aerospace engineering and mathematics from California State Polytechnic University, Pomona and a Master of Science degree from Cal Tech, and a Doctorate of Science (HON) from California State Polytechnic University, Pomona.
Specific qualifications, experience, skills and expertise that led to the CNCG Committee’s conclusion that Mr. Hartenstein is qualified to serve on the Board include:
|
·
|
|
Operating and management experience;
|
|
·
|
|
Core business skills, including financial and strategic planning; and
|
|
·
|
|
Deep understanding of our company, its history and culture.
|
Timothy P. Knight
Mr. Knight has served as our Chief Executive Officer and as a director since January 17, 2019 and as our President since October 30, 2017. Before that, he was President of our digital division since February 2017. Before joining the Company, Mr. Knight served as President of Advance Ohio, a digital media and marketing company, since October 2015. Before that, from December 2011 to October 2015, Mr. Knight served as Chief Executive Officer of Wrapports, LLC. Prior to joining Wrapports, he held various roles at Newsday Media Group including President, Chief Executive Officer and Publisher. Before joining Newsday in 2003, he held various senior management positions at Tribune Publishing Company, the Chicago Tribune Media Group, and Classified Ventures, LLC. Prior to joining Classified Ventures in 1997, Mr. Knight served as mergers and acquisitions counsel for Tribune Company and a senior associate at Skadden, Arps, Slate, Meagher & Flom LLP, an international law firm. He has been engaged in a number of civic organizations over the years and is currently a member of the Board of Trustees of DePaul University and the Board of Regents of Mercy Home for Boys and Girls (Chicago). He also was a member of the Rock and Roll Hall of Fame, Destination Cleveland, United Way of Greater Cleveland and the Long Island Chapter of Young President’s Organization. Mr. Knight holds a B.S. in accounting from Marquette University and a J.D. with honors from DePaul University College of Law.
Specific qualifications, experience, skills and expertise that led to the CNCG Committee’s conclusion that Mr. Knight is qualified to serve on the Board include:
|
·
|
|
Operating and management experience;
|
|
·
|
|
Core business skills, including operations and strategic planning; and
|
|
·
|
|
Deep understanding of our company, its history and industry.
|
Richard A. Reck
Mr. Reck has served as a director since April 2016. He is the founder and President of Business Strategy Advisors LLC, a business strategy consultancy firm that focuses on serving technology, information and entertainment companies, and has served in such capacity since August 2002. Mr. Reck joined the certified public accounting firm of KPMG LLP in June 1973 and remained employed there until his retirement as a partner in July 2002. He currently serves on the board of directors and chairs the audit committee of SilkRoad, Inc., a venture capital backed multinational human capital management software company; serves on the board of advisors of Ultra Corporation, a private IT consultancy firm; and serves on the board of directors and chairs the audit committee of Advanced Life Sciences Holdings, Inc., a public biopharmaceutical company that has been inactive since 2011. He previously served on the board of directors, as well as the audit and compensation committees, of Interactive Intelligence Group, Inc., a public communications software company which was acquired by Genesys Telecommunications Laboratories, Inc. in December 2016, and the board of directors of Merge Healthcare, Inc., which was a publicly-traded company until its acquisition by IBM in October 2015 where he served on the audit committee and chaired the nominating and governance committee. Mr. Reck is a registered certified public accountant in Illinois and holds a B.A. from DePauw University and an M.B.A. in Accounting from the University of Michigan.
Specific qualifications, experience, skills and expertise that led to the CNCG Committee’s conclusion that Mr. Reck is qualified to serve on the Board include:
|
·
|
|
Operating and management experience;
|
|
·
|
|
Expertise in finance and financial reporting; and
|
|
·
|
|
Core business skills, including financial, audit and strategic planning.
|
CORPORATE GOVERNANCE
Board of Directors
During the fiscal year ended December 30, 2018, the Board of Directors met 26 times, the CNCG Committee met nine times, and the Audit Committee met six times. No incumbent director attended fewer than 75% of the meetings of the Board and standing Board committees on which he or she served during his or her term of service. Five of our six incumbent directors attended the 2018 Annual Meeting.
The Nasdaq Stock Market (“
Nasdaq
”) listing rules (“
Nasdaq Rules
”) require that a majority of our Board of Directors be “independent directors,” as defined in Nasdaq Rule 5605(a)(2). The Board, following the review and recommendation of the Compensation, Nominating and Corporate Governance Committee of the Board, reviewed the independence of the persons who served as our directors, including whether specified transactions or relationships exist currently, or existed during the past three years, between our directors, or certain family members or affiliates of our directors, and the Company and our subsidiaries, certain other affiliates, or our independent registered public accounting firm. As a result of the review, the Board determined that all of the current directors (except for Mr. Knight) are “independent” under the applicable Nasdaq Rules. The Board also determined that Michael W. Ferro, Jr., our former Non-Executive Chair of the Board (through his retirement from the Board), and Justin C. Dearborn, our former Chief Executive Officer and Chair of the Board (in 2018 and through his retirement from the Company), were not independent.
Board Leadership Structure and Role in Risk Oversight
The Company’s Corporate Governance Guidelines provide that it is the policy of the Board that it may choose in its discretion whether to separate or combine the offices of Chairman and Chief Executive Officer on a case‑by‑case basis. Our Board believes that it should have the flexibility to make this determination as circumstances require and in a manner that it believes is best to provide appropriate leadership for our Company. Pursuant to our Corporate Governance Guidelines, if the Board chooses to combine the offices of Chairman and Chief Executive Officer, an independent Lead Director will be appointed annually by the independent directors. The Board believes that its current leadership structure, with Mr. Dreier serving as Chairman of the Board and Mr. Knight serving as Chief Executive Officer and President, is appropriate because it enables the Board as a whole to engage in oversight of management, promote communications between management and the Board and oversee governance matters while allowing our Chief Executive Officer to focus on his primary responsibility for the operational leadership and strategic direction of the Company. The Board does not believe that its role in risk oversight has affected the Board’s leadership structure. Stockholders may access a copy of the Company’s Corporate Governance Guidelines on our website at investor.tribpub.com.
Our independent directors have the opportunity to meet in executive session to consider such matters as they deem appropriate, without management being present, as a regularly scheduled agenda item for Board and committee meetings, as appropriate. The Chairman chairs executive sessions of the independent board members and the chairperson of each committee chairs that committee’s executive sessions.
The Board of Directors considers oversight of the Company’s risk management efforts to be a responsibility of the entire Board (as reported by and through the appropriate committee in the case of risks that are under the purview of a particular committee). Management provides the full Board regular updates on major Company initiatives, strategies, and related risks. The CNCG Committee provides oversight of the Company’s pay policies and practices, including risks associated with executive compensation. In addition, the CNCG Committee oversees risks associated with corporate governance and Board composition, including the independence of Board members. The Audit Committee receives the results of a risk assessment designed to identify and assess key risks associated with the achievement of the Company’s strategic objectives. Management and the CNCG Committee periodically evaluate 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. The Audit Committee also receives periodic reports regarding internal audits, which include management action plans designed to mitigate deficiencies and related risks. The Audit Committee also provides oversight concerning key financial risks and, pursuant to its charter, discusses Company policies with respect to risk assessment and risk management. As part of its role relating to consideration and oversight of risk management, the Audit Committee is periodically informed about, and oversees, data security risks.
