departed from the Company.
2019 Overview
In 2019, we made significant progress delivering results across our three strategic pillars – People, Audience and Revenue. We continue to aim to be a high-performing, audience-centric culture that delivers sustainable revenue growth and profit while increasing stockholder value. Our digital-only subscribers increased 33.6% to 334,000 at the end of the fourth quarter 2019, up from 250,000 at the end of the fourth quarter 2018 and exceeding our 2019 goal. In spite of revenue headwinds across our industry in 2019, our income from continuing operations increased by $43.0 million compared to 2018 and Adjusted EBITDA grew 8.0% to $101.4 million. As discussed below, compensation decisions made in 2019 were aligned with our Company goals and in support of delivering these results. Adjusted EBITDA is a non-GAAP (generally accepted accounting principles) financial measure. For reconciliation to income from continuing operations, the most comparable GAAP measure, and other information on this measure, please reference our 2019 Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” on pages 38-39.
Pay Philosophy
Our executive compensation program is designed to closely tie pay to performance through compensating our executives for the attainment of short-term and long-term goals, the achievement of which we believe will create stockholder value. The CNCG Committee developed our executive pay program in support of the following fundamental pay philosophy guidelines:
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·
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A significant portion of compensation opportunity should be variable and at risk. The majority of our NEOs’ compensation is variable and at risk and based on the performance of the Company (including stock price performance) and/or its business units so that actual compensation delivered to our NEOs is aligned with the actual performance of the Company.
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·
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Long-term incentives should weigh heavier than short-term incentives. The incentive compensation for our NEOs focuses more heavily on long-term, rather than short-term, accomplishments and results.
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·
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Pay levels and designs should generally be aligned with market norms among peer companies with whom we compete for executive talent. The Company strives for each NEO’s total compensation package to pay at approximately the 50th percentile of the market.
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·
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Management should be aligned with stockholders through equity compensation. Equity-based compensation is used to align the interests of our NEOs with the interests of our stockholders.
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Consideration of Results of 2019 Stockholder Advisory Vote on Executive Compensation; Investor Outreach
At our 2019 Annual Meeting of Stockholders, 99.7% of votes present or represented by proxy at the meeting and entitled to vote were in support of the proposal to approve executive compensation. The CNCG Committee considers the results of annual "say-on-pay" proposals among many other factors in discharging its responsibilities. Throughout the year, we regularly interacted with
stockholders regarding Company performance, business strategy and other corporate matters. Relating to corporate governance and executive compensation matters, we are committed to understanding our investors' views and guidelines on best practices and are open to discussing with stockholders the design of our programs.
2019 Compensation Highlights
1. NEO Compensation Tied to Business Performance and Long‑Term Share Price Performance
Our compensation program continues to tie a substantial portion of executive compensation to business performance, making a large portion of executive pay “at-risk.” A large percentage of an executive’s total pay opportunity is either (a) an annual bonus award opportunity under a plan tied to Company and individual performance and/or (b) equity awards, the value of which are linked to our stock price. Under our 2019 management incentive program (“MIP”), as discussed below, the CNCG Committee set our MIP performance targets at rigorous levels it believed were reasonable but not so difficult as to encourage undue risk-taking by our executives. In addition, our compensation design for executives continued to be structured to ensure executives held a significant number of shares of our common stock, vesting over time, to encourage the achievement of long-term stockholder value creation.
2. Pay for Performance—Compensation At Risk
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·
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Our 2019 MIP contained two performance metrics, corporate Adjusted EBITDA and total revenue.
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·
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All NEOs had a portion of their MIP tied directly to Adjusted EBITDA to ensure that executives were focused on the profitability of the Company, in direct alignment with stockholder interests.
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·
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In addition to Adjusted EBITDA, all NEOs had a portion of their MIP opportunity tied to the Company’s consolidated total revenue to reinforce the need for revenue growth.
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·
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All NEOs had a portion of their MIP tied to individual performance that was measured by the achievement of specific goals aligned under each of our strategic goals: People, Audience and Revenue.
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·
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In fiscal year 2019, actual performance of both the performance metrics met the threshold established by the CNCG Committee for the 2019 MIP to fund bonus payments to the NEOs and all other MIP participants. The CNCG Committee designed the 2019 MIP so that the MIP pool would fund and incentive amounts would be paid if the Company’s consolidated Adjusted EBITDA performance met the minimum specified threshold. Since we did meet that threshold, our NEOs received 2019 MIP awards in March 2020.
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·
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Restricted stock units (“RSUs”) directly tie Named Executive Officer compensation to absolute share price performance and stock option grants reward performance that drives stock price appreciation. Each of our currently employed NEOs has outstanding RSU and option awards, however, no stock options were granted to NEOs in 2019.
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·
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The following charts reflect the composition of the 2019 total pay opportunity for (i) the CEO and (ii) the average of other currently employed NEOs. These charts (a) included such person’s target 2019 MIP bonus opportunity and (b) averaged the value of the LTI equity awards granted to each of them over the past three years to reflect the value attributable to 2019 as two of them received additional equity awards in 2019.
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CEO
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Other NEOs
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3. Good Pay Practices
The Company has adopted many best practices with respect to the executive compensation program, including:
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·
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We pay for performance. A significant portion of total executive compensation is earned by achieving annual goals that increase stockholder value.
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·
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We emphasize equity compensation to reward long‑term growth and stockholder value creation. A significant portion of total executive compensation is earned in the form of stock options and RSUs, which directly tie the Named Executive Officer compensation to both absolute share price performance and share price appreciation.
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·
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We have a Policy on Trading in Securities that prohibits hedging, pledging and other speculative transactions in our securities.
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·
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The CNCG Committee has retained an independent compensation consultant to advise the CNCG Committee regarding the executive compensation program and the risk profile of the Company’s compensation programs. Both our executive management and the CNCG Committee evaluate annually the risks involved with our compensation programs and do not believe that any of our programs creates risks that are reasonably likely to have a material adverse impact on us.
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·
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The CNCG Committee has reviewed a risk analysis of our compensation programs and practices to ensure that appropriate risk mitigation controls are in place.
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·
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The Company’s Omnibus Incentive Plan (a) prohibits repricing or replacing stock options with exercise prices below the current fair market value of our common stock without stockholder approval; (b) generally prohibits acceleration of vesting of equity awards except in the case of a change of control, death or disability; and (c) other than with respect to a small number of available shares, prohibits the granting of equity awards that vest in under one year from the date of grant, ensuring the recipient’s interest are aligned with those of our long-term stockholders.
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·
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We have an Executive Compensation Clawback Policy that allows the Company to recoup executive compensation in the event of a restatement of the Company’s financial statements that results in the amount of any performance‑based compensation (cash and equity) paid or awarded to an executive officer being greater than it would have been had it been calculated based on the restated financial statements.
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·
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We have robust stock ownership guidelines that apply to executive officers and directors and annually review compliance.
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·
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Any dividend equivalents on our RSUs are paid only when such units vest.
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·
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We offer executive officers the same group benefit programs as we provide all other employees.
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·
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We provide limited executive perquisites.
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·
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A significant portion of the compensation to our NEOs is awarded in the form of RSUs, the value of which is directly linked to absolute share price performance.
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·
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The Company does not provide any change in control excise or other tax gross-ups for any executives.
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Independent Compensation Consultant
The CNCG Committee retained Willis Towers Watson (the “Compensation Consultant”) as its independent compensation consultant. The Compensation Consultant regularly attends CNCG Committee meetings, advises on matters including peer group composition, annual and long‑term incentive plan design and awards and provides market data, analysis and advice regarding compensation for our Named Executive Officers and our non‑employee directors.
Our Approach to Executive Compensation
Our approach to executive compensation is aimed at achieving the following:
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·
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Attract and retain top talent;
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·
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Motivate and reward the performance of senior executives to achieve strategic, financial and operating performance objectives;
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·
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Ensure that our total compensation packages are competitive in comparison to those offered by our peers and that our compensation practices are consistent with high standards of corporate governance; and
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·
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Align our executives’ interests with the long‑term interests of our stockholders.
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NEO Compensation
The CNCG Committee oversees all components of the Company’s executive compensation program. During 2019, the Company’s Chief Executive Officer and Chief Human Resources Officer made recommendations to the CNCG Committee regarding executive compensation actions for the Named Executive Officers. The CNCG Committee uses market compensation data, published media industry survey benchmarks, and compensation data from the Company’s Peer Group (as described below), and other qualitative information, in making its compensation determinations for its NEOs.
Peer Group
In May 2019, the CNCG Committee updated the Company’s group of peer companies to remove IAC/InterActiveCorp (as updated, the “Peer Group”) given certain factors including M&A and an ongoing review of relevance to Tribune Publishing. The replacement company is Gray Television Inc. Gray Television owns and operates television stations and digital properties in 93 television markets. The companies in the current Peer Group are as follows:
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Company (Ticker Symbol)
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Revenue (1)
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AMC Networks Inc. (AMCX)
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$
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3,060
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The E. W. Scripps Company (SSP)
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$
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1,424
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Fair Isaac Corporation (FICO)
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$
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1,160
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Gannett Co., Inc. (GCI)
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$
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1,868
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Gray Television, Inc.
