DEF 14A 1 tpub-20160602xdef14a.htm DEF 14A tpub_Current_Folio_DEF14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.           )

 

 

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a‑12

 

 

 

TRIBUNE PUBLISHING COMPANY

(Name of Registrant as Specified In Its Charter)

 

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

 

 

 

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a‑6(i)(1) and 0‑11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 

 

 

 


 

Picture 1

 

April 19, 2016

 

 

Dear Tribune Publishing Company Stockholders:

 

We are pleased to invite you to the 2016 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will begin at 9:30 a.m. local time on Thursday, June 2, 2016, at the offices of Sidley Austin LLP, located at 555 West Fifth Street, Los Angeles, California 90013.

 

At the Annual Meeting, you will be asked to:

 

1.

elect eight directors nominated by our Board of Directors;

 

2.

approve, on an advisory basis, the compensation of our named executive officers for 2015;

 

3.

approve our Tribune Publishing Company 2014 Omnibus Incentive Plan, as amended;

 

4.

ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 25, 2016; and

 

5.

consider any other business properly presented at the Annual Meeting and any adjournment or postponement of the Annual Meeting.

 

Our Board of Directors recommends that you vote FOR each of the proposals described in this Proxy Statement.

 

We hope you can join us at the Annual Meeting. Regardless of whether you plan to attend, please read the accompanying Proxy Statement and vote your shares promptly. You may vote over the Internet, as well as by telephone, or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card.

 

Sincerely,

 

 

 

 

Picture 6

Picture 7

Michael W. Ferro, Jr.

Justin C. Dearborn

Chair of the Board of Directors

Chief Executive Officer and Member of the Board of Directors

 

 

 

 


 

TRIBUNE PUBLISHING COMPANY

435 N. Michigan Avenue

Chicago, Illinois 60611

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON THURSDAY, JUNE 2, 2016

9:30 A.M. LOCAL TIME

LOS ANGELES, CALIFORNIA

 

TO THE STOCKHOLDERS OF TRIBUNE PUBLISHING COMPANY:

 

On Thursday, June 2, 2016, we will hold our 2016 Annual Meeting of Stockholders (the “Annual Meeting”) at the offices of Sidley Austin LLP, located at 555 West Fifth Street, Los Angeles, California 90013. The Annual Meeting will begin at 9:30 a.m. local time.

 

At the Annual Meeting, you will be asked to:

 

1.

elect eight directors nominated by our Board of Directors;

 

2.

approve, on an advisory basis, the compensation of our named executive officers for 2015;

 

3.

approve our Tribune Publishing Company 2014 Omnibus Incentive Plan, as amended;

 

4.

ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 25, 2016; and

 

5.

consider any other business properly presented at the Annual Meeting and any adjournment or postponement of the Annual Meeting.

 

You are entitled to vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting if you were a stockholder of record at the close of business on April 15, 2016 (the “Record Date”). At the Annual Meeting and for ten days prior, a list of stockholders of record entitled to vote will be available for any purpose germane to the Annual Meeting at our principal executive offices, 435 N. Michigan Avenue, Chicago, Illinois 60611. If you would like to view the stockholder list, please call our Investor Relations Department at (469) 528‑9366.

 

Regardless of whether you plan to attend, please read the accompanying Proxy Statement and vote your shares as promptly as possible in order to ensure your representation at the Annual Meeting. You may vote over the Internet, as well as by telephone, or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Even if you have given your proxy, you may still vote in person if you attend the Annual Meeting. If your shares are held through a broker, bank, or other holder of record and you wish to vote in person at the Annual Meeting, you must obtain a legal proxy issued in your name from your broker, bank, or other holder of record.

 

The Proxy Statement is furnished in connection with the solicitation of proxies by Tribune Publishing Company on behalf of the Board of Directors for the Annual Meeting. In accordance with Securities and Exchange Commission rules, we will send a Notice of Internet Availability of Proxy Materials on or about April 19, 2016, and provided access to the Proxy Statement over the Internet on or before that date, to the holders of record of our common stock as of the close of business on the Record Date.

 

By Order of the Board of Directors

Picture 4

Julie K. Xanders

Executive Vice President, General Counsel and Secretary

 

Chicago, Illinois

April 19, 2016

 

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Stockholders to Be Held on June 2, 2016.

The Proxy Statement and the 2015 Annual Report are available at www.tribpub.com.

 

 


 

TABLE OF CONTENTS

 

 

 

 

Item

    

Page

General Information Concerning Proxies and Voting at the Annual Meeting 

 

1 

Proposal 1: Election of Directors 

 

5 

Corporate Governance 

 

9 

Director Compensation 

 

13 

2015 Director Compensation Table 

 

13 

Proposal 2: Advisory Vote to Approve Compensation of Named Executive Officers 

 

14 

Proposal 3: Approval of the 2014 Omnibus Incentive Plan, As Amended 

 

15 

Proposal 4: Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm 

 

23 

Report of the Audit Committee 

 

25 

Independent Registered Public Accounting Firm’s Fees Report 

 

26 

Executive Officers 

 

26 

Security Ownership of Certain Beneficial Owners, Directors, and Management 

 

28 

Section 16(a) Beneficial Ownership Reporting Compliance 

 

30 

Compensation Discussion and Analysis 

 

30 

Compensation Committee Report 

 

40 

Named Executive Officer Compensation 

 

41 

2015 Summary Compensation Table 

 

41 

2015 Grants of Plan‑Based Awards Table 

 

42 

2015 Outstanding Equity Awards at Fiscal Year‑End Table 

 

44 

2015 Option Exercises and Stock Vested Table 

 

45 

Potential Payments Upon Termination or Change of Control Table 

 

46 

Policies and Procedures for the Review and Approval or Ratification of Transactions With Related Persons 

 

49 

Additional Information 

 

52 

Appendix A – 2014 Omnibus Incentive Plan, As Amended 

 

A-1 

 

 

 

i


 

TRIBUNE PUBLISHING COMPANY

435 N. Michigan Avenue

Chicago, Illinois 60611

 

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS

 

GENERAL INFORMATION CONCERNING PROXIES AND VOTING AT THE ANNUAL MEETING

 

Why did I receive these proxy materials?