The chairperson of the relevant Board committee reports on its discussions to the full Board of Directors during the committee reports portion of the applicable Board meeting. The full Board may access committee materials and may attend committee meetings. This enables the Board and its committees to coordinate the risk oversight role regarding, for example, compensation and governance‑related risks.
Board Committees
The Board of Directors has established the following standing committees: the Audit Committee and the Compensation, Nominating and Corporate Governance Committee. The Board may, by resolution passed by a majority of the Board, from time to time, appoint other committees to address special projects or matters of interest to the Board.
All of the members of each of the standing committees meet the criteria for independence prescribed by the Nasdaq Rules. Membership of the standing committees is determined periodically by the Board of Directors. Adjustments to committee assignments may be made at any time. As of April 3, 2019, membership of each standing committee was as set forth above under “Board Composition.”
The Board of Directors has adopted a written charter for each standing committee. Stockholders may access a copy of each standing committee’s charter on our website at www.investor.tribpub.com. A summary of the duties and responsibilities of each committee is set forth below.
Audit Committee
The primary purposes of the Audit Committee are to: (a) assist the Board in overseeing (i) the quality and integrity of the Company’s financial statements, (ii) the qualifications and independence of the Company’s independent auditor, (iii) the performance of the Company’s internal audit function and independent auditor, (iv) the Company’s compliance with legal and regulatory requirements, and (v) management’s process to assess and manage the Company’s enterprise risk issues; and (b) prepare the report of the Audit Committee required to be included in the Company’s annual proxy statement under SEC rules.
The Audit Committee has the sole authority to appoint or replace the independent auditor. The Audit Committee has the direct responsibility for the compensation, retention and oversight of the work of each independent auditor engaged by the Company for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for the Company, and each such independent auditor reports directly to the Audit Committee. The Audit Committee is responsible for resolving disagreements between management and each such independent auditor regarding financial reporting. The Audit Committee has established policies and procedures for the review and pre‑approval by the Audit Committee of all auditing services and permissible non‑audit services (including the fees and terms thereof) to be performed by the independent auditor.
The Audit Committee meets with our independent auditor at least quarterly, prior to releasing our quarterly results, to review the results of the independent auditor’s interim reviews or annual audit before the results are released to the public or filed with the SEC. The Audit Committee also meets at least once every quarter in separate sessions with management and with the Company’s internal auditor. In addition, the Audit Committee reviews and comments on the quality of our accounting principles and financial reporting and controls, the adequacy of staff, and the results of procedures performed in connection with the audit process. Pursuant to its charter, the Audit Committee is required to meet at least once per quarter.
The charter of the Audit Committee requires that it be composed of at least three directors, all of whom meet the independence requirements relating to directors and audit committee members (a) of Nasdaq and (b) under Section 10A(m) of the Exchange Act and any related rules and regulations promulgated thereunder by the SEC. Each member of the Audit Committee shall, in the judgment of the Board, have the ability to read and understand fundamental financial statements. At least one member of the Audit Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. No member of the Audit Committee may serve on more than three audit committees of publicly traded companies (including our Audit Committee), unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Audit Committee.
The Board of Directors has determined that each member of the Audit Committee meets the independence and financial literacy requirements of Nasdaq and the SEC. The Board also has determined that Messrs. Franklin and Reck and Ms. Crenshaw are “audit committee financial experts” under SEC rules and satisfy the financial sophistication requirements of the Nasdaq Rules.
Compensation, Nominating and Corporate Governance Committee
With respect to its compensation functions, the purpose of the CNCG Committee is to assist the Board in fulfilling its responsibilities for establishing and administering the Company’s policies, programs and procedures for compensating its executives, including (a) to discharge the Board’s responsibilities relating to the compensation of the Company’s Chief Executive Officer and executive officers (collectively, the “
Senior Management Group
”), and the compensation of the independent directors of the Board,
(b) to review the compensation discussion and analysis of executive compensation portion of this proxy statement and prepare the report of the CNCG Committee also included in this proxy statement and (c) to take such other actions relating to the compensation and benefits structure of the Company as the CNCG Committee deems necessary or appropriate.
With respect to its nominating and corporate governance functions, the purpose of the CNCG Committee is to assist the Board in fulfilling its responsibilities by: (a) identifying individuals qualified to become directors and selecting, or recommending that the Board select, the candidates for all director positions to be filled by the Board or by the stockholders, (b) developing and recommending to the Board a set of corporate governance guidelines applicable to the Company, and (c) otherwise taking a leadership role in shaping the corporate governance of the Company.
The CNCG Committee’s charter reflects the responsibilities noted above and is reviewed regularly by the committee. The charter also requires that the CNCG Committee be composed of at least three members who satisfy the independence requirements relating to directors and compensation committee members under the Nasdaq Rules. Unless the Board shall determine otherwise, at least two members of the CNCG Committee are required to satisfy the requirements of a “Non‑Employee Director” for purposes of Rule 16b‑3 under the Exchange Act. In addition, subject to any applicable transition rule, as to any compensation plan that is intended to be administered in a manner consistent with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “
Code
”), at least two members of the CNCG Committee are required to satisfy the requirements of being an “outside director” for purposes of Section 162(m) of the Code and related regulations. The Board has determined that each member of the CNCG Committee meets the Nasdaq independence requirements and at least two members meet such other requirements. In accordance with its charter and to the extent permitted by applicable law, regulations, and the Nasdaq Rules, the CNCG Committee may form and delegate its duties, responsibilities and authority to subcommittees or to members of management to perform certain duties and responsibilities on its behalf.
Pursuant to its charter, the CNCG Committee may, without further approval by the Board, retain or terminate, as it determines to be necessary or advisable, a compensation consultant or other advisors, including outside accounting and legal advisors, to assist in the performance of its duties. Any legal or other advisor retained by the CNCG Committee may, but need not be, otherwise engaged by the Company for any other purpose.
The CNCG Committee reports frequently to the Board of Directors and maintains open communication with the Company’s Chief Executive Officer, independent consultants, and internal human resources professionals. The CNCG Committee meets as frequently as necessary, as determined by its Chair, to carry out its responsibilities under its charter and takes actions by written consent when necessary.
Independent Compensation Consultant
Pursuant to its charter, as outlined above, the CNCG Committee may engage outside consultants to assist it in meeting its responsibilities. In 2018, the CNCG Committee retained Willis Towers Watson (the “
Compensation Consultant
”) as its independent compensation consultant to assist with peer group analysis, director compensation analysis, risk assessment of the Company’s compensation programs, and other services upon request. The CNCG Committee has reviewed the independence of the Compensation Consultant based on the criteria established by the SEC and Nasdaq and confirmed that, based on the absence of conflicts of interest, the Compensation Consultant is independent. As part of this review, the CNCG Committee confirmed that the Compensation Consultant did not provide any other services to the Company and only received fees from the Company for work performed directly for the CNCG Committee.
Role of Executives in Establishing Executive Compensation
With support from the Company’s human resources department, our Chief Executive Officer prepared and provided recommendations to the CNCG Committee on the following items: base salaries for current executives, the design of the short‑term and long‑term incentive plans for executives, and the grant value of equity awards provided to executives. The Chief Executive Officer assisted in the review of compensation studies and proposed incentive plans, including proposing specific performance goals to be reviewed by the CNCG Committee with respect to short‑term and long‑term executive compensation. The Chief Executive Officer, the General Counsel and other members of the legal department, members of the human resources department and the Compensation Consultant attended the CNCG Committee meetings that related to executive compensation to assist the CNCG Committee with its review; however, the executives did not attend the executive sessions of the meetings. In connection with reviewing and determining executive compensation, the CNCG Committee asked the Chief Executive Officer to provide recommendations for compensation levels for the executives. The CNCG Committee uses this information along with, among other information, survey data and market studies to determine executive compensation.