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$
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2,122
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j2 Global, Inc. (JCOM)
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|
$
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1,372
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Lee Enterprises, Incorporated (LEE)
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$
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510
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The McClatchy Company (MNI)
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$
|
807
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Meredith Corporation (MDP)
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|
$
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3,189
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The New York Times Company (NYT)
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$
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1,812
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Scholastic Corporation (SCHL)
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|
$
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1,654
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TEGNA, INC (TGNA)
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|
$
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2,300
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Townsquare Media, Inc (TSQ)
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|
$
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431
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(1)
|
|
Revenue set forth is in millions and is based on most recent fiscal year-end reported.
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Our Compensation Cycle
In general, compensation is reviewed during the first quarter of every year. This review includes:
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·
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|
Annual performance reviews for the prior year;
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·
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Long‑term incentive target awards (including stock options, RSUs and/or performance‑based awards).
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The CNCG Committee, in consultation with the Compensation Consultant, reviews and assesses the performance of the Chief Executive Officer and all other Named Executive Officers and authorizes compensation actions it believes are appropriate and commensurate with relevant competitive data and the compensation program.
Primary Compensation Components
The following sections, including information supplied in tabular form, provide information about principles and approaches with respect to base salary, the MIP and long-term incentive target awards.
BASE SALARY
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General Principle
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Specific Approach
|
A competitive salary provides a necessary element of stability. Base salary should recognize individual performance, market value of a position and the executive officer’s tenure, experience and expertise, scope of responsibility, contribution to the Company, and growth in his or her role.
|
|
Salary levels are reviewed annually. The CNCG Committee will consider compensation data from the Peer Group. Any increases will be based on overall performance, Company performance and relative competitive market position.
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The base salaries of each of our Named Executive Officers employed by us at the end of fiscal 2019 were as follows.
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Base Salary
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Name
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|
(Effective as of December 29, 2019)
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Timothy P. Knight
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$
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600,000
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Terry Jimenez
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|
$
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550,000
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Julie K. Xanders
|
|
$
|
465,000
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Justin Dearborn (1)
|
|
$
|
600,000
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Ross Levinsohn (1)
|
|
$
|
600,000
|
|
(1)
|
|
The former NEOs separated from the company in January 2019, and pursuant to their executive employment agreements, were compensated by salary continuation through December 2019.
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The base salaries for the NEOs remained constant in 2019 from their 2018 and 2018 year-end levels, with the exception of Terry Jimenez who gained additional responsibility and received a $75,000 increase to his base salary in January 2019.
MANAGEMENT INCENTIVE PROGRAM (MIP)
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|
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General Principle
|
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Specific Approach
|
The MIP is designed to provide an opportunity for our executive officers to earn incentive awards tied to annual performance. The program aligns the focus of our executive officers with Company‑wide and business unit‑specific financial and operating measures. The MIP is the key compensation tool for aligning short‑term realized pay for the management team with the attainment of key operating imperatives.
|
|
The 2019 MIP was designed to emphasize financial and/or individual goals. Bonus opportunities were based on a mixture of our consolidated financial performance and individual performance as described below.
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We structure the MIP awards to achieve competitive compensation levels when targeted performance results are achieved. We use objective formulas to establish potential MIP performance awards, and the CNCG Committee then has negative, but not positive, discretion to decrease awards from the amount calculated under the MIP.
|
|
The 2019 MIP provided for an annual cash payment to participating executive officers established as a target percentage of base salary. Any MIP payment is the product of the annual base salary rate multiplied by the target base salary percentage multiplied by the MIP annual performance factor based on the approved metrics. The CNCG Committee may approve negative discretionary adjustments with respect to MIP awards for executive officers.
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Overview of the MIP
2019 Internal Performance Metrics (Corporate Level)
|
|
|
Performance Metric
|
|
Why this Metric
|
Adjusted EBITDA
|
|
Adjusted EBITDA reflects the Company’s emphasis on profitability and cost‑containment and is a measure of total operating performance of the enterprise.
|
|
|
|
|
|
We define Adjusted EBITDA as income from continuing operations before equity in earnings of unconsolidated affiliates, income taxes, loss on early debt extinguishment, interest expense, other (expense) income, realized gain (loss) on investments, reorganization items, depreciation and amortization, net income attributable to noncontrolling interests, and other items that we do not consider in the evaluation of ongoing operating performance. These items include stock-based compensation expense, restructuring charges, transaction expenses, and certain other charges and gains that we do not believe reflects the underlying business performance.
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Total Revenue
|
|
Total Revenue reflects our consolidated gross revenues as set forth on our Income Statement included in our Form 10‑K for the year ended December 29, 2019.
Revenue reflects the Company’s emphasis on growing the business.
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2019 MIP Design
The 2019 MIP was designed so that a bonus pool would fund at 100% if the Company achieved an Adjusted EBITDA goal of $105 million. If performance exceeded that threshold target, the pool would be funded with a sliding scale of funding based on how much actual results exceeded the threshold. The 2019 MIP design was structured with a minimum threshold of 90% of Company Adjusted EBITDA and 95% of Revenue that had to be achieved in order to fund on a sliding scale to a target of 100%. Once the pool is funded, individual payments are calculated based on a combination of performance against the Adjusted EBITDA threshold target, performance against a total revenue threshold target of $1,000 million and performance against individual goals. Based on, among other things, comparable market and peer data received from its Compensation Consultant, as well as on recommendations from management, the CNCG Committee set the Adjusted EBITDA and Revenue threshold targets as set forth in the table below.
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|
|
|
|
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|
Threshold ($ in million)
|
|
|
Adjusted EBITDA (after the effect of the MIP)
|
|
$105
|
|
|
Total Revenue
|
|
$1,000
|
|
|
2019 MIP Performance Target and Performance
The CNCG Committee established 2019 MIP performance targets for the Named Executive Officers based on the performance metrics discussed above and the Company’s annual operating plan, taking into consideration the Company’s aspirational business and strategic goals. Successful attainment is achievable only if the Company performs at the established level. Goals are set to be attainable but yet to stretch an executive officer to perform at a high level, lead a high performing team, and do so without incentivizing undue risk-taking.
2019 Target MIP Award as a Percentage of Base Salary
The following table shows the performance metrics and target MIP award (as a percentage of base salary) for each Named Executive Officer under the 2019 MIP. As structured, 2019 MIP awards to our NEOs could not exceed two times the target amount, regardless of Company or individual performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
|
Metric and % Weighting
|
|
Award
|
|
|
|
Adjusted
|
|
|
|
Individual
|
|
(as a % of
|
|
Named Executive Officer
|
|
EBITDA
|
|
Revenue
|
|
Goals
|
|
Base Salary)
|
|
Timothy P. Knight
|
|
60
|
%
|
20
|
%
|
20
|
%
|
100
|
%
|
Terry Jimenez
|
|
60
|
|
20
|
|
20
|
|
80
|
|
Julie K. Xanders
|
|
60
|
|
20
|
|
20
|
|
50
|
|
Justin Dearborn
|
|
-
|
|
-
|
|
-
|
|
100
|
|
Ross Levinsohn
|
|
-
|
|
-
|
|
-
|
|
166.67
|
|
Justin Dearborn and Ross Levinsohn, former executive officers listed above, separated from the Company in January 2019, and pursuant to their executive employment agreements, received a pro-rata amount of the 2019 MIP award based on actual performance with respect to the calendar year of termination of employment, based on the number of days worked in such calendar year. The former NEOs were employed through January 17, 2019.
Key individual goals for our NEOs generally consisted of the following:
|
·
|
|
For Mr. Knight, improve employee communications within and across all markets, improve employee engagement, increase our unique visitors to our sites, grow digital subscriptions and revenue, achieve top-line revenue targets at each business unit and across the Company, and optimize cash flow from our legacy print business.
|
|
·
|
|
For Mr. Jimenez, develop a 3 year operating plan to stabilize and optimize New York Daily News, increase employee engagement and employee communications, deploy new talent management and performance management practices across his assigned business units, increase digital subscriber audiences and achieve revenue targets at New York Daily News, Orlando Sentinel and Sun Sentinel business units.
|
|
·
|
|
For Ms. Xanders, enhance compliance review and improvement, develop and execute a data privacy compliance strategy, enhance various training programs aimed to decrease the Company’s legal risks, enhance contractual terms, conditions and procedures to help streamline contracting processes and mitigate legal risks.
|
The CNCG Committee reviewed each executive’s 2019 performance against his or her individual goals in connection with their leadership responsibility, and the CNCG Committee approved 2019 MIP bonus payments to all Named Executive Officers, as the Company’s financial performance met the threshold financial performance required under the MIP.