 

We are providing these proxy materials in connection with the solicitation by the Board of Directors (our “Board” or “Board of Directors”) of Tribune Publishing Company (“Tribune Publishing,” the “Company,” “we,” “us,” or “our”), a Delaware corporation, of proxies to be voted at our 2016 Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournment or postponement of the Annual Meeting. In accordance with rules of the Securities and Exchange Commission (the “SEC”), we will send a Notice of Internet Availability of Proxy Materials on or about April 19, 2016 and provided access to our proxy materials over the Internet beginning on or before that date, to the holders of record and beneficial owners of our common stock as of the close of business on April 15, 2016 (the “Record Date”).

 

You are invited to attend our Annual Meeting on Thursday, June 2, 2016, beginning at 9:30 a.m. local time. The Annual Meeting will be held at the offices of Sidley Austin LLP, located at 555 West Fifth Street, Los Angeles, California 90013.

 

What information is included in this Proxy Statement?

 

The information in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process, our Board of Directors and Board committees, the compensation of directors and named executive officers for fiscal year 2015, and other information.

 

Who is entitled to vote?

 

Holders of our common stock at the close of business on April 15, 2016, the Record Date, are entitled to receive the Notice of Annual Meeting of Stockholders (the “Notice”) and vote at the Annual Meeting. As of the close of business on the Record Date, there were 31,660,737 shares of our common stock outstanding and entitled to vote.

 

How many votes do I have?

 

Each share of our common stock is entitled to one vote on each matter properly brought before the Annual Meeting. For example, if you own 30 shares of Tribune Publishing common stock, you are entitled to 30 votes on each matter at the Annual Meeting. Stockholders do not have cumulative voting rights.

 

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

If your shares are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those shares, the “stockholder of record.” As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote over the Internet, by telephone or by filling out and returning a proxy card to ensure your vote is counted.

 

If your shares are held in a brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of such shares. In this case, the Notice, Proxy Statement, Annual Report to Stockholders (including our Form 10‑K for the year ended December 27, 2015 (the “Annual Report”)), and applicable voting instruction form should have been forwarded to you by your broker, bank, or other holder of record who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank, or other holder of record on how to vote your shares by using the voting instruction form provided by your broker, bank, or other holder of record.

 

1


 

What am I voting on?

 

We are asking you to vote on the following matters in connection with the Annual Meeting:

 

1.

The election of eight directors nominated by our Board of Directors;

 

2.

An advisory resolution approving the compensation of our named executive officers for 2015;

 

3.

The approval of the Tribune Publishing Company 2014 Omnibus Incentive Plan, as amended; and

 

4.

The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 25, 2016.

 

We will also consider any other business properly presented at the Annual Meeting and any adjournment or postponement of the Annual Meeting.

 

How do I vote?

 

You can vote using any one of the methods described below.

 

Vote by Internet.  Stockholders of record may submit proxies over the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials or, if printed copies of the proxy materials were requested, the instructions on the printed proxy card. Most beneficial stockholders may vote by accessing the website specified on the voting instructions forms provided by their brokers, trustees, banks or other nominees. Please check your voting instruction form for Internet voting availability.

 

Vote by Telephone.  Stockholders of record may submit proxies using any touch‑tone telephone from within the United States by following the instructions on the Notice of Internet Availability of Proxy Materials or, if printed copies of the proxy materials were requested, the instructions on the printed proxy card. Most beneficial owners may vote using any touch‑tone telephone from within the United States by calling the number specified on the voting instruction forms provided by their brokers, trustees, banks or other nominees.

 

Vote by Mail.  You can vote by mail by completing, signing, and dating the proxy card or voting instruction form and returning it in the prepaid return envelope, if printed copies of the proxy materials were requested. If you are a stockholder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the Board of Directors. If you are a beneficial owner and you return your signed voting instruction form but do not indicate your voting preferences, please see “What are ‘broker non‑votes’ and how do they affect the proposals?” regarding whether your broker, bank, or other holder of record may vote your uninstructed shares on a particular proposal.

 

Vote in Person at the Annual Meeting.  All stockholders as of the close of business on the Record Date can vote in person at the Annual Meeting. You can also be represented by another person at the Annual Meeting by executing a proper proxy designating that person. If you are a beneficial owner, you must obtain a legal proxy from your broker, bank, or other holder of record and present it to the inspector of election with your ballot to be able to vote at the Annual Meeting. Even if you plan to attend the Annual Meeting, we recommend that you also vote either by telephone, by Internet, or by mail so that your vote will be counted if you later decide not to attend.