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 20, 2019, 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 “2018 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.
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares
|
|
Percentage of
|
|
|
|
Beneficially
|
|
Outstanding
|
|
Name
|
|
Owned(1)
|
|
Shares(1)
|
|
More Than 5% Stockholders:
|
|
|
|
|
|
Merrick Media, LLC (2)
|
|
9,071,529
|
|
25.3
|
%
|
350 North Orleans Street, 10th Floor
|
|
|
|
|
|
Chicago, IL 60654
|
|
|
|
|
|
Nant Capital LLC (3)
|
|
8,743,619
|
|
24.4
|
%
|
9922 Jefferson Boulevard
|
|
|
|
|
|
Culver City, CA 90232
|
|
|
|
|
|
PRIMECAP Management Company (4)
|
|
2,392,916
|
|
6.7
|
%
|
177 E. Colorado Blvd,11th floor
|
|
|
|
|
|
Pasadena, CA 91105
|
|
|
|
|
|
BestReviews Inc. (5)
|
|
1,913,438
|
|
5.3
|
%
|
8985 Double Diamond Parkway, Unit B7
|
|
|
|
|
|
Reno, NV 89521
|
|
|
|
|
|
Non-Employee Directors and Director Nominees:
|
|
|
|
|
|
Carol Crenshaw (6)
|
|
44,530
|
|
*
|
|
David Dreier (7)
|
|
131,310
|
|
*
|
|
Philip G. Franklin (8)
|
|
46,350
|
|
*
|
|
Eddy W. Hartenstein (9)
|
|
145,060
|
|
*
|
|
Richard A. Reck (10)
|
|
55,129
|
|
*
|
|
Named Executive Officers:
|
|
|
|
|
|
Justin C. Dearborn (11)
|
|
300,089
|
|
*
|
|
Terry Jimenez (12)
|
|
159,808
|
|
*
|
|
Timothy P. Knight (13)
|
|
161,395
|
|
*
|
|
Ross Levinsohn (14)
|
|
140,189
|
|
*
|
|
Julie K. Xanders (15)
|
|
57,732
|
|
*
|
|
All current directors and executive officers as a group (8 persons) (16)
|
|
801,314
|
|
2.2
|
%
|
*
Represents beneficial ownership of less than 1%
|
(1)
|
|
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 35,805,524 shares of the Company’s common stock outstanding as of March 20, 2019, 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 20, 2019. 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.
|
|
(2)
|
|
Information presented is based on a Schedule 13D/A (Amendment No. 4) filed with the SEC on June 5, 2018 by Merrick Media, LLC (“
Merrick Media
”), Merrick Venture Management, LLC (“
Merrick Management
”) and Michael W. Ferro, Jr.. Pursuant to the filing, the reporting persons directly own 9,071,529 shares. Mr. Ferro directly owns 23,741 shares. Merrick Media owns, and has sole voting power and sole dispositive power over, 5,220,000 shares. Merrick Management owns, and has sole voting power and sole dispositive power over, 3,827,788 shares, and Mr. Ferro is the manager of Merrick Management, which is the sole manager of Merrick Media. As a result, Mr. Ferro has sole voting and dispositive power over the shares owned by Merrick Management and Merrick Management and Mr. Ferro have sole voting and dispositive power over the shares owned by Merrick Media. Mr. Ferro, by virtue of his relationship to Merrick Management, may be deemed to
|
indirectly beneficially own the shares that Merrick Management directly beneficially owns. Merrick Management and Mr. Ferro, by virtue of their relationship to Merrick Media, may be deemed to indirectly beneficially own the shares that Merrick Media directly beneficially owns.
|
|
(3)
|
|
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)
|
|
Information presented is based on a Schedule 13G/A (Amendment No. 7) filed with the SEC on February 8, 2019 by PRIMECAP Management Company (“
Primecap
”) as of December 31, 2018. Pursuant to the filing, Primecap has sole voting power over 2,250,691 shares of the Company’s common stock and sole dispositive power over 2,392,916 shares.
|
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(5)
|
|
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.
|
|
(6)
|
|
The number of shares beneficially owned by Ms. Crenshaw includes (a) 8,131 shares of unvested restricted stock and (b) 25,832 shares (attributable to deferred director fees converted to stock units) issuable within 60 days of March 20, 2019 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).
|
|
(7)
|
|
The number of shares beneficially owned by Mr. Dreier includes 108,131 shares of unvested restricted stock.
|
|
(8)
|
|
The number of shares beneficially owned by Mr. Franklin includes 8,131 shares of unvested restricted stock.
|
|
(9)
|
|
The number of shares beneficially owned by Mr. Hartenstein includes (a) 8,131 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 20, 2019.
|
|
(10)
|
|
The number of shares beneficially owned by Mr. Reck includes (a) 8,131 shares of unvested restricted stock and (b) 26,431 shares (attributable to deferred director fees converted to stock units) issuable within 60 days of March 20, 2019 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).
|
|
(11)
|
|
The number of shares beneficially owned by Mr. Dearborn includes 150,000 shares subject to options that are currently exercisable or will become exercisable within 60 days of March 20, 2019.
|
|
(12)
|
|
The number of shares beneficially owned by Mr. Jimenez includes 75,000 shares subject to options that are currently exercisable or that will become exercisable within 60 days of March 20, 2019.
|
|
(13)
|
|
The number of shares beneficially owned by Mr. Knight includes 75,000 shares subject to options that are currently exercisable or will become exercisable within 60 days of March 20, 2019.
|
|
(14)
|
|
The number of shares beneficially owned by Mr. Levinsohn includes 66,666 shares subject to options that are currently exercisable or will become exercisable within 60 days of March 20, 2019.
|
|
(15)
|
|
The number of shares beneficially owned by Ms. Xanders includes (a) 20,301 shares subject to options that are currently exercisable or that will become exercisable within 60 days of March 20, 2019 and (b) 5,288 shares issuable on the vesting of RSUs that are scheduled to vest on April 3, 2019.
|
|
(16)
|
|
The number of shares beneficially owned by all current directors and current executive officers as a group as of March 20, 2019 includes (a) 222,634 shares subject to options that are currently exercisable or that will become exercisable within 60 days of March 20, 2019, (b) 140,655 shares of unvested restricted stock, (c) 5,288 shares issuable upon the vesting of RSUs within 60 days of March 20, 2019, and (d) 52,263 shares issuable within 60 days of March 20, 2019 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.)
|
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s directors, officers, and beneficial holders of more than 10% of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. To our knowledge, based solely on our review of the copies of such reports and written representations from certain reporting persons that no other reports were required, all of the applicable directors, officers, and beneficial holders of more than 10% of the Company’s stock complied with all of the Section 16(a) reporting requirements applicable to them with respect to transactions during fiscal year 2018.