Actual Company Performance under the 2019 MIP and Actual 2019 MIP Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target (in millions)
|
|
Actual Results (in millions)
|
|
Payout %
|
|
|
Weight
|
|
|
Earned Percentage
|
|
Adjusted EBITDA*
|
|
$
|
105.0
|
|
$
|
101.4
|
|
76.6
|
%
|
|
60
|
%
|
|
45.9865
|
%
|
Total Revenue
|
|
$
|
1,000.0
|
|
$
|
983.1
|
|
83.1
|
%
|
|
20
|
%
|
|
16.6202
|
%
|
Individual Performance Goals
|
|
|
|
|
|
|
|
100.0
|
%
|
|
20
|
%
|
|
20.0000
|
%
|
Earned Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82.6067
|
%
|
*including MIP expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Target 2019 MIP
|
|
Earned Percentage
|
|
Actual MIP Payment
|
Timothy P. Knight
|
|
$
|
600,000
|
|
|
82.6067
|
%
|
$
|
495,640
|
Terry Jimenez
|
|
$
|
440,000
|
|
|
82.6067
|
%
|
$
|
363,470
|
Julie Xanders
|
|
$
|
232,500
|
|
|
82.6067
|
%
|
$
|
192,061
|
Justin C. Dearborn
|
|
$
|
600,000
|
|
|
3.8475
|
%
|
$
|
23,085
|
Ross Levinsohn
|
|
$
|
1,000,000
|
|
|
3.8475
|
%
|
$
|
38,475
|
Long‑Term Incentive Awards Program
The Company’s long‑term incentive award program for senior executives has two components, each of which directly ties long‑term compensation to long‑term value creation and stockholder return:
|
·
|
|
Non‑qualified stock option awards.
|
Our Named Executive Officers Timothy Knight and Terry Jimenez received long-term incentive awards in 2016, 2017 and 2019 for the reasons described below. The CNCG Committee granted these equity awards in consultation with the Compensation Consultant in order to align the interests of senior management with the interests of the Company’s stockholders and for the Company to remain competitive in attracting, rewarding and retaining talent.
The long-term incentive awards granted to Timothy Knight were initially made by the CNCG Committee in connection with the recruitment and onboarding of Mr. Knight to hold the position of President, Tronc X in February 2017. The awards vested in three equal annual installments on the first, second and third anniversaries of the grant. The CNCG Committee intended that no additional long-term equity would be granted to him for three years. However, Mr. Knight was promoted to Chief Executive Officer and awarded 125,000 RSUs on January 16, 2019, in connection with the promotion. The award that fully vested on the first anniversary of the grant date.
Terry Jimenez joined the Company in April 2016 and the CNCG Committee awarded RSUs and non‑qualified stock options to him that year. Those awards are subject to a three-year vesting schedule. Taking into account the size of such grants, the CNCG Committee intended for these equity grants to serve as the sole long-term equity incentives for Mr. Jimenez until 2019. No additional equity awards were granted to Mr. Jimenez in 2018. However, in January 2019, Mr. Jimenez’s scope of responsibility was significantly increased and he was granted 75,000 RSUs on January 16, 2019 that fully vested on the first anniversary of the grant date.
Ms. Xanders did not receive an equity award in 2019.
Restricted Stock Unit Component
Grants of RSUs provide Named Executive Officers with stock ownership of unrestricted shares after the restriction lapses. In the judgment of the CNCG Committee, individuals in positions most likely to assist in the Company’s long‑term value creation goals and to create stockholder value over time should generally receive RSUs.
Key elements of the RSU program are:
|
·
|
|
RSUs provide the same economic risk or reward as restricted stock, but recipients do not have voting rights and do not receive cash dividends during the restriction period. Dividend equivalents are accrued and paid in cash upon vesting of the RSUs. Vested RSUs are settled in shares.
|
|
·
|
|
RSUs are generally subject to a three-year or four‑year restriction period and will vest in three or four equal annual installments, as applicable.
|
In certain cases, such as for new hires, to facilitate retention or for significant promotions, selected employees may receive RSUs subject to different vesting terms.
Non‑Qualified Stock Options Component
Non‑qualified stock options permit optionees to buy the Company’s common stock in the future at a price equal to the common stock’s value on the date the option was granted, which is the option exercise price.
Key elements of the non‑qualified stock option program are:
|
·
|
|
The option exercise price of stock options awarded was the Nasdaq closing price of the Company’s common stock on the date of grant.
|
|
·
|
|
The options will vest in three or four equal annual installments.
|
|
·
|
|
Options cannot be exercised prior to vesting.
|
|
·
|
|
The options expire seven years after the grant date.
|
|
·
|
|
The Omnibus Incentive Plan prohibits the repricing of, or exchange of, stock options that are priced below the prevailing market price of our common stock with lower‑priced stock options without stockholder approval.
|
The following table provides an overview of some of the main characteristics of RSUs and non‑qualified stock options.
|
|
|
RSUs
|
|
Non‑Qualified Stock Options
|
An RSU award is a promise to deliver to the recipient, upon vesting, shares of the Company’s common stock.
|
|
Non‑qualified stock options provide the opportunity to purchase the Company’s common stock at a specified price called the “exercise price” at a future date.
|
|
|
|
Holders of RSUs are not entitled to vote the shares and do not receive cash dividends during the restriction period. Dividend equivalents are paid in cash upon the vesting of RSUs.
|
|
Stock option holders do not receive dividends on shares underlying options and cannot vote the shares underlying options.
|
|
|
|
RSUs have intrinsic value on the day the award is received and retain some realizable value even if the share price declines during the restriction period, so each provides strong employee retention value.
|
|
Non‑qualified stock options increase focus on activities primarily related to absolute share price appreciation. The Company’s non‑qualified stock options will expire seven years after their grant date. If the value of the Company’s common stock increases and the optionee exercises his or her option to buy at the exercise price, the optionee receives a gain in value equal to the difference between the option exercise price and the price of the stock on the exercise date. If the value of the Company’s common stock fails to increase or declines, the stock option has no realizable value. Stock options provide less retention value than RSUs because stock options have realizable value only if the share price appreciates over the option exercise price before the options expire.
|
Stock Ownership Guidelines
In order to further align the interests of our executive officers and directors with those of our stockholders, our Board of Directors has adopted stock ownership guidelines under which our executive officers and directors are required to achieve the following holdings by March 1, 2022 for those subject to the guidelines when adopted in March 2017 or, for any other executives and directors, within five years of becoming subject to the guidelines:
|
|
|
Leadership Position
|
|
Value of Shares
|
Chief Executive Officer
|
|
5x base salary
|
Chief Financial Officer
|
|
3x base salary
|
Other Executive Officers
|
|
1x base salary
|
|
|
|
For purposes of determining an individual’s ownership level, shares held outright, unvested RSUs and deferred stock units are included in the calculation, but unvested options are not. As of the date of this proxy statement, each person covered by our stock ownership guidelines either was already in compliance with the guidelines or was on track to be in compliance over the accumulation period based on anticipated vesting of currently outstanding equity awards and/or the expectation of future equity grants.
Severance Plan Arrangements
The employment agreements with each of the Named Executive Officers provide for a specified severance payment in the case of certain termination events. The Company’s current form of executive employment agreement provides for severance in connection with a change of control only if the executive’s employment ceases upon or within two years after that change in control, a so-called “double trigger.” The agreements for Mr. Dearborn and Mr. Levinsohn were amended in January 2019 to allow for payment
of their severance in the form of salary continuation throughout the remainder of 2019, rather than a lump sum. The severance‑related terms of the employment agreements with the Named Executive Officers and the severance guidelines are described in more detail in “Named Executive Officer Compensation—Potential Payments Upon Termination or Change in Control.”
Employee Benefits and Perquisites
Our Named Executive Officers are eligible for the same benefits as full‑time employees generally, including life, health, and disability insurance and defined contribution retirement benefits. We do not offer supplemental executive benefits of any kind, and perquisites are not a material item of our compensation program for our executive officers.
Recoupment Policy
Our Executive Compensation Clawback Policy provides that we will, subject to applicable law, seek recoupment of executive officers’ performance‑based compensation (cash and equity) in the event of a restatement of our financial statements (other than due to changes in accounting rules) if the CNCG Committee determines that the amount of any performance‑based compensation actually paid or awarded to an executive officer would have been lower had it been calculated based on the restated financials. We would seek recoupment of such amounts previously paid or awarded over the amounts that would have been paid or awarded based on the restated financials. Based on a consideration of all relevant facts and circumstances, the CNCG Committee can determine to not seek recovery of these excess amounts if it determines that to do so would be unreasonable or not in our best interests. Each Named Executive Officer is subject to this policy.
Consideration of Tax and Accounting Impacts
The CNCG Committee may consider tax and accounting implications in designing the Company’s compensation programs. However, the CNCG Committee believes that in establishing the compensation programs for our executive officers, the potential tax and accounting implications of those programs should be only one of a number of relevant factors taken into consideration, and not the sole governing factor.