 

Tribune Publishing Company is incorporated under Delaware law, which specifically permits electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the inspector of election can determine that such proxy was authorized by the stockholder. The electronic voting procedures provided for the Annual Meeting are designed to authenticate each stockholder by use of a control number to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.

 

How many copies of the proxy materials should I have received?

 

If you received more than one proxy card or voting instruction form, your shares are registered in more than one name or are registered in different accounts. In order to vote all of the shares you own, please sign and return all proxy cards or voting instruction forms, or vote each proxy card or voting instruction form by telephone or by Internet to ensure that all of your shares are voted.

 

2


 

What can I do if I change my mind after I vote?

 

If you are a stockholder of record, you can revoke your proxy before it is exercised by:

 

1.

delivering written notice of such revocation to the Company;

 

2.

timely delivering a valid, subsequent proxy by Internet, by telephone, or by mail; or

 

3.

voting by ballot at the Annual Meeting.

 

If you are a beneficial owner, you may be able to submit new voting instructions by contacting your broker, bank, or other holder of record. You may also vote in person at the Annual Meeting if you obtain a legal proxy, as previously described.

 

Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you vote by ballot at the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting.

 

Is there a list of stockholders entitled to vote at the Annual Meeting?

 

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 435 N. Michigan Avenue, Chicago, Illinois 60611. If you would like to view the stockholder list, please call our Investor Relations Department at (469) 528‑9366. The list will also be available at the Annual Meeting.

 

What constitutes a quorum at the Annual Meeting?

 

The holders of a majority of the outstanding shares entitled to vote at the Annual Meeting, present in person or represented by proxy at the Annual Meeting, are necessary to constitute a quorum to transact business. Abstentions and “broker non‑votes” (as described under the heading “What are ‘broker non‑votes’ and how do they affect the proposals?”) are counted as present and entitled to vote for purposes of determining a quorum.

 

What are the voting requirements to elect directors and approve each of the other proposals described in this Proxy Statement?

 

Shares represented by a valid proxy will be voted at the Annual Meeting and, when instructions are given by the stockholder, will be voted in accordance with those instructions. If you are a stockholder of record and you return your proxy card but do not indicate your voting preferences, the persons named on the proxy card will vote the shares represented by that proxy as recommended by the Board of Directors. If you are a beneficial owner and you return your signed voting instruction form but do not indicate your voting preferences, please see “What are ‘broker non‑votes’ and how do they affect the proposals?” regarding whether your broker, bank, or other holder of record may vote your uninstructed shares on a particular proposal.

 

With respect to Proposal No. 1, the election of directors, the eight directors receiving the largest number of votes will be elected. With respect to Proposal Nos. 2, 3 and 4, the affirmative vote of the holders of at least a majority of the outstanding shares of common stock present in person or represented by proxy at the meeting and entitled to vote is required in order for the proposal to be approved. Abstentions will not be counted in the tabulation of votes cast on Proposal No. 1. Abstentions will be counted in the tabulation of votes cast on Proposal Nos. 2, 3 and 4 and will have the same effect as a vote against the proposals.

 

What are “broker non‑votes” and how do they affect the proposals?

 

A “broker non‑vote” occurs when a broker, bank, or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because such holder of record does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

 

If you are a beneficial owner and you do not give instructions to your broker, bank, or other holder of record, such holder of record will be entitled to vote the shares with respect to “discretionary” items but will not be permitted to vote the shares with respect to “non‑discretionary” items (those shares are treated as “broker non‑votes”). If you are a beneficial owner, your broker, bank, or other holder of record has “discretion” to vote your shares on Proposal No. 4, the ratification of the appointment of our independent registered public accounting firm, if the holder of record does not receive voting instructions from you. However, such holder of record may not vote your shares on Proposal Nos. 1, 2 or 3, without your voting instructions on those proposals, because such proposals are considered

3


 

“non‑discretionary.” Accordingly, without your voting instructions on those proposals, a broker non‑vote will occur. Broker non‑votes are not counted for any purpose in determining the outcome of Proposal Nos. 1, 2 or 3.

 

What is the effect of the advisory resolution to approve the compensation of our Named Executive Officers?

 

In accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are providing our stockholders with a nonbinding, advisory vote to approve the compensation of our Named Executive Officers (as defined in the Compensation Discussion and Analysis section of this Proxy Statement), commonly known as a “say‑on‑pay” proposal. Although this advisory vote is not binding upon the Board of Directors or the Company, the Board of Directors and the Compensation Committee of the Board of Directors (the “Compensation Committee”) will review and consider the voting results when making future decisions regarding our executive compensation program.

 

What is the effect of the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm?

 

Selection of our independent registered public accounting firm is not required to be submitted to a vote of stockholders. The Sarbanes‑Oxley Act of 2002 requires the Audit Committee of our Board of Directors (the “Audit Committee”) to be directly responsible for the appointment, compensation, and oversight of the audit work of the independent registered public accounting firm. However, the Board of Directors has elected to submit the selection of Ernst & Young LLP as our independent registered public accounting firm to stockholders for ratification as a matter of corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain Ernst & Young LLP, and may retain that firm or another firm without resubmitting the matter to our stockholders. Even if the appointment is ratified, the Audit Committee may, at its discretion, appoint a different independent registered public accounting firm at any time during the year.

 

Who counts the votes?

 

Broadridge Financial Solutions, Inc. will count all votes and serve as the inspector of election. The inspector of election will separately count affirmative and negative votes, abstentions, and broker non‑votes.

 

Who will pay for the cost of this proxy solicitation?