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 Named Executive Officers (the “
Named Executive Officers
” or “
NEOs
”):
|
|
|
Name
|
|
Title
|
Justin C. Dearborn
|
|
Chief Executive Officer and Chairperson of the Board (Former)
|
Terry Jimenez
|
|
Executive Vice President, Chief Financial Officer
|
Timothy P. Knight
|
|
President, Chief Executive Officer
|
Ross Levinsohn
|
|
Chief Executive Officer, Tribune Interactive, LLC (Former)
|
Julie K. Xanders
|
|
Executive Vice President, General Counsel and Secretary
|
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 shareholder value. The CNCG Committee developed our executive pay program in support of the following fundamental pay philosophy guidelines:
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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.
|
|
·
|
|
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.
|
|
·
|
|
Pay levels and designs should generally be aligned with market norms among peer companies with whom we compete for executive talent.
|
|
·
|
|
Management should be aligned with shareholders through equity compensation. Equity-based compensation is used to align the interests of our NEOs with the interests of our shareholders.
|
2018 Overview
In 2018, we made progress executing our five strategic pillars – Content, Commerce, Finance, Acquisitions and Culture. We continue to aim to be a high-performing, audience-centric culture that delivers sustainable revenue growth and profit while increasing stockholder value. As discussed below, various of our compensation decisions made in 2018 were in support of these efforts.
Consideration of Results of 2018 Stockholder Advisory Vote on Executive Compensation; Investor Outreach
At our 2018 Annual Meeting of Stockholders, 99% of votes cast 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.
2018 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”. It does this by making a large percentage of an executive’s total pay opportunity either (a) an annual bonus award opportunity under a plan tied to company and/or individual performance and/or (b) equity awards, the value of which are linked to our stock price. Under our 2018 management incentive program (“
MIP
”), as discussed below, the CNCG
Committee set our MIP performance targets at rigorous levels it believed were reasonably but not so difficult as to encourage undue risk-taking by our executives. Because the Company’s consolidated financial performance fell below the identified MIP’s performance thresholds, the MIP bonus pool did not fund and our executives did not earn an annual cash bonus award for 2018. In addition, our compensation design for executives was structured to ensure they 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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Our 2018 MIP contained two performance metrics, Adjusted EBITDA and total revenue.
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All NEO’s 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 shareholder interests.
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In addition to Adjusted EBITDA, Messrs. Dearborn, Levinsohn and Knight 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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In fiscal year 2018, actual performance of both these metrics failed to reach the threshold or targeted levels in the 2018 MIP. The CNCG Committee designed the 2018 MIP so that the MIP pool would not fund and no incentive amounts would be paid if the Company’s consolidated Adjusted EBITDA performance fell below the specified threshold. Since we did not meet that threshold, our NEOs received no 2018 MIP awards.
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Restricted stock units (“
RSU
s”) 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 current executive officers has outstanding RSU and option awards.
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The following charts reflect the composition of the 2018 total pay opportunity for (i) our CEO and (ii) the average of other NEOs. For purposes of these charts (a) we annualized the base salary of any NEO that did not work the full year; (b) included such person’s target 2018 MIP bonus opportunity; (c) averaged the value of the LTI equity awards granted to each of them over the past three years to reflect the value attributable to 2018 as none of them received additional equity awards in 2018, with the award value as:
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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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We pay for performance. A significant portion of total executive compensation is earned by attaining annual goals that increase stockholder value.
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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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We have a Policy on Trading Securities that prohibits hedging, pledging and other speculative transactions in our securities.
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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 periodically evaluate 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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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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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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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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We have robust stock ownership guidelines that apply to executive officers and directors.
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Any dividend equivalents on our RSUs are paid only when such units vest.
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We offer executive officers the same group benefit programs as we provide other employees.
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We provide limited executive perquisites.
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A significant portion of the compensation to our NEOs is awarded in the form of restricted stock units, the value of which is directly linked to absolute share price performance.
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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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Attract and retain top talent;
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Motivate and reward the performance of senior executives to achieve strategic, financial and operating performance objectives;
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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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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 2018, the Company’s Chief Executive Officer and senior human resources executives 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.
Based on this information and in consultation with the Compensation Consultant, the CNCG Committee made no changes to the compensation packages for any of the NEOs and did not grant any additional equity award to any NEO in 2018.
Peer Group
In May 2018, the CNCG Committee updated the Company’s group of peer companies to remove Scripps Networks Interactive, Time, Inc. and Take-Two Interactive Software (as updated, the “
Peer Group
”) given certain factors including M&A and an ongoing review of relevance to Tribune Publishing. The replacement companies are TEGNA and Townsquare Media. TEGNA operates as a media company that provides broadcast advertising, with each TV station having a digital presence across online, mobile and social platforms. Townsquare Media operates as a media, entertainment and digital marketing solutions company. 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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2,972
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The E. W. Scripps Company (SSP)
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$
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1,208
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Fair Isaac Corporation (FICO)
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$
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1,032
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Gannett Co., Inc. (GCI)
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$
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2,917
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IAC/InterActiveCorp (IAC)
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$
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4,263
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j2 Global, Inc. (JCOM)
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$
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1,207
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Lee Enterprises, Incorporated (LEE)
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$
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544
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The McClatchy Company (MNI)
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$
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807
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Meredith Corporation (MDP)
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$
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2,247
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The New York Times Company (NYT)
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$
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1,749
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Scholastic Corporation (SCHL)
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$
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1,628
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TEGNA, INC (TGNA)
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$
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2,207
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Townsquare Media, Inc (TSQ)
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$
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431
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(1)
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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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Annual performance reviews for the prior year;
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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 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
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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, responsibilities, contribution to the Company, and growth in his or her role.
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Salary levels are reviewed annually. The CNCG Committee will consider compensation data from the Peer Group. Any increases will be based on overall 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 2018 were as follows.
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Base Salary
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Name
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(Effective as of December 30, 2018)
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Justin C. Dearborn
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$
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600,000
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Terry Jimenez
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$
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475,000
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Timothy P. Knight
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$
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600,000
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Ross Levinsohn
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$
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600,000
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Julie K. Xanders
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$
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465,000
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All base salaries for the NEO’s remained constant in 2018 from their 2017 year-end levels.
MANAGEMENT INCENTIVE PROGRAM (MIP)
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General Principle
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Specific Approach
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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.
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The 2018 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.
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The 2018 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
2018 Internal Performance Metrics (Corporate Level)
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Performance Metric
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Why this Metric
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Adjusted EBITDA
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Adjusted EBITDA reflects the Company’s emphasis on profitability and cost‑containment and is a measure of total operating performance of the enterprise.
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We use the same Adjusted EBITDA definition and calculation used for financial reporting purposes, which is net income 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 non-controlling 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 (including spin-related costs).
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Total Revenue
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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 30, 2018.
Revenue reflects the Company’s emphasis on growing the business.
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2018 MIP Design
The 2018 MIP was designed so that a bonus pool would fund at 100% if the Company achieved an Adjusted EBITDA goal of $110 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. 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 $1,047 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. The MIP was structured so that if Adjusted EBITDA (after the effect of MIP payouts) was less than $110 million, no MIP bonus pool would fund and no MIP awards would be earned or paid.
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Threshold ($ in million)
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Adjusted EBITDA (after the effect of the MIP)
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$
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110
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Total Revenue
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$
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1,047
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2018 MIP Performance Target and Performance
The CNCG Committee established 2018 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, without incentivizing undue risk-taking.
2018 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 2018 MIP. As structured, 2018 MIP awards to our NEOs could not exceed two times the target amount, regardless of Company or individual performance.