Risk Assessment of Executive Officer Compensation
The CNCG Committee believes the various components of the total compensation package of the executive officers, as discussed above, are appropriately balanced so as to avoid any excessive risk taking by such individuals. First, long‑term equity awards tied to the market price of our common stock represent a significant component of executive officer compensation and promote a commonality of interest between the executive officers and our stockholders in increasing stockholder value. More specifically, a substantial portion of the equity awards is in the form of RSUs. The use of such RSUs mitigates the potential risk that stock options, which are granted from time to time to NEOs, might otherwise pose to risk taking in the short term. RSUs provide varying levels of compensation as the market price of our common stock fluctuates over time, and they are less likely to contribute to excessive risk taking. Furthermore, the equity awards, whether in the form of stock options or restricted stock unit awards, generally will vest over a period of years, and that vesting element encourages the award recipients to focus on sustaining our long‑term share price performance. Additionally, because equity awards are typically made on an annual basis, the executive officers always have unvested awards outstanding that could decrease significantly in value if our business is not managed to achieve its long‑term goals. In addition, under the 2018 MIP, an individual bonus amount is established for each executive officer at each level of potential goal attainment. Accordingly, at all levels of performance goal attainment, there are limits in place for the potential bonus payout. In addition, a maximum bonus amount is established for each participant such that no participant may earn more than a fixed percentage of the participant’s base salary. Accordingly, our overall compensation structure is not overly‑weighted toward short‑term incentives, and the CNCG Committee has taken what it believes are reasonable steps to protect against the potential of disproportionately large short‑term incentives that might encourage excessive risk taking.
COMPENSATION, NOMINATING AND CORPORATE GOVERNANCE COMMITTEE REPORT
The Compensation, Nominating and Corporate Governance Committee has reviewed and discussed the Compensation Discussion and Analysis above, and, based on such review and discussions, has recommended to the Board of Directors of the Company that the Compensation Discussion and Analysis be included in this proxy statement.
The Compensation, Nominating and Corporate Governance Committee
Richard A. Reck, Chairperson
Carol Crenshaw
Phil Franklin (Former)
Dana Goldsmith Needleman
NAMED EXECUTIVE OFFICER COMPENSATION
2019 Summary Compensation Table
The following table shows, for services performed during the designated year, compensation awarded to or earned by our Chief Executive Officer, our Chief Financial Officer and the other three most highly compensated individuals who served as executive officers as of December 29, 2019 (collectively, the “Named Executive Officers”).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Awards (1)
|
|
Awards (1)
|
|
Compensation (2)
|
|
Compensation (3)
|
|
Total
|
Timothy P. Knight
|
|
2019
|
|
$
|
600,000
|
|
$
|
—
|
|
$
|
1,647,500
|
(6)
|
$
|
—
|
|
$
|
495,640
|
|
$
|
11,200
|
|
$
|
2,754,340
|
Chief Executive Officer and
|
|
2018
|
|
$
|
600,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,000
|
|
$
|
611,000
|
President
|
|
2017
|
|
$
|
512,308
|
|
$
|
—
|
|
$
|
2,791,875
|
|
$
|
747,000
|
|
$
|
—
|
|
$
|
237,300
|
|
$
|
4,288,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry Jimenez
|
|
2019
|
|
$
|
546,250
|
|
$
|
—
|
|
$
|
988,500
|
(6)
|
$
|
—
|
|
$
|
363,470
|
|
$
|
11,200
|
|
$
|
1,909,420
|
EVP/Chief Financial Officer
|
|
2018
|
|
$
|
475,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,000
|
|
$
|
486,000
|
|
|
2017
|
|
$
|
448,173
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,800
|
|
$
|
458,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julie K. Xanders
|
|
2019
|
|
$
|
465,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
192,061
|
|
$
|
11,200
|
|
$
|
668,261
|
EVP/General Counsel
|
|
2018
|
|
$
|
465,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,000
|
|
$
|
476,000
|
|
|
2017
|
|
$
|
473,269
|
|
$
|
—
|
|
$
|
842,779
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,800
|
|
$
|
1,326,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Justin C. Dearborn (4)
|
|
2019
|
|
$
|
32,308
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,283,086
|
|
$
|
1,315,394
|
Former Chief Executive Officer
|
|
2018
|
|
$
|
600,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,000
|
|
$
|
611,000
|
and Chairperson of the Board
|
|
2017
|
|
$
|
611,539
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
145,935
|
|
$
|
757,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ross Levinsohn (5)
|
|
2019
|
|
$
|
32,308
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,597,990
|
|
$
|
1,630,298
|
Former Chief Executive Officer,
|
|
2018
|
|
$
|
600,000
|
|
$
|
400,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,000
|
|
$
|
1,011,000
|
Tribune Interactive, LLC
|
|
2017
|
|
$
|
219,231
|
|
$
|
144,931
|
|
$
|
5,352,000
|
|
$
|
1,212,000
|
|
$
|
—
|
|
$
|
4,038
|
|
$
|
6,932,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts reflect the aggregate grant date fair value of awards granted during the fiscal year noted as computed in accordance with FASB ASC Topic 718, excluding the effect of any estimated forfeitures. These amounts reflect the Company’s accounting expense to be recognized over the vesting period of the awards and do not correspond to the actual value that will be realized by the Named Executive Officers. Assumptions used in the calculation of these amounts are described in the Company’s audited financial statements included in the Company’s Annual Report of Form 10-K for each fiscal year.
|
|
(2)
|
|
Amounts reflect the payouts under the management incentive program, which are described in the “Compensation Discussion and Analysis” section of this proxy statement.
|
|
(3)
|
|
Amounts include $11,200 in 401(k) retirement plan matching contributions for each of the Named Executive Officers other than for Mr. Levinsohn for whom the contribution amount was $1,823 and Mr. Dearborn for whom there was no 401(k) matching contribution. With respect to Mr. Dearborn, the 2019 amount also includes the following amounts paid (as required by his employment agreement) as severance upon the termination of his employment without cause during 2019: (i) $1,260,000 in salary continuation payments, (ii) $23,086 reflecting a pro-rated 2019 MIP award, assuming target performance and pro-rated for the number of days he worked in 2019. With respect to Mr. Levinsohn, the 2019 amount also includes the following amounts paid (as required by his employment agreement) as severance upon the termination of his employment without cause during 2019: (i) $957,692 in salary continuation payments, (ii) $600,000 sign on bonus (iii) $38,475 reflecting a pro-rated 2019 MIP award, assuming target performance and pro-rated for the number of days he worked in 2019.
|
|
(4)
|
|
Mr. Dearborn’s employment with the Company terminated in January 2019.
|
|
(5)
|
|
Mr. Levinsohn’s employment with the Company terminated in January 2019.
|
|
(6)
|
|
Reflects each of Mr. Knight’s and Mr. Jimenez’s RSU grants in 2019 that vest on the first anniversary of the grant date.
|
2019 Grants of Plan‑Based Awards Table
The following table shows equity and non‑equity incentive plan compensation opportunities granted to our Named Executive Officers under our management incentive plan during the fiscal year ended December 29, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
Base
|
|
Fair Value of
|
|
|
|
|
Under NonEquity
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
Incentive Plan Awards (1)
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($ / share)
|
|
($)
|
Timothy P. Knight
|
|
1/16/2019
|
|
—
|
|
600,000
|
|
1,200,000
|
|
125,000
|
|
—
|
|
13.18
|
|
1,647,500
|
Terry Jimenez
|
|
1/16/2019
|
|
—
|
|
440,000
|
|
880,000
|
|
75,000
|
|
—
|
|
13.18
|
|
988,500
|
Julie K. Xanders
|
|
|
|
—
|
|
232,500
|
|
465,000
|
|
—
|
|
—
|
|
—
|
|
—
|
Justin C. Dearborn
|
|
|
|
—
|
|
600,000
|
|
1,200,000
|
|
—
|
|
—
|
|
—
|
|
—
|
Ross Levinsohn
|
|
|
|
—
|
|
1,000,000
|
|
2,000,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
These columns show the threshold, target and maximum payouts under the 2019 management incentive program, which is described in the “Compensation Discussion and Analysis” section of this proxy statement.
|
Employment Agreements
The Company has entered into employment agreements with our currently employed Named Executive Officers as described below. Each agreement provides for certain payments and benefits to the executive upon separation from us as described below in “Potential Payments Upon Termination or Change in Control.” Each agreement also contains certain restrictive covenants for our benefit and requires the executive to maintain the confidentiality of our confidential information. The equity awards described in each agreement will be subject to such other terms as set forth in the Omnibus Incentive Plan and applicable award agreements. The employment agreements generally provide for a minimum base salary and target bonus opportunity.
Terry Jimenez
Pursuant to his employment agreement, effective April 4, 2018, Mr. Jimenez is entitled to receive an annual base salary of at least $475,000 and has a target annual cash bonus opportunity of at least 75% of base salary. The term of his employment agreement expires on April 3, 2021.
Julie K. Xanders
Pursuant to her employment agreement, effective January 4, 2018, Ms. Xanders is entitled to a minimum annual base salary of $465,000 and has a target annual cash bonus opportunity of 50% of base salary.