 

We will bear the cost of soliciting proxies. Proxies may be solicited on our behalf by the Company’s directors, officers, or employees in person or by telephone, electronic transmission, and facsimile transmission. No additional compensation will be paid to directors, officers, or other employees for soliciting proxies. In addition, D.F. King will solicit proxies from brokers, banks, nominees, and institutional investors or other stockholders at a cost of approximately $15,000 plus out‑of‑pocket expenses. We furnish copies of solicitation materials to banks, brokerage houses, fiduciaries, and custodians holding in their names shares of our common stock beneficially owned by others to forward to such beneficial owners. We may reimburse persons representing beneficial owners of our common stock for their costs of forwarding solicitation materials to such beneficial owners.

 

Why did I receive a one‑page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

 

Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials to our stockholders. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice of Internet Availability of Proxy Materials or request to receive an electronic copy or printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request an electronic copy or printed copy may be found in the Notice of Internet Availability of Proxy Materials. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of the Annual Meeting.

 

When will Tribune Publishing announce the results of the voting?

 

We will report the voting results in a Current Report on Form 8‑K filed within four business days after the end of the Annual Meeting. If final voting results are unavailable at that time, we will file an amended Current Report on Form 8‑K within four business days of the day the final results are available. The Current Report on Form 8‑K, and any amendments, will be available at www.sec.gov and on our website at www.tribpub.com.

 

4


 

What are the requirements for admission to the Annual Meeting?

 

You are entitled to attend the Annual Meeting if you were a Company stockholder as of the close of business on the Record Date or you hold a valid proxy for the Annual Meeting. In order to be admitted to the Annual Meeting, you must present photo identification (e.g., a driver’s license or passport). In addition, if you are a stockholder of record, your name will be verified against the list of stockholders of record as of the Record Date. If your shares are held in the name of a broker, bank or other holder of record that holds your shares, you should provide a copy of the voting instruction card provided by your broker, bank, or other holder of record, or other similar evidence of your beneficial ownership of those shares. If you do not comply with these procedures, you may not be admitted to the Annual Meeting.

 

PROPOSAL 1: ELECTION OF DIRECTORS

 

Our Amended and Restated Certificate of Incorporation (“Restated Certificate”) and our Amended and Restated By‑Laws (“By‑Laws”) currently provide that the Board of Directors will be elected at the annual meeting of stockholders to serve one‑year terms or until their successors have been duly elected and qualified, or until their earlier death, resignation or removal.

 

Board Composition

 

As of April 15, 2016, the Board of Directors was composed of ten members:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Board

    

 

    

 

    

Nominating and

 

 

 

 

 

of

 

Audit

 

Compensation

 

Governance

 

Name

 

Age

 

Directors

 

Committee

 

Committee

 

Committee

 

Carol Crenshaw

 

59

 

*

 

 

 

 

 

 

 

Justin C. Dearborn

 

46

 

*

 

 

 

 

 

 

 

David E. Dibble

 

56

 

*

 

*

 

*

 

 

 

Michael W. Ferro, Jr.

 

49

 

**

 

 

 

 

 

 

 

Philip G. Franklin

 

64

 

*

 

**

 

 

 

*

 

Eddy W. Hartenstein

 

65

 

*

 

 

 

 

 

 

 

Renetta McCann

 

59

 

*

 

 

 

*

 

**

 

Richard A. Reck

 

66

 

*

 

 

 

 

 

 

 

Donald Tang

 

52

 

*

 

 

 

 

 

 

 

Ellen Taus

 

57

 

*

 

*

 

**

 

 

 


*     Member

 

**   Chairperson

 

Messrs. Dearborn, Dibble, Ferro, Franklin, Hartenstein, Reck, and Tang, and Ms. Crenshaw have consented to being named as Board nominees in this Proxy Statement and have each agreed to serve if elected. Management has no reason to believe that they will be unable to serve. If any of the Board nominees becomes unavailable to serve as a director, proxies will be voted for the election of such person as shall be designated by the Board of Directors, unless the Board chooses to reduce the number of directors serving on the Board. Mr. Ferro was elected to the Board in connection with the Purchase Agreement described in the “Policies and Procedures for the Review and Approval or Ratification of Transactions with Related Persons--Related Person Transactions” section of this proxy statement.

 

5


 

The Board of Directors Recommends a Vote “FOR” Each of the Board’s Nominees.

 

Carol Crenshaw

 

Ms. Crenshaw has served as a director since April 2016. She is the Chief Financial Officer and Vice President of Finance for The Chicago Community Trust, a community foundation dedicated to improving the Chicagoland region through strategic grant making, civic engagement and inspiring philanthropy. She joined The Chicago Community Trust in 1983 as assistant controller, was promoted to controller in 1984, and has served in her current role since 1994. Prior to joining The Chicago Community Trust, she was an auditor with the certified public accounting firm of KPMG Peat Marwick/Chicago. Ms. Crenshaw is a member of the Accounting Practices Committee of Community Foundations, a trustee of the John L. Patten Charitable Trust and a member of the board of directors of Northern Illinois University Foundation. Ms. Crenshaw is a certified public accountant and holds a B.S. from Northern Illinois University.

 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Ms. Crenshaw was 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.

