Related party transactions

9 Months Ended

Sep. 30, 2020

NOTE 15 — Related party transactions

As of September 30, 2020, the Manager, which is an affiliate of Fortress Investment Group LLC ("Fortress"), and its affiliates owned approximately 3% of the Company’s outstanding stock and approximately 40% of the Company’s outstanding warrants. The Manager or its affiliates held 6,068,075 stock options of the Company’s stock as of September 30, 2020. During the three and nine months ended September 30, 2020, no dividends were paid to Fortress and its affiliates. During the three and nine months ended September 29, 2019, Fortress and its affiliates were paid $0.2 million and $0.7 million in dividends, respectively.

The Company's Chief Executive Officer is an employee of Fortress (or one of its affiliates), and his salary is paid by Fortress (or one of its affiliates). The management fee paid is reduced by the compensation paid to the Chief Financial Officer.

Amended and Restated Management Agreement

On November 26, 2013, New Media entered into a management agreement (as amended and restated, "the Management Agreement") with the Manager, an affiliate of Fortress, pursuant to which the Manager managed the operations of New Media. New Media paid the Manager an annual management fee equal to 1.50% of the Company's Total Equity (as defined in the Management Agreement), and the Manager was eligible to receive incentive compensation.

On August 5, 2019, in connection with the execution of the Legacy Gannett acquisition agreement, the Company and the Manager entered into the Amended and Restated Management and Advisory Agreement (the “Amended Management Agreement”). Effective upon the consummation of the acquisition on November 19, 2019, the Amended Management Agreement replaced the Management Agreement. The Amended Management Agreement (i) establishes a termination date for the Manager’s services of December 31, 2021, in lieu of annual renewals of the term; (ii) reduces the “incentive fee” payable under the Amended Management Agreement from 25% to 17.5% for the remainder of the term; (iii) reduces by 50% the number of options that would otherwise be issuable in connection with the issuance of shares as consideration for the acquisition, and imposes a premium on the exercise price; (iv) eliminates the Manager’s right to receive options in connection with future equity raises by the Company; and (v) eliminates certain payments otherwise due at or after the end of the term of the prior management agreement.

In connection with entering into the Amended Management Agreement and the occurrence of the consummation of the acquisition, the Company issued to the Manager 4,205,607 shares of Company Common Stock and granted to the Manager options to acquire 3,163,264 shares of Company Common Stock. The Manager is restricted from selling the issued shares until the expiration of the Amended Management Agreement, or otherwise upon a change in control and certain other extraordinary events. The options have an exercise price of $15.50 and become exercisable upon the first trading day immediately following the first 20 consecutive trading day period in which the closing price of the Company Common Stock (on its principal U.S. national securities exchange) is at or above $20 per share (subject to adjustment). The options also become exercisable upon a change in control and certain other extraordinary events.

Upon expiration of the term of the Amended Management Agreement, the Manager will cease providing external management services to the Company, and the Manager will no longer be the employer of the person serving in the role of Chief Executive Officer of the consolidated company.

The following table provides the management and incentive fees recognized and paid to the Manager:



	Three months ended				Nine Months Ended
In thousands	September 30, 2020		September 29, 2019		September 30, 2020		September 29, 2019
Management fee expense	$	4,269	$	2,456	$	12,702	$	7,368
Incentive fee expense	—		—		—		1,455
Management fees paid	8,943		2,456		16,326		8,623
Incentive fees paid	—		1,455		2,602		6,675
Reimbursement for expenses	591		774		1,916		2,000

The Company had no outstanding liability for all Management Agreement related fees at September 30, 2020 and a liability of $6.5 million at December 31, 2019, included in accrued expenses.