2019 Outstanding Equity Awards at Fiscal Year‑End Table
The following table shows the outstanding stock options and unvested RSU awards held by each Named Executive Officer as of December 29, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
Number of
|
|
Market
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Shares or
|
|
Value of
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Units of
|
|
Shares or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
|
Stock That
|
|
Units of
|
|
|
|
|
Options
|
|
Options
|
|
Option
|
|
Option
|
|
Have Not
|
|
Stock That
|
|
|
|
|
(#)
|
|
(#)
|
|
Exercise
|
|
Expiration
|
|
Vested
|
|
Have Not
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
Unexercisable (1)
|
|
Price (2)
|
|
Date
|
|
(#) (3)
|
|
Vested (4)
|
Timothy P. Knight
|
|
2/23/2017
|
|
75,000
|
|
37,500
|
|
$
|
14.89
|
|
2/23/2024
|
|
62,500
|
|
$
|
815,000
|
|
|
1/16/2019
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
125,000
|
|
$
|
1,630,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry Jimenez
|
|
8/2/2016
|
|
112,500
|
|
—
|
|
$
|
14.87
|
|
8/2/2023
|
|
—
|
|
$
|
—
|
|
|
1/16/2019
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
75,000
|
|
$
|
978,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julie K. Xanders
|
|
5/7/2013
|
|
6,301
|
|
—
|
|
$
|
14.02
|
|
5/7/2023
|
|
—
|
|
$
|
—
|
|
|
8/29/2014
|
|
7,000
|
|
—
|
|
$
|
19.20
|
|
8/29/2021
|
|
—
|
|
$
|
—
|
|
|
3/9/2015
|
|
7,000
|
|
—
|
|
$
|
17.41
|
|
3/9/2022
|
|
—
|
|
$
|
—
|
|
|
10/25/2016
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
4,929
|
|
$
|
64,274
|
|
|
4/3/2017
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
10,578
|
|
$
|
137,937
|
|
|
12/20/2017
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
10,000
|
|
$
|
130,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Justin C. Dearborn
|
|
8/2/2016
|
|
225,000
|
|
—
|
|
$
|
14.87
|
|
3/20/2020
|
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ross Levinsohn
|
|
8/21/2017
|
|
133,332
|
|
—
|
|
$
|
13.38
|
|
3/20/2020
|
|
—
|
|
$
|
—
|
|
(1)
|
|
The stock option awards granted in 2014, 2015, 2016 and 2017 were pursuant to the Omnibus Incentive Plan. The 2014 and 2015 awards vest over four years in equal installments on March 1st of each year following the grant until the option is fully vested. The 2016 and 2017 awards granted to Messrs. Dearborn, Jimenez, Knight and Levinsohn vest over three years in equal installments on each anniversary of the grant date until their options are fully vested. Each stock option award has a term of seven years; provided, however, that pursuant to the terms of our option award agreements, upon certain termination events, including a termination without cause, the option term may be shortened to 90 days from the date of termination. Vesting is subject to continued service. Stock options with a grant date of May 7, 2013 for Ms. Xanders were granted pursuant to the Tribune Media Company 2013 Equity Incentive Plan and converted to the Company’s stock options under the Omnibus Incentive Plan and have a term of ten years, which may be shortened upon certain terminations of employment.
|
|
(2)
|
|
The per share option exercise price represents the closing price of the Company’s common stock on the date of grant.
|
|
(3)
|
|
The RSUs were granted pursuant to the Omnibus Incentive Plan. The awards granted in 2014 and 2015 vest over four years in equal installments on March 1st of each year following the grant until the award is fully vested. The 2019 awards granted to Messrs. Jimenez and Knight vest on the one year anniversary of the grant date and are fully vested at that time. The 2016 and 2017 awards granted to Messrs. Dearborn, Jimenez, Knight and Levinsohn vest over three years in equal installments on each anniversary of the grant date until their awards are fully vested. The 2016 and April 2017 awards granted to Ms. Xanders vest over four years in equal installments on each anniversary of the grant date until the award is fully vested and the December 2017 grant issued to Ms. Xanders vest over three years in equal installments on each anniversary of the grant date until the award is fully vested. Vesting is subject to continued service. RSUs with a grant date of May 7, 2013 for Ms. Xanders were granted pursuant to the Tribune Media Company 2013 Equity Incentive Plan and converted to the Company’s RSUs under the Omnibus Incentive Plan.
|
|
(4)
|
|
Market value was determined by multiplying the number of RSUs by $13.04 (the closing price of the Company’s common stock on December 27, 2019, the last day of trading in fiscal year 2019).
|
2019 Option Exercises and Stock Vested Table
The following table shows, for the fiscal year ended December 29, 2019, the RSUs vested for the Named Executive Officers. No options were exercised in 2019.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Shares Acquired
|
|
Value Realized
|
Name
|
|
on Exercise (#)
|
|
on Exercise ($)
|
|
on Vesting (#)
|
|
on Vesting ($) (1)
|
Timothy P. Knight
|
|
—
|
|
—
|
|
62,500
|
|
758,125
|
Terry Jimenez
|
|
—
|
|
—
|
|
62,500
|
|
513,125
|
Julie K. Xanders
|
|
—
|
|
—
|
|
22,555
|
|
264,373
|
Justin C. Dearborn
|
|
—
|
|
—
|
|
125,000
|
|
1,026,250
|
Ross Levinsohn
|
|
—
|
|
—
|
|
133,333
|
|
999,998
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based on the closing price of the Company’s common stock on the vesting date.
|
Elements of Post‑Termination Compensation and Benefits
Employment Agreements
The Company (or a subsidiary thereof) has employment agreements with each of our executive officers. The employment agreements provide for certain payments and benefits to the executive officer upon the executive officer’s separation from us as described below in “Potential Payments Upon Termination or Change in Control”.
Change in Control Provisions for Equity Awards
Change in Control Provisions in the Omnibus Incentive Plan.
The Omnibus Incentive Plan is administered by the CNCG Committee or such other committee as our Board may from time to time designate (the “Plan Committee”). Upon a change in control, no cancellation, acceleration of exercisability or vesting, lapse of any restricted period or settlement or other payment will occur with respect to any outstanding awards, if the Plan Committee reasonably determines in good faith, prior to the occurrence of the change in control, that such outstanding awards will be honored or assumed or new rights substituted therefor (such honored, assumed or substituted awards, “Alternative Awards”). Alternative Awards must provide a participant with substantially equivalent rights and entitlements and provide for accelerated vesting in the event a participant’s employment is terminated without “cause” within 12 months after the change in control.
If the Plan Committee reasonably determines in good faith, prior to the occurrence of the change in control, that no Alternative Awards will be provided, then, (A) all unvested awards (other than performance awards) shall vest and the restricted period on that award shall lapse; (B) each outstanding option and stock appreciation right (“SAR”) will vest and be canceled in exchange for a cash payment equal to (x) the excess, if any, of the change in control price over the exercise price of such option or SAR, multiplied by (y) the aggregate number of shares of common stock covered by such award; (C) each outstanding performance award with a performance cycle in progress at the time of the change in control shall be deemed to be earned and become vested and paid out based on the performance goals achieved as of the date of the change in control (which performance goals shall be pro‑rated, if necessary or appropriate, to reflect the portion of the performance cycle that has been completed), and all other performance awards shall terminate and be forfeited upon consummation of the change in control; (D) cash awards that are vested but unpaid shall be paid in cash; and (E) each outstanding restricted stock, RSU, performance shares and performance units and other stock‑based awards shall vest, the restricted period (if any) on all such outstanding awards shall lapse and shares of common stock issued or the awards may be canceled in exchange for a cash payment equal to (x) the change in control price, multiplied by (y) the aggregate number of shares of common stock covered by such award; provided, however that no award that is subject to Section 409A of the Code shall be canceled in exchange for a cash payment unless such payment may be made without the imposition of any additional taxes or interest under Section 409A of the Code.
If the Plan Committee reasonably determines in good faith, prior to the occurrence of the change in control, that no Alternative Awards will be provided, then the Plan Committee may determine, in its discretion, to cancel some or all awards in exchange for a cash payment based on the change in control price or may, in its discretion, accelerate the exercisability or vesting or lapse of any restricted period with respect to all or any portion of any outstanding award.
Awards to Executives Under the Omnibus Incentive Plan. The awards granted under the Omnibus Incentive Plan provide for accelerated vesting as follows:
|
·
|
|
Death or Disability. Upon termination of employment of the executive officer by reason of death or disability, the unvested portion of the award will vest in full and stock options will remain exercisable for one year following the termination of employment, but not later than the original term of the option as determined by the Plan Committee when granted (generally seven years).
|
|
·
|
|
Change in Control. If the executive officer will not receive an Alternative Award satisfying the conditions set forth in the Omnibus Incentive Plan, in the event of a change in control occurring prior to the applicable vesting date, the unvested portion of the award will vest in full and in the case of stock options, if so directed by the Plan Committee, will be cancelled in exchange for a payment equal to the excess, if any, of the price paid for a share of common stock in the transaction resulting in the change in control over the applicable exercise price. In addition, in February 2016, all then-outstanding RSUs and stock options held by Ms. Xanders were amended to also provide for full acceleration of the unvested shares in the event of (a) a termination of employment without cause within two years following a change in control, (b) the change in control occurs during the term of their respective employment agreements and (c) they timely sign a release and waiver of claims. The equity grants awarded after this amendment to each of Messrs. Dearborn, Jimenez, Knight and Levinson, and Ms. Xanders (other than the April 2017 RSU grant to Ms. Xanders) include a similar provision.
|
Potential Payments Upon Termination or Change in Control
The employment agreements with each of our executive officers provide for certain payments and benefits upon a separation from us. To the extent applicable, “cause” and “good reason” are defined in the employment agreements. If any payments or benefits payable under the employment agreements will be subject to a parachute excise tax under Section 4999 of the Internal Revenue Code, we will pay to the executive officer either (a) the full amount of such payments or benefits or (b) the full amount reduced by an amount that prevents any portion from being an excess parachute payment with the meaning of Code Section 280G, whichever results, on an after-tax basis, in the greater amount payable to the executive officer.