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Target
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Metric and % Weighting
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Award
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Adjusted
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Individual
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(as a % of
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Named Executive Officer
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EBITDA
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Revenue
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Goals
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Base Salary)
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Justin C. Dearborn
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65
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%
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15
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%
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20
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%
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100
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%
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Terry Jimenez
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75
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N/A
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25
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75
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Timothy P. Knight
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50
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25
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25
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100
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Ross Levinsohn
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25
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50
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25
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166 2/3
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Julie K. Xanders
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25
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N/A
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75
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50
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Key individual goals for our NEOs generally consisted of the following:
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For Mr. Dearborn, improving employee communications and engagement, designing a two year diversity and inclusion strategic plan, installing content management system across the enterprise, increasing our unique visitors to our sites, growing digital subscriptions and revenue, executing acquisitions and increasing our share price.
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For Mr. Jimenez, ensuring compliance with Sarbanes-Oxley requirements resulting in no material weakness, delivering on a Talent Management Program for Finance Leadership and a Rewards/Recognition program for Finance, IT and Manufacturing & Distribution, completing the divesiture of the Los Angeles Times and San Diego Union-Tribune, executing acquisitions and implementing various technology applications.
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For Mr. Knight, improving employee communications within and across all markets, improving employee engagement, increasing our unique visitors to our sites, growing digital subscriptions and revenue, completing the divestiture of the Los Angeles Times and San Diego Union-Tribune and executing acquisitions.
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For Mr. Levinsohn, improving employee communications, installing the content management system across the system, creating premium content to fill gaps and add value, growing digital subscriptions and revenue, and executing acquisitions.
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For Ms. Xanders, enhacing compliance review and improvement, enhancing various training programs aimed to decrease the Company’s legal risks, enhancing contractual terms, conditions and procedures to help streamline contracting processes and mitigate legal risks.
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While the CNCG Committee did not approve any 2018 MIP payouts to any executives officers (because the Company’s financial performance did not meet the threshold financial performance required under the MIP), the CNCG Committee still reviewed each executive’s 2018 performance against his or her individual goals in connection with their general oversight of management.
Actual Company Performance under the 2018 MIP and Actual 2018 MIP Awards
As set forth in the table below, the Company did not meet the Adjusted EBITDA threshold target as forth in the 2018 MIP. As a result, the 2018 MIP pool did not fund and the CNCG Committee did not approve any 2018 MIP payouts to any of the Named Executive Officers.
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Threshold (in millions)
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Actual Results (in millions)
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Actual MIP Payout %
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Adjusted EBITDA (after the effect of the MIP)
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$
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110
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$
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93.9
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0
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%
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Total Revenue
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$
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1,047
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$
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1,031
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0
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%
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Mr. Levinsohn’s employment agreement also provided for a payment of up to 10% of the gross dollars received by the Company for certain syndication, licensing and distribution of Los Angeles Times content and brand. No dollars were awarded to Mr. Levinsohn pursuant to this provision due to the sale of the Los Angeles Times to Nant Holdings, LLC.
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:
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Non‑qualified stock option awards.
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Our Named Executive Officers each received long-term incentive awards in 2016 and/or 2017 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 and retaining talent.
No equity grants for Named Executive Officers in 2018
Messrs. Dearborn and Jimenez joined the Company in 2016 and the CNCG Committee awarded RSUs and non‑qualified stock options to them 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 them until 2019. No additional equity awards were granted to either of them in 2018. Mr. Jimenez was granted 75,000 RSUs on January 16, 2019 that will fully vest on the first anniversary of the grant date.
The long-term incentive awards granted to Messrs. Knight and Levinsohn were made by the CNCG Committee in connection with and at the time that each executive joined the Company in February and August, respectively, of 2017. Each of the awards vests in three equal annual installments on the first, second and third anniversaries of grant. For Mr. Knight’s award, similar to the equity grants in 2016 to Messrs. Dearborn and Jimenez, 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 will fully vest on the first anniversary of the grant date. Ms. Xanders did not receive an equity award in 2018.
Restricted Stock Unit Component
Grants of RSUs provide Named Executive Officer with stock ownership of unrestricted shares after the restriction lapses. While our Named Executive Officers did not receive RSUs in 2018, 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:
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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.
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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.
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In certain cases, such as for new hires or to facilitate retention, 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:
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The option exercise price of stock options awarded was the Nasdaq closing price of the Company’s common stock on the date of grant.
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The options will vest in three or four equal annual installments.
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Options cannot be exercised prior to vesting.
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The options expire seven years after the grant date.
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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.
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The following table provides an overview of some of the main characteristics of RSUs and non‑qualified stock options.
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RSUs
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Non‑Qualified Stock Options
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An RSU award is a promise to deliver to the recipient, upon vesting, shares of the Company’s common stock.
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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.
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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.
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Stock option holders do not receive dividends on shares underlying options and cannot vote the shares underlying options.
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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.
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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.
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Stock Ownership Guidelines
In order to further align the interests of our executive officers and directors with those of our stockholders, our Board of Director 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:
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Leadership Position
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Value of Shares
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Chief Executive Officer
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5x base salary
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Chief Financial Officer
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3x base salary
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Other Executive Officers
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1x base salary
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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 them 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 Messrs. Dearborn and 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. In addition, 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 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 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
Philip G. Franklin
NAMED EXECUTIVE OFFICER COMPENSATION
2018 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 30, 2018 (collectively, the “
Named Executive Officers
”).
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Non-Equity
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Stock
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Option
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Incentive Plan
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All Other
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Name and Principal Position
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Year
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Salary
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Bonus
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Awards (1)
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Awards (1)
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Compensation (2)
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Compensation (3)
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Total
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Justin C. Dearborn
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2018
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$
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600,000
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$
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—
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$
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—
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$
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—
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$
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—
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$
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11,000
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$
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611,000
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Former Chief Executive Officer
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2017
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$
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611,539
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$
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—
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$
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—
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$
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—
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$
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—
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$
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145,935
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$
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757,474
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and Chairperson of the Board
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2016
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$
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450,000
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$
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—
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$
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5,576,250
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$
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1,345,500
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$
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506,455
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$
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245,709
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$
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8,123,914
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Terry Jimenez
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2018
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$
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475,000
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$
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—
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$
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—
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$
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—
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$
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—
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$
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11,000
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$
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486,000
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EVP/Chief Financial Officer
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2017
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$
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448,173
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$
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—
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$
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—
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$
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—
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$
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—
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$
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10,800
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$
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458,973
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2016
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$
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306,923
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$
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—
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$
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2,788,125
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$
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672,750
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$
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379,841
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$
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6,865
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$
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4,154,504
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Timothy P. Knight (4)
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2018
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$
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600,000
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$
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—
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$
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—
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$
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—
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$
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—
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$
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11,000
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$
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611,000
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Chief Executive Officer and
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2017
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$
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512,308
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$
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—
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$
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2,791,875
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$
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747,000
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$
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—
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$
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237,300
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$
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4,288,483
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President
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Ross Levinsohn (5)
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2018
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$
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600,000
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$
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400,000
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$
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—
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$
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—
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$
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—
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$
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11,000
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$
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1,011,000
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Former Chief Executive Officer,
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2017
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$
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219,231
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$
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144,931
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$
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5,352,000
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$
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1,212,000
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$
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—
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$
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4,038
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$
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6,932,200
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Tribune Interactive, LLC
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Julie K. Xanders
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2018
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$
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465,000
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$
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—
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$
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—
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$
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—
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$
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—
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$
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11,000
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$
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476,000
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EVP/General Counsel
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2017
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$
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473,269
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$
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—
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$
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842,779
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$
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—
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$
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—
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$
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10,800
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$
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1,326,848
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2016
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$
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430,000
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$
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—
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$
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334,152
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$
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—
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$
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259,257
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$
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10,600
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$
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1,034,009
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(1)
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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.