 

Justin C. Dearborn

 

Mr. Dearborn has served as Chief Executive Officer of Tribune Publishing and a director since February 2016.  Prior to joining the Company, Mr. Dearborn was Chief Executive Officer and a director of Merge Healthcare Incorporated (“Merge”), an information technology company supplying radiology and cardio information solutions to healthcare providers. Merge was a publicly-traded company until its acquisition by IBM in October 2015. Mr. Dearborn served as Chief Executive Officer, President, and Chief Financial Officer of Merge at various times from 2008 to 2016. From January 2007 to June 2008, Mr. Dearborn served as managing director at Merrick Ventures, LLC (“Merrick Ventures”), a venture capital and private equity firm focused on big data, deep learning, and content aggregation and distribution technologies. Prior to Merrick Ventures, he served in various executive and senior management positions for Click Commerce, Inc., a publicly-traded software and services company. Mr. Dearborn holds a B.S. in Accounting from Illinois State University and a J.D. from DePaul University.

 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Mr. Dearborn was qualified to serve on the Board include:

 

·

Operating and management experience;

 

·

Core business skills, including operations and strategic planning; and

 

·

Deep understanding of the technology industry.

 

David E. Dibble

 

Mr. Dibble has served as a director since the consummation of the Company’s distribution and separation from Tribune Media Company (the “Distribution”) in August 2014. Mr. Dibble has been Chief Technology Officer for Cablevision Systems, a cable television and telecommunications company, since September 2014. Prior to that, he was at Yahoo!, Inc., an Internet company, from November 2008 to December 2013, where he held a variety of executive technology positions, including development of the company’s data centers and global technology infrastructure, and most recently served as its Executive Vice President, Central Technology. From 2005 to 2007, Mr. Dibble served as Chief Technology Officer and Executive Vice President at First Data Corporation, a global electronic payment processing company. Prior to that, he had served in various senior technology roles at JPMorgan Chase & Co., Charles Schwab & Co. and Fidelity Investments, which are financial institutions. Mr. Dibble is a graduate of the University of Kansas, where he earned his B.S. in economics and undertook three years of graduate studies in economics, mathematics, and computer science. Mr. Dibble currently serves on the Advisory Board of Elementum, a cloud‑based supply chain technology company. He previously served as a director of Hubub, Inc.

 

6


 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Mr. Dibble was qualified to serve on the Board include:

 

·

Operating and management experience;

 

·

Core business skills, including operations and strategic planning; and

 

·

Deep understanding of the technology industry.

 

Michael W. Ferro, Jr.

 Mr. Ferro has served as Non-Executive Chairman of the Board of Directors since February 2016. Since 2007, he has been the Chairman and Chief Executive Officer of Merrick Ventures, LLC, a venture capital and private equity firm focused on big data, deep learning, and content aggregation and distribution technologies. From 2008 to 2015, Mr. Ferro served as Chairman of Merge. Merge was a publicly-traded company until its acquisition by IBM in October 2015. From 2011 until early 2016, Mr. Ferro served as Chairman of Wrapports, LLC, which owns various media properties including the Sun-Times Network, the Chicago Sun-Times, the Chicago Reader, Chicago.com, Aggrego, Thecube.com and Higi LLC. Mr. Ferro was co-founder of Click Commerce, Inc., an Internet software company.

 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Mr. Ferro was qualified to serve on the Board include:

 

·

Operating and management experience;

 

·

Core business skills, including operations and strategic planning; and

 

·

Deep understanding of media and technology industries.

 

Philip G. Franklin

 

Mr. Franklin has served as a director since the Distribution in August 2014. Mr. Franklin is currently a consultant to Littelfuse, Inc., a manufacturer of electronic components, after retiring in April 2016 after 17 years of service as its Chief Financial Officer. Prior to joining Littelfuse in 1998, he was Vice President and Chief Financial Officer of OmniQuip International, a private equity sponsored roll‑up in the construction equipment industry. Previously, Mr. Franklin served as Chief Financial Officer for Monarch Marking Systems, a subsidiary of Pitney Bowes, and Hill Refrigeration. Earlier in his career, he worked in a variety of finance and general management positions at FMC Corporation. Mr. Franklin also currently serves as a director of TTM Technologies, Inc., where he is chairman of the audit committee. Mr. Franklin attended Dartmouth College, where he earned a bachelor’s degree in economics and an MBA at the Tuck School of Business.

 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Mr. Franklin was qualified to serve on the Board include:

 

·

Operating and management experience;

 

·

Core business skills, including financial and strategic planning; and

 

·

Expertise in finance and financial reporting.

 

Eddy W. Hartenstein

 

Mr. Hartenstein has served as a director since the Distribution in August 2014 and was the Non-Executive Chairman from August 2014 until February 2016. From August 2008 until the Distribution, Mr. Hartenstein served as Publisher and Chief Executive Officer of the Los Angeles Times, where he was responsible for all aspects of print, digital and mobile operations of the country’s largest metropolitan daily news organization, as well as those of the Los Angeles Times Media Group’s portfolio. Prior to Tribune Media Company’s January 2013 change of ownership, he was also President and Chief Executive Officer of Tribune Media Company, one of the country’s leading multimedia companies, operating businesses in publishing, digital and broadcasting. Until July 2014, he was a member of the Board of Directors of Tribune Media Company and until the Distribution, continued to serve as special advisor to the Chief

7


 