Terry Jimenez
Pursuant to Mr. Jimenez’s employment agreement in effect at the end of 2019, if the Company terminates his employment without cause (and other than due to death or disability) or he resigns for good reason, subject to his execution and non-revocation of a release of claims, the Company will pay him, in addition to his previously-accrued compensation, the following severance: (i) an amount equal to the greater of (x) an amount equal to his base salary paid via salary continuation over the remainder of the term of the agreement (through April 3, 2021) or (y) his base salary paid via salary continuation for a 52 week period after the date of termination, (ii) any unpaid annual bonus with respect to the calendar year immediately preceding the calendar year of termination of employment, and (iii) a pro-rata amount of the annual bonus based on actual performance with respect to the calendar year of termination of employment, with the pro-rated annual bonus payment paid at the time such bonuses are paid to the other executive officers of the Company.
In addition to such amounts, if there is a change in control (as defined in Mr. Jimenez’s employment agreement) of the Company during the term of Mr. Jimenez’s employment agreement and (1) the Company terminates his employment for any reason other than death, disability, or for cause, or he resigns for good reason (as cause and good reason are defined in the employment agreement) within two years of that change in control and (2) Mr. Jimenez executes a waiver and release of claims and does not revoke it, then all of his unvested equity awards will vest in full. An equity award granted to Mr. Jimenez in January, 2019 vests in full upon a change in control.
Julie K. Xanders
Pursuant to Ms. Xanders’ employment agreement in effect at the end of 2019, if the Company terminates her employment without cause (and other than due to death or disability) or she resigns for good reason, subject to her execution and non-revocation of a release of claims, the Company will pay her, in addition to her previously-accrued compensation, the following severance: (i) 12 months of her base salary paid bi-weekly over 52 weeks, (ii) any unpaid annual bonus for the preceding year, and (iii) a pro-rated annual bonus for the year of termination based on actual performance with respect to the calendar year of termination of employment, with the pro-rated annual bonus payment paid at the time such bonuses are paid to the other executive officers of the Company.
In addition to such amounts, if there is a change in control (as defined in Ms. Xanders employment agreement) of the Company during the term of her employment agreement and (1) the Company terminates her employment for any reason other than death, disability, or for cause, or she resigns for good reason (as cause and good reason are defined in the employment agreement) within two years of that change in control and (2) Ms. Xanders executes a waiver and release of claims and does not revoke it, then all of her unvested equity awards (other than those granted in April 2017) will vest in full.
Timothy P. Knight
Mr. Knight stepped down as Chief Executive Officer, President and Chairman of the Board, effective January 31, 2020, and continued his employment with the Company through March 1, 2020. The Company and Mr. Knight agreed that in satisfaction of Mr. Knight’s severance rights under his employment agreement with Tribune Publishing Company, LLC, Mr. Knight received continuation of his base salary for one year through February 28, 2021 ($600,000), his bonus for 2019 and certain benefit continuation.
Pursuant to Mr. Knight’s employment agreement in effect at the end of 2019, if the Company had terminated his employment without cause (and other than due to death or disability) or he had resigned for good reason, subject to his execution and non-revocation of a release of claims, the Company would have paid him, in addition to his previously-accrued compensation, the following severance: (i) an amount equal to the greater of (x) an amount equal to his base salary paid via salary continuance over the remainder of the term of the agreement (through January 31, 2022) or (y) his base salary paid via salary continuance for a 52 week period after the date of termination, (ii) any unpaid annual bonus with respect to the calendar year immediately preceding the calendar year of termination of employment, (iii) a pro-rata amount of the annual bonus based on actual performance with respect to the calendar year of termination of employment, with the pro-rated annual bonus payment paid at the time such bonuses are paid to the other executive officers of the Company and (iv) certain benefit continuation.
In addition to such amounts, if there was a change in control (as defined in Mr. Knight’s employment agreement) of the Company during the term of Mr. Knight’s employment agreement and (1) the Company terminated his employment for any reason other than death, disability, or for cause, or he resigned for good reason (as cause and good reason are defined in the employment agreement) within two years of that change in control and (2) Mr. Knight executed a waiver and release of claims and did not revoke it, then all of his unvested equity awards would have vested in full.
Justin C. Dearborn
Mr. Dearborn stepped down as Chief Executive Officer and Chairman of the Board, effective January 17, 2019. Pursuant to his amended employment agreement, the Company paid him, in addition to his previously-accrued compensation, the following severance: (i) an amount, paid in substantially equal installments as salary continuance throughout the remainder of calendar year 2019, equal to his base salary remaining due under the term of the agreement (through February 21, 2021) ($1,260,000) and (ii) a pro-rata amount of the annual bonus based on actual performance with respect to calendar year 2019 ($23,085.62), with the pro-rated annual bonus payment paid at the time such bonuses are paid to the other executive officers of the Company. In addition, Mr. Dearborn continued to vest in equity awards through the end of calendar year 2019.
Ross Levinsohn
Mr. Levinsohn moved on from his role as Chief Executive Officer of Tribune Interactive, LLC to pursue new opportunities, effective January 17, 2019. Pursuant to his amended employment agreement, the Company paid him, in addition to his previously-accrued compensation, the following severance: (i) an amount, paid in substantially equal installments as salary continuance throughout the remainder of calendar year 2019, equal to his base salary and sign-on bonus remaining due under the term of the employment agreement (through August 20, 2020) ($1,557,692), and (ii) a pro-rata amount of the annual bonus based on actual performance with respect to calendar year 2019 ($38,475.13), with the pro-rated annual bonus payment paid at the time such bonuses are paid to the other executive officers of the Company. In addition, Mr. Levinsohn continued to vest in equity awards through the end of calendar year 2019, and Mr. Levinsohn and his eligible family members will continue to receive medical, dental and vision coverage through August 20, 2020, with Mr. Levinsohn continuing to pay his portion of such benefits for such time.
Estimated Payments Upon Termination or Change in Control at Year End Table
The following table shows the estimated incremental compensation for Messrs. Knight and Jimenez and Ms. Xanders as of December 29, 2019, in the event a termination of employment without cause (and other than due to death or disability) or resignation for good reason or a change in control had occurred on that date. The table does not include benefits generally available to all employees or payments and benefits that the Named Executive Officers would have already earned during their employment with us whether or not a termination or change in control event had occurred. In addition, the table does not include pro rata incentive bonuses
for the year of termination because December 29, 2019 was the last day of the fiscal year and the incentive amounts for 2019 are set forth in the Non-Equity Incentive Plan Compensation column of the 2019 Summary Compensation Table. Actual amounts payable can only be determined at the time of termination or change in control and any reduction pursuant to the employment agreements in payments that would otherwise be subject to parachute excise tax at such time is not reflected in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Change of
|
|
On or After Change
|
|
|
|
|
Control
|
|
of Control
|
|
|
|
|
Termination
|
|
Termination
|
|
|
|
|
Without Cause or
|
|
Without Cause or
|
Name
|
|
Benefit
|
|
for Good Reason
|
|
for Good Reason (1)
|
Timothy P. Knight
|
|
Cash Severance
|
|
$
|
1,257,692
|
|
$
|
1,257,692
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
—
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
1,257,692
|
|
$
|
1,257,692
|
|
|
|
|
|
|
|
|
|
Terry Jimenez
|
|
Cash Severance
|
|
$
|
602,885
|
|
$
|
602,885
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
978000
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
602,885
|
|
$
|
1,580,885
|
|
|
|
|
|
|
|
|
|
Julie K. Xanders
|
|
Cash Severance
|
|
$
|
465,000
|
|
$
|
465,000
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
194,674
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
465,000
|
|
$
|
659,674
|
|
|
|
|
|
|
|
|
|
|
(1)
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|
RSU acceleration and stock option acceleration in connection with a change in control require termination of employment without cause or resignation for good reason if the awards are assumed or substituted; however, the awards will vest upon a change of control if the awards are not assumed or substituted. In addition, all of the outstanding awards of Messrs. Knight and Jimenez and the awards of Ms. Xanders, other than the award to Ms. Xanders granted in April 2017, specifically provide for acceleration of the vesting of awards upon termination of employment without cause or resignation for good reason within specified periods of time after a change of control. The numbers in this column assume assumption of the awards and within 12 months of a change of control either a termination of employment without cause or, for all Named Executive Officers’ equity grants outstanding as of December 31, 2019 other than Ms. Xanders’ April 2017 grant, resignation for good reason.