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(2)
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Amounts reflect the payouts under the management incentive program, which are described in the “Compensation Discussion and Analysis” section of this proxy statement.
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(3)
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Amount for 2018 reflects $11,000 in 401(k) retirement plan matching contributions for each of the Named Executive Officers.
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(4)
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Mr. Knight became an executive officer in 2017.
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(5)
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Mr. Levinsohn joined the Company as an executive officer in 2017. Mr. Levinsohn’s employment agreement guaranteed him a $1,200,000 sign on bonus payment, paid at the rate of $100,000 per quarter.
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2018 Grants of Plan‑Based Awards Tabl
e
The following table shows non‑equity incentive plan compensation opportunities granted to our Named Executive Officers under our management incentive plan during the fiscal year ended December 30, 2018. No equity awards were granted to our Named Executive Officers under the Omnibus Incentive Plan during the fiscal year ended December 30, 2018.
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All Other
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All Other
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Stock
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Option
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Awards:
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Awards:
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Exercise or
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Grant Date
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Estimated Future Payouts
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Number of
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Number of
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Base
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Fair Value of
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Under NonEquity
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Shares of
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Securities
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Price of
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Stock and
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Incentive Plan Awards (1)
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Stock or
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Underlying
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Option
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Option
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Threshold
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Target
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Maximum
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Units
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Options
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Awards
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Awards
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Name
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Grant Date
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($)
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($)
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($)
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(#)
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(#)
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($ / share)
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($)
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Justin C. Dearborn
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—
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600,000
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1,200,000
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—
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—
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—
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—
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Terry Jimenez
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—
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356,250
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712,500
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—
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—
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—
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—
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Timothy P. Knight
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—
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600,000
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1,200,000
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—
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—
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—
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—
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Ross Levinsohn
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—
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1,000,000
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2,000,000
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—
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—
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—
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—
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Julie K. Xanders
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—
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232,500
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465,000
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—
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—
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—
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—
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(1)
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These columns show the threshold, target and maximum payouts under the 2018 management incentive program, which is described in the “Compensation Discussion and Analysis” section of this proxy statement.
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Employment Agreements
The Company has entered into employment agreements with our 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.
Justin C. Dearborn
On February 22, 2016, in connection with the appointment of Mr. Dearborn as the Company’s Chief Executive Officer, a subsidiary of the Company entered into an employment agreement with Mr. Dearborn. The agreement expired pursuant to its terms on February 21, 2018 and a new agreement was entered into effective February 22, 2018. The term of the new agreement would have expired on February 21, 2021. Mr. Dearborn’s appointment as the Company’s Chief Executive Officer and a director ended and his last day of work for the Company was January 17, 2019. Pursuant to his 2018 employment agreement, Mr. Dearborn received an annual base salary of $600,000 and had a target annual cash bonus opportunity of 100% of base salary.
Terry Jimenez
In connection with the appointment of Mr. Jimenez as the Company’s Executive Vice President and Chief Financial Officer, a subsidiary of the Company entered into an employment agreement with him effective as of April 4, 2016. The term of the employment agreement expired on April 3, 2018 and a new agreement was entered into effective April 4, 2018. The term of the new agreement expires on April 3, 2021. Pursuant to his 2018 employment agreement, 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.
Timothy P. Knight
In connection with the appointment of Mr. Knight as an executive officer of the Company, a subsidiary of the Company entered into an employment agreement with Mr. Knight effective as of February 23, 2017. The term of the employment agreement would have expired on February 22, 2019. On January 17, 2019, Mr. Knight was appointed as the Company’s Chief Executive Officer, in addition to his role as President, and a director. In connection with such appointment, a subsidiary of the Company entered into a new employment agreement with him. The term of Mr. Knight’s new employment agreement will continue through January 31, 2022. Pursuant to these agreements, Mr. Knight is entitled to an annual base salary of $600,000 and has a target annual cash bonus opportunity of 100% of base salary.
Ross Levinsohn
In connection with the appointment of Mr. Levinsohn as an executive officer of the Company, the Company entered into an employment agreement with him effective as of August 21, 2017. The term of the employment agreement would have expired on August 20, 2020. Mr. Levinsohn’s last day of work for the Company was January 17, 2019. Pursuant to his employment agreement, Mr. Levinsohn received (1) a sign-on bonus of $1,200,000 payable in quarterly installments of $100,000 over the initial term of the agreement, (2) an annual base salary of $600,000, (3) payment of up to 10% of the gross dollars received by the Company or its affiliates from the syndication of content outside of the United States or licensing and distribution of the Los Angeles Times content and brand (which amount he may allocate, in his discretion, to his team), and (4) an annual cash bonus with a target of 166 2/3% of base salary.
Julie K. Xanders
Effective January 4, 2016, a subsidiary of the Company entered into an employment agreement with Ms. Xanders. The term of the employment agreement expired on January 3, 2018, but was renewed effective January 4, 2018 with an indefinite term. Pursuant to her employment agreement, 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.
2018 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 30, 2018.
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Option Awards
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Stock Awards
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Number of
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Number of
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Number of
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Market
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Securities
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Securities
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Shares or
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Value of
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Underlying
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Underlying
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Units of
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Shares or
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Unexercised
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Unexercised
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Stock That
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Units of
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Options
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Options
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Option
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Option
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Have Not
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Stock That
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(#)
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(#)
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Exercise
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Expiration
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Vested
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Have Not
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Name
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Grant Date
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Exercisable
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Unexercisable (1)
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Price (2)
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Date
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(#) (3)
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Vested (4)
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Justin C. Dearborn
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8/2/2016
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150,000
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75,000
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$
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14.87
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8/2/2023
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125,000
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$
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1,403,750
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Terry Jimenez
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8/2/2016
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75,000
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37,500
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$
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14.87
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8/2/2023
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62,500
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$
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701,875
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Timothy P. Knight
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2/23/2017
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37,500
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75,000
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$
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14.89
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2/23/2024
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125,000
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$
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1,403,750
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Ross Levinsohn
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8/21/2017
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66,666
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133,334
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$
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13.38
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8/21/2024
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266,667
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$
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2,994,670
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Julie K. Xanders
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5/7/2013
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6,301
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—
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$
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14.02
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5/7/2023
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—
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$
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—
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8/29/2014
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7,000
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—
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$
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19.20
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8/29/2021
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—
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$
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—
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3/9/2015
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5,250
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1,750
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$
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17.41
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3/9/2022
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2,339
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$
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26,267
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10/25/2016
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—
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—
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$
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—
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—
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9,857
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$
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110,694
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4/3/2017
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—
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—
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$
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—
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—
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15,866
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$
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178,175
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12/20/2017
|
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—
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—
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$
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—
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—
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20,000
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$
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224,600
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(1)
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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.
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(2)
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The per share option exercise price represents the closing price of the Company’s common stock on the date of grant.
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(3)
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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 2016 and 2017 awards
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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.
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(4)
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Market value was determined by multiplying the number of RSUs by $11.23 (the closing price of the Company’s common stock on December 28, 2018, the last day of trading in fiscal year 2018).
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2018 Option Exercises and Stock Vested Table
The following table shows, for the fiscal year ended December 30, 2018, the RSUs vested for the Named Executive Officers. No options were exercised in 2018.