Executive Officer of Tribune Media Company. Previously, Mr. Hartenstein presided over the birth and growth of the satellite television industry. As a Vice President of Hughes Communications in 1981, he expanded Hughes’s acquisition and deployment of commercial communications satellites which served the broadcast and cable programming industries. In 1990, he was named President of a Hughes‑owned subsidiary founded to develop direct‑to‑home satellite TV service. Mr. Hartenstein then transformed the concept into one of the most successful new product launches in consumer electronics history, propelling what became known as DirecTV into the nation’s leading digital, multichannel television service and helping establish digital TV as an innovative entertainment and distribution medium. He served as DirecTV’s Chairman and Chief Executive Officer through 2004, when the company was sold to News Corp. Currently, Mr. Hartenstein is a board member at Avago Technologies Ltd., City of Hope, SanDisk and Sirius XM Radio, where he also serves as lead independent director. In 2008, he was inducted into the Consumer Electronics Association Hall of Fame and in 2007 he received an Emmy® from the National Academy of Television Arts and Sciences for Lifetime Achievement. He was inducted into the Broadcasting & Cable Hall of Fame in 2002 and the National Academy of Engineering (NAE) in 2001. Mr. Hartenstein holds Bachelor of Science degrees in aerospace engineering and mathematics from California State Polytechnic University, Pomona and a Master of Science degree from Cal Tech.

 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Mr. Hartenstein was 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.

 

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-based 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, as well as the audit and compensation committees, of Interactive Intelligence, Inc., a public communications software company, and on the board of directors, as well as 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 of Merge. Merge was a publicly-traded company until its acquisition by IBM in October 2015. Mr. Reck also serves on the board of directors of SilkRoad, Inc., a private multinational human capital management software company, and the board of advisors of Ultra Corporation, a private IT consultancy firm.  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 Nominating and Corporate Governance Committee’s conclusion that Mr. Reck was 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; and

 

Donald Tang

 

 Mr. Tang has served as a director since April 2016. He is founder and Managing Partner of Tang Media Partners, an organization focusing on the global entertainment and media business with particular emphasis on transactions between China and the United States, and he has served in such capacity since January 2015. Since October 2011, he has been Managing Partner of Roselaine, LLC, an advisory/consulting company, and since November 2014, he has been President of Daley & Tang Securities LLC, a strategic advisory company firm. From October 1992 to September 2008, Mr. Tang served in various capacities at Bear Stearns, including Vice Chairman of Bear Stearns & Co., Chairman and President of Bear Stearns International Holdings, and Chairman and CEO of Bear Stearns Asia, Ltd.  During his time with Bear Stearns, Mr. Tang was responsible for developing five product areas, including equities, fixed income, investment banking, wealth management, and derivatives. Mr. Tang did undergraduate work at the East China Institute of Technology in Shanghai, and holds a B.S. from California State University Polytechnic of Pomona.

 

8


 

Specific qualifications, experience, skills and expertise that led to the Nominating and Corporate Governance Committee’s conclusion that Mr. Tang was qualified to serve on the Board include:

 

·

Expertise in finance and financial reporting;

 

·

Core business skills, including financial, audit and strategic planning; and

 

·

Deep understanding of the media industry.

 

CORPORATE GOVERNANCE

 

Board of Directors

 

During the fiscal year ended December 27, 2015, the Board of Directors met 17 times, the Audit Committee held seven meetings, the Compensation Committee held ten meetings and the Nominating and Corporate Governance Committee held five meetings. 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. Two of our directors attended the 2015 Annual Meeting.

 

The New York Stock Exchange (“NYSE”) listing rules (“NYSE Rules”) require that a majority of our Board of Directors be “independent directors,” as defined in NYSE Rule 303A.01. The Board, following the review and recommendation of the 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 during fiscal 2015, all of the then current directors, except for John H. Griffin, Jr., who served as our President and Chief Executive Officer and as a director until February 2016, and Mr. Hartenstein, who was an employee within the past three years, were “independent” under the applicable NYSE Rules described above. With respect to the current members of our Board of Directors, the Board has determined that all of the current directors, except for Mr. Dearborn, who is an employee, and Mr. Hartenstein, who was an employee within the past three years, are independent under the applicable NYSE Rules. In making the independence determinations, the Board considered the longstanding relationship that Mr. Ferro has with Mr. Dearborn and the fact that Mr. Ferro serves as chair of the board of The Chicago Community Trust and Ms. Crenshaw is the Chief Financial Officer and Vice President of Finance of that organization.

 

Our independent directors and our non‑management 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 of the Board of Directors (for non‑management executive sessions of the Board), the chairperson of the Audit Committee or the Chairman of the Board, if that person is an independent director (for executive sessions of the independent directors), and the chairperson of each committee (for committee executive sessions) act as the chair of the applicable executive sessions.

 

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. If the Board chooses to combine the offices of Chairman and Chief Executive Officer, a Lead Director will be appointed annually by the independent directors. The Board believes that its current leadership structure, with Mr. Ferro serving as Non‑Executive Chairman and Mr. Dearborn serving as Chief Executive Officer, is appropriate because it enables the Board as a whole to engage in oversight of management, promote communication 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 www.tribpub.com.

 

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 Compensation Committee provides oversight of the Company’s pay policies and practices, including risks associated with executive compensation. The Nominating and Corporate Governance 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

9


 

risks associated with the achievement of the Company’s strategic objectives. 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.

 

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 also has access to all committee materials and attends many of the 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: Audit, Compensation, and Nominating and Corporate Governance. 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 NYSE. 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 15, 2016, 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.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: (a) to 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) to prepare the report of the Audit Committee required to be included in the Company’s annual proxy statement under the rules of the SEC.