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(2)
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|
Calculated by multiplying the number of accelerated RSUs by $13.04 (the closing price of the Company’s common stock on December 27, 2019, the last trading day on Nasdaq during our 2019 fiscal year).
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(3)
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Calculated by multiplying the number of shares underlying accelerated options by the excess, if any, of (i) $13.04 (the closing price of the Company’s common stock on December 27, 2019, the last trading day on Nasdaq during our 2019 fiscal year) over (ii) the exercise price of the applicable options.
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2019 Pay-Ratio
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the annual total compensation of our median employee, the annual total compensation of our Chief Executive Officer, and the ratio of these two amounts. We have estimated the 2019 annual total compensation of our median employee to be $47,249. The 2019 annual total compensation of Mr. Knight, as set forth in the Summary Compensation Table above, was $2,754,340. The ratio of the estimated annual total compensation of our median employee to the annual total compensation of our CEO was 1 to 59. We selected the median employee based on our employee base (excluding Mr. Knight) as of December 30, 2019 using 2020 Box 1 W-2 compensation. For purposes of calculating the ratio, after determining our median employee, we calculated that employee’s compensation for purposes of this ratio in the manner consistent with SEC rules for the Summary Compensation Table and compared it to Mr. Knight’s total compensation in that same table.
POLICIES AND PROCEDURES FOR THE REVIEW AND APPROVAL OR RATIFICATION
OF TRANSACTIONS WITH RELATED PERSONS
Policies and Procedures for the Review and Approval or Ratification of Transactions with Related Persons
Our Board of Directors has adopted a written policy for the review and approval or ratification of related person transactions. Under the policy, our directors, nominees for director and executive officers are expected to disclose to our General Counsel as soon as reasonably practicable the material facts of any proposed or existing transaction, arrangement or relationship in which the Company was, is or will be a participant and such director, nominee for director or executive officer (or any immediate family member thereof as defined in the policy) had, has or will have any direct or indirect interest (other than transactions, arrangements or relationships specifically excluded as set forth in the policy). The Audit Committee of the Board has responsibility for administering this policy and may review, and recommend amendments to, this policy from time to time.
A related person transaction generally is defined as any transaction required to be disclosed under the SEC’s related person transaction disclosure requirement of Item 404(a) of Regulation S‑K.
Any potential related person transaction reported to or otherwise made known to the General Counsel is reviewed according to the following procedures:
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·
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If the General Counsel determines that disclosure of the transaction in our annual proxy statement or annual report on Form 10‑K is not required under the SEC’s related person transaction requirement, the transaction will not be deemed to be a related person transaction subject to the policy.
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·
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If disclosure of the transaction in our annual proxy statement or annual report on Form 10‑K would be required under the SEC’s related person transaction requirement, the General Counsel will submit the transaction to the Audit Committee. The Audit Committee will review and determine whether to approve or ratify the transaction.
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·
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The Audit Committee will approve or ratify the transaction only if it determines that the transaction is in, or is not inconsistent with, the best interests of the Company. The Audit Committee, in its sole discretion, may impose such terms and conditions as it deems appropriate on the Company or the related person in connection with approval of the transaction.
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·
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In the event that it is impracticable or undesirable to wait until an Audit Committee meeting to obtain approval or ratification of the transaction, the chairperson of the Audit Committee may approve or ratify any transaction not involving the chairperson or an immediate family member thereof, and any other member of the Audit Committee who is not involved in and does not have an immediate family member who is involved in the transaction may approve or ratify any transaction involving the chairperson or an immediate family member thereof. In such event, the chairperson or other member of the Audit Committee, as applicable, will possess delegated authority to act between Audit Committee meetings and the transaction will be disclosed to the Audit Committee. Any transaction that is material will be disclosed to the full Board.
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When determining whether to approve or ratify a related person transaction, the Audit Committee will review relevant facts regarding the related person transaction, including, without limitation: fairness to the Company; whether the terms are comparable to those generally available in arm’s‑length transactions; the business reasons for the transaction; the availability of other sources for comparable products or services; and the nature and extent of the related person’s interest in the transaction.
If any related person transaction is ongoing or is part of a series of transactions, the Audit Committee may establish guidelines as necessary to appropriately review the ongoing transaction. After initial approval or ratification of the transaction, the Audit Committee will review the transaction on a regular basis (at least annually).
In the event the Audit Committee determines not to ratify a transaction that has been entered into without approval, the Audit Committee may consider additional action, in consultation with counsel, including, but not limited to, termination of the transaction on a prospective basis, rescission of the transaction or modification of the transaction in a manner that would permit it to be ratified by the Audit Committee.
Related Person Transactions
Agreements with Merrick Media, LLC
On February 3, 2016, the Company entered into (a) a Securities Purchase Agreement (the “Merrick Purchase Agreement”), by and among the Company, Merrick Media, LLC (“Merrick Media”) and Michael W. Ferro, Jr., which was later amended and (b) a Registration Rights Agreement (the “Merrick Registration Rights Agreement”), by and between the Company and Merrick Media. On December 20, 2017, the Company and one of its subsidiaries entered into a Consulting Agreement (the “Consulting Agreement”) with Merrick Ventures LLC (“Merrick Ventures”) and, solely for certain sections thereof, Mr. Ferro and Merrick Media. On November 15, 2019, Merrick Media and its affiliates sold 9,071,529 shares of Company common stock, all of the shares of Company stock they controlled, to funds affiliated with Alden Global Capital LLC in a private transaction. Mr. Ferro, who was the Chairperson of our Board until March 18, 2018, is the manager of Merrick Venture Management, LLC (“Merrick Management”), which is the sole manager of Merrick Media. Because Merrick Management serves as the sole manager of Merrick Media, Mr. Ferro may have been deemed to indirectly control all of the shares of the Company’s common stock that were owned by Merrick Media.
The summaries of the Merrick Registration Rights Agreement and the Consulting Agreement (as amended) below are qualified in their entireties by reference to the full text of the applicable agreements, which are listed as exhibits to the Company’s 2018 Annual Report on Form 10‑K.
Registration Rights Agreement
Pursuant to the Merrick Registration Rights Agreement, Merrick Media was entitled to certain registration rights under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock of the Company acquired in connection with the Merrick Purchase Agreement. The Merrick Registration Rights Agreement provided that the Company would use its reasonable best efforts to cause a registration statement with respect to the shares of common stock to be declared effective. The Company would pay all of its own costs and expenses, including all fees and expenses of counsel for the Company, relating to the Merrick Registration Rights Agreement. The Merrick Registration Rights Agreement terminated upon the sale of the shares of common stock subject to the agreement to the funds affiliated with Alden Global Capital LLC.
Consulting Agreement, as amended
The Consulting Agreement provided for the engagement of Merrick Ventures on a non-exclusive basis to provide certain management expertise and technical services for an annual fee of $5 million. During the term of the Consulting Agreement, Merrick Ventures and Mr. Ferro agreed to certain non-competition covenants relating to engaging in certain other daily printed newspaper businesses, subject to certain exceptions. In June 2018, the Company amended the Consulting Agreement to reduce the total fees due under the Consulting Agreement by $2.5 million. The Company paid the $12.5 million in fees due under the Consulting Agreement during 2018.
The Consulting Agreement provided for a rolling three-year term, with the initial term continuing through December 31, 2020. The amendment to the Consulting Agreement eliminated the rolling term, such that the term of the Consulting Agreement will end on December 31, 2020, and allows the Company to engage Merrick Ventures as its advisor, if it so chooses, but at no additional cost to the Company. If so engaged, the Company would indemnify Merrick Ventures if the Company requests it to meet with third parties.
Agreements with Nant Capital, LLC
On May 22, 2016, the Company entered into (a) a Securities Purchase Agreement (the “Nant Purchase Agreement”), by and among the Company, Nant Capital, LLC (“Nant Capital”) and Dr. Patrick Soon-Shiong and (b) a Registration Rights Agreement (the “Nant Registration Rights Agreement”), by and between the Company and Nant Capital. In addition, on February 7, 2018, the Company entered into a Membership Interest Purchase Agreement by and among the Company and Nant Capital (the “Membership Interest Purchase Agreement”). Dr. Soon-Shiong and Nant Capital collectively beneficially owned, as of March 24, 2020, approximately 24.0% of the outstanding common stock of the Company.
The summaries of the Nant Purchase Agreement, the Nant Registration Rights Agreement and the Membership Interest Purchase Agreement described below are qualified in their entireties by reference to the full text of the applicable agreements, which are listed as exhibits to the Company’s 2019 Annual Report on Form 10 K.