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Option Awards
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Stock Awards
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Number of
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Number of
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Shares Acquired
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Value Realized
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Shares Acquired
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Value Realized
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Name
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on Exercise (#)
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on Exercise ($)
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on Vesting (#)
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on Vesting ($) (1)
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Justin C. Dearborn
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—
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—
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125,000
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1,915,000
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Terry Jimenez
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—
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—
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62,500
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957,500
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Timothy P. Knight
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—
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—
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62,500
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1,233,125
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Ross Levinsohn
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—
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|
—
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133,333
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2,230,661
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Julie K. Xanders
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—
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|
—
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25,054
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381,968
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(1)
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Based on the closing price of the Company’s common stock on the vesting date.
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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:
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·
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|
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.
Justin C. Dearborn
Pursuant to Mr. Dearborn’s employment agreement in effect at the end of 2018, if as of December 30, 2018 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) the lump sum amount equal the greater of (x) his base salary remaining due under the term of the agreement (through February 21, 2021) or (y) 52 weeks of his base salary, (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 had been a change in control (as defined in Mr. Dearborn’s employment agreement) of the Company during the term of Mr. Dearborn’s employment agreement and (1) the Company had terminated his employment for any reason other than death, disability, or for cause, or he had 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. Dearborn had executed a waiver and release of claims and had not revoked it, then all of his unvested equity awards would have vested in full.
In connection with his departure from the Company in 2019, Mr. Dearborn’s employment agreement was amended to provide for payment of the severance amount through the remainder of calendar year 2019 rather than in a lump sum and continuation of equity award vesting through such salary continuation period.
Terry Jimenez
Pursuant to Mr. Jimenez’s employment agreement in effect at the end of 2018, 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, we 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.
Timothy P. Knight
Pursuant to Mr. Knight’s employment agreement in effect at the end of 2018, if as of December 30, 2018 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 his base salary remaining due under the term of the employment agreement, payable in bi-weekly installments over the remaining term of the agreement (through February 22, 2019), (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. Knight’s employment agreement) of the Company during the term of Mr. Knight’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. Knight executes a waiver and release of claims and does not revoke it, then all of his unvested equity awards will vest in full. The equity award granted to Mr. Knight in January, 2019 vests in full upon a change in control.
If Mr. Knight’s employment had been terminated by the Company for cause (or he had resigned other than for good reason (as cause and good reason are defined in his agreement)) before February 23, 2019, he would have had to repay the full relocation allowance paid to him upon hire.
In connection with Mr. Knight’s appointment as Chief Executive Officer, a subsidiary of the Company entered into a new employment agreement with Mr. Knight effective January 17, 2019 which provides that 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 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.
Ross Levinsohn
Pursuant to Mr. Levinsohn’s employment agreement in effect at the end of 2018, if as of December 30, 2018 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) a lump sum amount equal to his base salary and sign-on bonus remaining due under the term of the employment agreement (through August 20, 2020), (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, Mr. Levinsohn and his eligible family members would have continued to receive medical, dental and vision coverage through the end of the term of his employment agreement, with Mr. Levinsohn continuing to pay his portion of such benefits for such time.
In addition to such amounts, if there had been a change in control (as defined in Mr. Levinsohn’s employment agreement) of the Company during the term of the employment agreement and (1) the Company had terminated his employment for any reason other than death, disability, or for cause, or he had 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. Levinsohn had executed a waiver and release of claims and had not revoked it, then all of his unvested equity awards would have vested in full.
In connection with his departure from the Company in 2019, Mr. Levinsohn’s employment agreement was amended to provide for payment of the severance amount through the remainder of calendar year 2019 rather than in a lump sum and continuation of equity award vesting through such salary continuation period.
Julie K. Xanders
If the Company terminates Ms. Xanders’ 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, severance equal to the following: (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.
Estimated Payments Upon Termination or Change in Control at Year End Table
The following table shows the estimated incremental compensation for Messrs. Dearborn, Jimenez, Knight and Levinsohn, and Ms. Xanders as of December 30, 2018, 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 (i) no cash incentive amounts were paid with respect to 2018 performance and (ii) even if they had been paid, they would have been reflected in the Non-Equity Incentive Plan Compensation column of the 2018 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.
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|
|
|
|
|
|
|
|
|
|
|
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)
|
Justin C. Dearborn
|
|
Cash Severance
|
|
$
|
1,292,308
|
|
$
|
1,292,308
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
1,403,750
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
1,292,308
|
|
$
|
2,696,058
|
|
|
|
|
|
|
|
|
|
Terry Jimenez
|
|
Cash Severance
|
|
$
|
1,077,885
|
|
$
|
1,077,885
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
701,875
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
1,077,885
|
|
$
|
1,779,760
|
|
|
|
|
|
|
|
|
|
Timothy P. Knight
|
|
Cash Severance
|
|
$
|
92,308
|
|
$
|
92,308
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
1,403,750
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
92,308
|
|
$
|
1,496,058
|
|
|
|
|
|
|
|
|
|
Ross Levinsohn
|
|
Cash Severance (4)
|
|
$
|
1,690,000
|
|
$
|
1,690,000
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
2,994,670
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
1,690,000
|
|
$
|
4,684,670
|
|
|
|
|
|
|
|
|
|
Julie K. Xanders
|
|
Cash Severance
|
|
$
|
465,000
|
|
$
|
465,000
|
|
|
RSU Acceleration (2)
|
|
$
|
—
|
|
$
|
361,561
|
|
|
Option Acceleration (3)
|
|
$
|
—
|
|
$
|
—
|
|
|
Total
|
|
$
|
465,000
|
|
$
|
826,561
|
|
(1)
|
|
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. Dearborn, Jimenez, Knight and Levinsohn 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, 2018 other than Ms. Xanders’ April 2017 grant, resignation for good reason.
|
|
(2)
|
|
Calculated by multiplying the number of accelerated RSUs by $11.23 (the closing price of the Company’s common stock on December 28, 2018, the last trading day on Nasdaq during our 2018 fiscal year).
|
|
(3)
|
|
Calculated by multiplying the number of shares underlying accelerated options by the excess, if any, of (i) $11.23 (the closing price of the Company’s common stock on December 28, 2018, the last trading day on Nasdaq during our 2018 fiscal year) over (ii) the exercise price of the applicable options.
|
|
(4)
|
|
Amount includes $700,000 relating to the sign-on bonus required to be paid under Mr. Levinsohn’s employment agreement.
|
2018 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 2018 annual total compensation of our median employee to be $52,534. The 2018 annual total compensation of Mr. Dearborn, as set forth in the Summary Compensation Table above, was $611,000. The ratio of the estimated annual total compensation of our median employee to the annual total compensation of our CEO was 1 to 12. We selected the median employee based on our employee base (excluding Mr. Dearborn) as of December 30, 2018 using 2018 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. Dearborn’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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|
·
|
|
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. (as amended by Amendment No. 1 to Securities Purchase Agreement, dated as of March 23, 2017, by and among the Company, Merrick Media and Mr. Ferro, and by the Consulting Agreement described below) and (b) a Registration Rights Agreement (the “
Merrick Registration Rights Agreement
”), by and between the Company and Merrick Media. Merrick Media and its affiliates beneficially owned, as of March 20, 2019, approximately 25.3% of the outstanding common stock of the Company. 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 be deemed to indirectly control all of the shares of the Company’s common stock owned by Merrick Media.