 

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 or other regulators. 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 the NYSE and (b) under Section 10A(m) of the Securities Exchange Act of 1934 (the “Exchange Act”) and any related rules and regulations promulgated thereunder by the SEC. Each member of the Audit Committee is required to be financially literate, as such qualification is interpreted by the Board in its business judgment, or must become financially literate within a reasonable period of time after appointment to the Audit Committee. At least one member of the Audit Committee shall have accounting or related financial management expertise and satisfy the criteria to be an “audit committee financial expert” under the rules and regulations of the SEC, as interpreted by the Board in its business judgment. 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 serve on the Audit Committee.

 

10


 

The Board of Directors has determined that each member of the Audit Committee meets the independence and financial literacy requirements of the NYSE and the SEC. The Board has also determined that Mr. Franklin and Ms. Taus are “audit committee financial experts” under SEC rules, have accounting or related financial management experience, and have accounting or related financial management expertise under the NYSE Rules.

 

Compensation Committee

 

The purpose of the Compensation 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 an annual compensation discussion and analysis of executive compensation for inclusion in the proxy statement or annual report on Form 10‑K, and prepare any report of the Compensation Committee on executive compensation required by item 407(e)(5) of Regulation S‑K, and (c) to take such other actions relating to the compensation and benefits structure of the Company as the Compensation Committee deems necessary or appropriate.

 

The Compensation Committee’s charter reflects the responsibilities noted above and is reviewed regularly by the Compensation Committee. The charter also requires that the Compensation Committee be composed of at least three members who satisfy the independence requirements relating to directors and compensation committee members of the NYSE. Unless the Board shall determine otherwise, at least two members of the Compensation Committee are required to satisfy the requirements of a “Non‑Employee Director” for purpose 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 Compensation Committee are required to satisfy the requirements of “outside director” for purposes of Section 162(m) of the Code and the regulations thereunder. The Board has determined that each member of the Compensation Committee meets the NYSE independence requirements and at least two members of the Compensation Committee meet such other requirements. The Compensation Committee meets throughout the year at scheduled and special times and takes actions by written consent when necessary.

 

Pursuant to its charter, the Compensation 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 evaluation of the compensation of members of the Senior Management Group and any non‑employee directors or any other compensation‑related matter, and commission special studies, when deemed necessary or appropriate, on any matter of concern relating to overall corporate organization, compensation practice or compensation policy for the Company. To the extent permitted by applicable law, regulations, and NYSE, the Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Compensation Committee or of the Board, or to an officer or committee of officers, to perform certain duties on its behalf.

 

The Compensation 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 Compensation Committee holds regularly scheduled meetings. Other meetings may be called by the Compensation Committee’s chairperson or at the direction of the Board.

 

Compensation Consultant

 

Pursuant to the Compensation Committee’s charter, as outlined above, the Compensation Committee may engage outside consultants to assist it in meeting its responsibilities. In January 2015, the Compensation Committee retained Willis Towers Watson (the “Compensation Consultant”) as its 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 Compensation Committee has reviewed the independence of the Compensation Consultant based on the criteria established by the SEC and determined that there were no conflicts of interest. The Compensation Consultant did not provide any other services to the Company and only received fees from the Company on behalf of the Compensation 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 Compensation 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

11


 

reviewed by the Compensation Committee with respect to short‑term and long‑term executive compensation. The Chief Executive Officer, the General Counsel or Assistant General Counsel, members of the human resources department and the Compensation Consultant attended the Compensation Committee meetings that related to executive compensation to assist the Compensation 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 Compensation Committee asked the Chief Executive Officer to provide recommendations for compensation levels for the executives. The Compensation Committee uses this information along with, among other information, survey data and market studies to determine executive compensation.

 

Compensation Committee Interlocks and Insider Participation

 

None of the members of our Compensation Committee in fiscal 2015 was, at any time during fiscal 2015 or at any other time, an officer or employee of the Company, and none had or has any relationships with the Company that are required to be disclosed under Item 404 of Regulation S‑K. None of the Company’s executive officers has served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our Board or Compensation Committee during fiscal 2015.

 

Nominating and Corporate Governance Committee

 

The primary purposes of the Nominating and Corporate Governance Committee are 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 charter of the Nominating and Corporate Governance Committee requires that the Nominating and Corporate Governance Committee be composed of at least two directors, each of whom meets the independence standards of the NYSE. The Board has determined that each member of the Nominating and Corporate Governance Committee meets such requirements.

 

As noted above, the Nominating and Corporate Governance Committee is responsible for making recommendations to the Board of Directors concerning nominees for election as directors and nominees for Board vacancies. To fulfill this role, the Nominating and Corporate Governance Committee has sole authority to retain and terminate any search firm that is used to identify director candidates and retains the sole authority to approve fees and other retention terms relating to search firms. The Nominating and Corporate Governance Committee may also retain independent counsel and other professionals to assist it without seeking Board approval with respect to the selection, fees, or terms of engagement of any such advisors.

 

Pursuant to its charter, the Nominating and Corporate Governance Committee may, without further approval by the Board, obtain such advice and assistance, including, without limitation, the performance of special reviews and other procedures, from outside legal or other advisors, and the selection, retention and termination of a consultant or search firm to be used to identify director candidates, as the Nominating and Corporate Governance Committee determines to be necessary or advisable in connection with the discharge of its duties and responsibilities.