Securities Purchase Agreement
Pursuant to the Nant Purchase Agreement, on May 22, 2016, the Company agreed to sell to Nant Capital in a private placement 4,700,000 unregistered shares of common stock of the Company (the “Purchased Common Stock”) at a purchase price of $15.00 per share, for a total of $70,500,000 in cash consideration. The Nant Purchase Agreement includes covenants prohibiting the transfer of shares of the Company’s common stock if the transfer would result in a person beneficially owning more than 4.9% of the Company’s then-outstanding shares of common stock following the transfer, as well as transfers to a material competitor of the Company in any of the Company’s then-existing primary geographical markets. Nant Capital and Dr. Soon-Shiong, and their respective affiliates, are also prohibited, without the prior written approval of the Board, from acquiring additional equity of the Company if the acquisition could result in their beneficial ownership of more than 25% of the Company’s then-outstanding shares of common stock.
Registration Rights Agreement
Pursuant to the Nant Registration Rights Agreement, Nant Capital is entitled to certain registration rights under the Securities Act with respect to the Purchased Common Stock. The Nant Registration Rights Agreement provides that the Company shall use its reasonable best efforts to cause a registration statement with respect to the Purchased Common Stock to be declared effective. The Company will pay all of its own costs and expenses, including all fees and expenses of counsel for the Company, relating to the Nant Registration Rights Agreement.
Membership Interest Purchase Agreement
Pursuant to the Membership Interest Purchase Agreement, the Company agreed to sell the Los Angeles Times, The San Diego Union-Tribune and various other California titles to Nant Capital (the “Nant Transaction”). The Nant Transaction closed on June 18, 2018. The Membership Interest Purchase Agreement contains provisions, covenants, representations and warranties made by the Company and Nant Capital that are typical in transactions of this size, type and complexity. In addition, the Membership Interest Purchase Agreement provides that the parties will indemnify each other for breaches of these representations, warranties and covenants, subject to certain limitations, and for certain other matters.
Transition Services Agreement
In connection with the closing of the Nant Transaction, the Company entered into a transition services agreement (“TSA”) with NantMedia Holdings, LLC (“NantMedia”), providing for up to twelve months of transition services between the parties at negotiated rates approximating cost. Either party may discontinue all or a portion of the services being provided to such party by providing 60 days advance notice. In January 2019, the Company and Nant Media amended the TSA. The amendment extended the term of the contract to June 30, 2020, settled the working capital adjustment from the Nant Transaction, and provided an indemnity related to certain receivables. During 2019, the Company recognized $19.5 million of revenue from provision of TSA services to NantMedia.
ADDITIONAL INFORMATION
Code of Ethics and Business Conduct
Our Board of Directors has adopted a Code of Ethics and Business Conduct that applies to all directors, officers, and non‑union employees of the Company. In addition, our Board of Directors has adopted a Code of Ethics and Business Conduct for CEO and Senior Financial Officers that applies to the Company’s Chief Executive Officer, Chief Financial Officer and Corporate Controller (or persons performing similar functions). Stockholders may access a copy of the Code of Ethics and Business Conduct and the Code of Ethics and Business Conduct for CEO and Senior Financial Officers on our website at investor.tribpub.com.
List of Stockholders of Record
In accordance with Delaware law and our By‑Laws, a list of the names of our stockholders of record entitled to vote at the Annual Meeting will be available for ten days prior to the Annual Meeting for any purpose germane to the meeting, between the hours of 9:00 a.m. and 4:30 p.m. local time at our principal executive offices at 160 N. Stetson Avenue, Chicago, Illinois 60601. This list will also be available during the entire time of the Annual Meeting on the virtual annual meeting website.
Submission of Stockholder Proposals for Inclusion in Next Year’s Proxy Statement
Pursuant to Rule 14a‑8(e) under the Exchange Act, to be considered for inclusion in next year’s proxy statement and form of proxy, stockholder proposals for the 2021 Annual Meeting of Stockholders must be received at our principal executive offices no later than the close of business on December 9, 2020. As prescribed by Rule 14a‑8(b) under the Exchange Act, a stockholder must, among other things, have continuously held at least $2,000 in market value, or 1%, of our outstanding stock for at least one year by the date of submitting the proposal, and the stockholder must continue to own such stock through the date of the annual meeting.
For any proposal that is not submitted for inclusion in next year’s proxy statement, but is instead sought to be presented directly at the 2021 Annual Meeting of Stockholders, stockholders are advised to review our By‑Laws as they contain requirements with respect to advance notice of stockholder proposals not intended for inclusion in our proxy statement and director nominations. To be timely, a stockholder’s notice must be delivered to the Corporate Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of our 2020 Annual Meeting of Stockholders. Accordingly, any such stockholder proposal must be received between the close of business on January 21, 2021 and the close of business on February 20, 2021. In the event that the date of the 2021 Annual Meeting is advanced by more than 30 days or delayed by more than 70 days from the anniversary date of the 2020 Annual Meeting, notice by the stockholder to be timely must be delivered not earlier than 120 days prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the close of business on the 10th day following the day on which public announcement of the date of such meeting is first made. A copy of the pertinent By‑law provisions is available upon request to the following address: Corporate Secretary, Tribune Publishing Company, 160 N. Stetson Avenue, Chicago, Illinois 60601. For such proposals or nominations that are timely filed, we retain discretion to vote proxies we receive, provided that (i) we include in our proxy statement advice to stockholders on the nature of the proposal and how we intend to exercise our voting discretion and (ii) the proponent does not issue a separate and appropriate proxy statement.
Consideration of Stockholder‑Recommended Director Nominees
The Compensation, Nominating and Corporate Governance Committee will consider director nominee recommendations submitted by stockholders. Stockholders who wish to recommend a director nominee should submit their suggestions in writing to the following address: Chairperson of Compensation, Nominating and Corporate Governance Committee, Attn: Corporate Secretary, Tribune Publishing Company, 160 N. Stetson Avenue, Chicago, Illinois 60601. As required by our By‑Laws, stockholders should include in their submissions the name, biographical information, and other relevant information relating to the recommended director nominee, including, among other things, information that would be required to be included in the proxy statement filed in accordance with applicable rules under the Exchange Act and the written consent of the director nominee to being named as a nominee and to serving as a director if elected. Stockholders may access a copy our By‑Laws on our website at investor.tribpub.com.
Evaluation of any such recommendations is the responsibility of the Compensation, Nominating and Corporate Governance Committee. In the event of any stockholder recommendations, the Compensation, Nominating and Corporate Governance Committee will evaluate the persons recommended in the same manner as other candidates.
Communications with the Board of Directors
Stockholders and other stakeholders may contact the Board of Directors as a group, the independent directors, or any individual member of the Board or any Committee of the Board by sending written correspondence by email to Julie.Xanders@tribpub.com or by mail to the following address: Tribune Publishing Company, Attn: Corporate Secretary, 160 N. Stetson Avenue, Chicago, Illinois 60601. Each communication should clearly specify the name(s) of the group of directors or the individual director to whom the communication is addressed. Our Board Communications Policy sets forth the policy for handling communications addressed to the Board. Under that process, the Corporate Secretary of Tribune Publishing Company is responsible for reviewing, summarizing or sending a copy to the Board, the Chairman of the Audit Committee or the office of the General Counsel, whichever is applicable, of any correspondence that deals with legal, ethical or compliance issues or other matter deemed by the Corporate Secretary to be potentially material to the Company. Directors may at any time review a log of all relevant correspondence received by the Company that is addressed to non‑employee members of the Board of Directors and obtain copies of any such correspondence.
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VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 20, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. TRIBUNE PUBLISHING COMPANY 160 N. STETSON AVENUE CHICAGO, IL 60601 During The Meeting - Go to www.virtualshareholdermeeting.com/TPCO2020 You may attend the meeting via the Internet and vote during the meeting. Have your 16-digit control number available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 20, 2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E98182-P37628 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. TRIBUNE PUBLISHING COMPANY The Board of Directors recommends you vote FOR the following: For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! ! ! 1. Election of Directors Nominees: 01) 02) 03) Carol Crenshaw Philip G. Franklin Terry Jimenez 04) 05) 06) Christopher Minnetian Dana Goldsmith Needleman Richard A. Reck For Against Abstain The Board of Directors recommends you vote FOR proposals 2 and 3. ! ! ! ! ! ! 2. Approve, on an advisory basis, the compensation of the Company's named executive officers for 2019 3. Ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 27, 2020 NOTE: The named proxies shall have discretionary authority to vote on any other business as may properly be presented at the Annual Meeting and any adjournment or postponement of the Annual Meeting. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E98183-P37628 TRIBUNE PUBLISHING COMPANY Annual Meeting of Stockholders May 21, 2020 2:00 PM (Central) This proxy is solicited by the Board of Directors The stockholder hereby appoints Terry Jimenez and Julie K. Xanders, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote upon the matters listed on the reverse side of this ballot, as designated on the reverse side of this ballot, with discretionary authority as to any and all other matters that may properly come before the meeting, all of the shares of stock of Tribune Publishing Company that the stockholder is entitled to vote at the Annual Meeting of Stockholders to be held as a virtual-only meeting on Thursday, May 21, 2020, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Please note there will be no physical location for the meeting. To attend the meeting live via the Internet, please go to www.virtualshareholdermeeting.com/TPCO2020 and have your 16-digit control number available to login. Continued and to be signed on reverse side
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