The summaries of the Merrick Purchase Agreement (as amended), the Merrick Registration Rights Agreement, and the Consulting Agreement (as amended) 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 2018 Annual Report on Form 10‑K.
Securities Purchase Agreement, as amended
Pursuant to the Merrick Purchase Agreement, on February 3, 2016, the Company sold to Merrick Media in a private placement 5,220,000 unregistered shares of common stock of the Company at a purchase price of $8.50 per share, for a total of $44,370,000 in cash consideration. The Merrick Purchase Agreement, as amended, prohibits (1) certain transfers of all shares owned by Merrick Media or its affiliates until the later of three years from the issuance of shares under the Merrick Purchase Agreement or 30 days after termination of the Consulting Agreement and, thereafter, (2) any transfers of the shares of common stock purchased under the Merrick Purchase Agreement that would result in a transfer of more than 25% of the shares purchased under the Merrick Purchase Agreement in any 12‑month period. These transfer restrictions expired when the Board did not nominate Mr. Ferro for re-election as a director at the 2018 Annual Meeting. The Merrick Purchase Agreement, as amended, also includes covenants prohibiting transfers of shares of the Company’s common stock to a material competitor of the Company in any of the Company’s then-existing primary geographical markets. Merrick Media and Mr. Ferro, and their respective affiliates, are also prohibited, until the later of three years from the date of issuance of shares under the Merrick Purchase Agreement and 30 days after termination of the Consulting Agreement, 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 30% of the Company’s then outstanding shares of common stock. In connection with the Merrick Purchase Agreement, Mr. Ferro was elected to the Board and named the non-executive Chairman of the Board on February 3, 2016. He retired from our Board effective March 18, 2018.
The Company also had granted Merrick Media the right to designate a replacement individual for election as a director at each annual and special meeting of the Company’s stockholders at which directors are to be elected as part of the slate of nominees recommended by the Board, subject to the reasonable prior approval of the Board’s CNCG Committee, in the event that Mr. Ferro was unable to continue to serve. The right to appoint a replacement director terminated when the Board did not nominate Mr. Ferro for re-election as a director at the 2018 Annual Meeting.
Until the later of either three years following the date of the Merrick Purchase Agreement and the first year after the date that Mr. Ferro (or a replacement director) ceases to serve on the Board due to resignation or refusal to stand for reelection, or Merrick Media’s decision to not designate a replacement director, Merrick Media, Mr. Ferro and their respective affiliates had agreed to vote in favor of nominees to the Board, and against the removal of any director, in each case as designated by the CNCG Committee. Merrick Media, Mr. Ferro and their affiliates also had agreed not to conduct or support any proxy solicitation regarding director removal or election, or any transaction that would effect a change of control of the Company. These voting covenants terminated when the Board did not nominate Mr. Ferro for re-election as a director at the 2018 Annual Meeting.
Finally, the Merrick Purchase Agreement, as amended, provides a right of first offer in favor of the Company on proposed transfers by Merrick Media and its affiliates that represent at least 2% of the then-outstanding number of shares of the Company’s common stock, subject to certain notice provisions. This right of first offer applies to all shares held by Merrick Media and its affiliates (regardless of when purchased). The Company’s right of first offer terminated when the Board did not nominate Mr. Ferro for re-election as a director at the 2018 Annual Meeting.
Registration Rights Agreement
Pursuant to the Merrick Registration Rights Agreement, Merrick Media is 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 provides that the Company shall use its reasonable best efforts to cause a registration statement with respect to the shares of 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 Merrick Registration Rights Agreement.
Consulting Agreement, as amended
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. 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 in cash, payable in advance on the first business day of each calendar year. 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, we amended the Consulting Agreement to reduce the total fees due under the Consulting Agreement by $2.5 million. The Company made the initial $5 million payment in January 2018 and paid the remaining $7.5 million in fees due under the amended Consulting Agreement in connection with the execution of the amendment.
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 amendment 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.
The Consulting Agreement also amended certain terms of the Merrick Purchase Agreement, which amendments are reflected in the description above under “Securities Purchase Agreement, as amended.” The termination of the Consulting Agreement does not affect the amendments to the Merrick Purchase Agreement, which shall survive any such termination.
In addition, in the second quarter of 2018, the Company agreed to pay $0.3 million in legal fees incurred by Mr. Ferro while conducting the Company’s business. Such legal fees were paid directly to the law firms.
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
”). Nant Capital beneficially owned, as of March 20, 2019, approximately 24.4% 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 2018 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.
Term Sheet
In connection with the Nant Capital private placement described above, the Company entered into a term sheet with NantWorks, LLC pursuant to which the Company would receive access to certain patents as well as studio space, subject to definitive documentation and approval from Tribune Media Company. If the transactions contemplated by the term sheet were consummated, the Company would issue to NantStudio, LLC 333,333 shares of common stock and in exchange would be entitled to retain the first $80 million in revenues derived from the licensed patents royalty free, after which the Company would pay to NantWorks a 6% royalty on subsequent revenues. With the completion of the Nant Transaction described below, the term sheet was terminated.
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 for an aggregate purchase price of $500 million in cash, less an initial working capital adjustment of $12.6 million, plus the assumption of unfunded pension liabilities, subject to a customary post-closing working capital adjustment from the buyer in the amount of $2.1 million (the “
Nant Transaction
”). The Nant Transaction closed on June 18, 2018 and resulted in a pre-tax gain of $404.8 million. The Membership Interest Purchase Agreement contains other 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 2018, the Company recognized $17.2 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 at the Annual Meeting.
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 2020 Annual Meeting of Stockholders must be received at our principal executive offices no later than the close of business on December 5, 2019. 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 2020 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 2019 Annual Meeting of Stockholders. Accordingly, any such stockholder proposal must be received between the close of business on January 16, 2020 and the close of business on February 15, 2020. In the event that the date of the 2020 Annual Meeting is advanced by more than 30 days or delayed by more than 70 days from the anniversary date of the 2019 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 90
th
day prior to such annual meeting or the close of business on the 10
th
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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If you would like to reduce the costs incurred by our company in mailing proxy materials, Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET 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, 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. Election of Directors Nominees 01 Carol Crenshaw 06 Richard A. Reck 02 David Dreier 03 Philip G. Franklin 04 Eddy W. Hartenstein 05 Timothy P. Knight The Board of Directors recommends you vote FOR proposals 2 and 3. 2Approve, on an advisory basis, the compensation of the Company's named executive officers for 2018 For 0 0 Against 0 0 Abstain 0 0 3Ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 29, 2019 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. John Sample attorney, executor, administrator, or other fiduciary, please give full ANY CITY, ON A1A 1A1 partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000411928_1 R1.0.1.18 Please sign exactly as your name(s) appear(s) hereon. When signing as title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 1234 ANYWHERE STREET SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 05/14/2019. 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. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 on 05/14/2019. Have your proxy card in hand when you call and then follow the instructions. John Sample 234567VOTE BY MAIL 1234567 1234567NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # → SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 TRIBUNE PUBLISHING COMPANY 160 N. Stetson Avenue Chicago, IL 60601 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and Annual Report are available at www.proxyvote.com TRIBUNE PUBLISHING COMPANY Annual Meeting of Shareholders May 15, 2019 9:30 AM (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 on Wednesday, May 15, 2019, at the offices of Kirkland & Ellis LLP, located at 300 North LaSalle, Chicago, Illinois 60654, 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. Continued and to be signed on reverse side 0000411928_2 R1.0.1.18
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