 

The Nominating and Corporate Governance Committee is required to meet at least once each fiscal year, and may have such additional meetings as the chairperson or a majority of its members deem necessary or desirable for the Nominating and Corporate Governance Committee to carry out its duties.

 

The Nominating and Corporate Governance Committee reviews annually the appropriate skills and characteristics required of directors in light of the current composition of the Board of Directors. When assessing a director candidate’s qualifications, the Nominating and Corporate Governance Committee will consider, among other factors, diversity, and balance of inside, outside and independent directors. The Nominating and Corporate Governance Committee will also consider the general qualifications of the potential nominees, such as: integrity and honesty; the ability to exercise sound, mature and independent business judgment in the best interests of the stockholders as a whole; a background and experience with media, including broadcasting, digital and publishing, finance or marketing or other fields which will complement the talents of the other Board members; willingness and capability to take the time to actively participate in Board and committee meetings and related activities; ability to work professionally and effectively with other Board members and the Company’s management; availability to remain on the Board long enough to make an effective contribution; satisfaction of relevant independence standards; and absence of material relationships with competitors or other third parties that could present realistic possibilities of conflict of interest or legal issues. The Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, which includes age, geography, professional, and other factors; however, the Nominating and Corporate

12


 

Governance Committee and the Board believe it is essential to have directors representing diverse viewpoints. Diversity is one factor considered by the Nominating and Corporate Governance Committee in determining the needs of the Board and evaluating director candidates to fill such needs.

 

The Nominating and Corporate Governance Committee will consider qualified director candidates recommended by the Company’s stockholders. The Nominating and Corporate Governance Committee evaluates the qualifications of candidates properly submitted by stockholders in the same manner as it evaluates the qualifications of director candidates identified by the Nominating and Corporate Governance Committee or the Board of Directors. Stockholders can recommend director candidates by following the instructions outlined below under “Additional Information—Consideration of Stockholder‑Recommended Director Nominees.” No nominations for director were submitted to the Nominating and Corporate Governance Committee for consideration by any of the Company’s stockholders in connection with the Annual Meeting.

 

DIRECTOR COMPENSATION

 

The following table shows compensation earned by or paid to non‑employee directors who served as directors for 2015. Mr. Griffin, our Chief Executive Officer during 2015, did not receive additional compensation for his service on the Board of Directors in 2015. The compensation of Mr. Griffin is described in the “2015 Summary Compensation Table.”

 

2015 Director Compensation Table  

 

 

 

 

 

 

 

 

 

 

    

Fees Earned or

    

Stock

    

 

 

Name

 

Paid in Cash ($)

 

Awards ($)(1)

 

Total ($)

 

David E. Dibble

 

70,000

 

100,002

 

170,002

 

Philip G. Franklin

 

90,000

 

100,002

 

190,002

 

Eddy W. Hartenstein

 

70,000

 

175,007

 

245,007

 

Renetta McCann

 

80,000

 

100,002

 

180,002

 

Ellen Taus

 

85,000

 

100,002

 

185,002

 


(1)

As of December 27, 2015, non-employee members of the Board of Directors had the following aggregate number of restricted stock units outstanding:  Mr. Dibble, 6,789; Mr. Franklin, 6,789; Mr. Hartenstein, 11,881; Ms. McCann, 6,789; and Ms. Taus, 6,789.  The dollar amounts in this column reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”) for awards granted during the fiscal year ended December 27, 2015 excluding the effect of any estimated forfeitures. Assumptions used in the calculation of these amounts are described in footnotes 3 and 16 to the Company’s audited financial statements included in the Annual Report. On May 27, 2015, each non-employee director received an annual award of 6,789 restricted stock units with a grant date fair value of $100,002 and Mr. Hartenstein, as Chair of the Board, received an additional award of 5,092 restricted stock units with a grant date fair value of $75,005, each such restricted stock unit award vests on the earlier of (a) the first anniversary of the grant date and (b) the day immediately prior to the first annual meeting of stockholders of the Company after the grant date, and if unvested, is forfeited upon a director’s termination of service.

 

Time, Manner and Components of Compensation

 

In 2015, annual cash retainers for service as a director or committee chairperson were paid in quarterly installments at the beginning of each fiscal quarter. Directors were also reimbursed for reasonable Company‑related travel expenses. The annual equity retainer for 2015 was made following the annual meeting of stockholders. The terms of the restricted stock units granted are described in footnote 1 to the table above.

 

13


 

For 2015, the components of the Company’s standard non‑employee director cash and equity compensation were:

 

 

 

 

 

 

Compensation Paid to NonEmployee Directors

    

 

    

 

Annual retainer

 

$

70,000

 

Annual restricted stock unit award

 

$

100,000

 

Additional Compensation for Board Chair and Committee Chairs

 

 

 

 

NonEmployee Board Chair—annual equity retainer of a restricted stock unit award

 

$

75,000

 

Audit Committee Chair—annual cash retainer

 

$

20,000

 

Compensation Committee Chair—annual cash retainer

 

$

15,000

 

Nominating and Corporate Governance Committee Chair—annual cash retainer

 

$

10,000

 


(1)Awards were granted based on grant date fair value.

 

For additional information regarding the stock holdings of our non‑employee directors, see “Security Ownership of Certain Beneficial Owners, Directors, and Management.”

 

In April 2016, the Board of Directors modified the non-employee director compensation program, effective as of the 2016 Annual Meeting, to replace the cash retainers with restricted stock unit awards that will be subject to a one-year vesting schedule. The restricted stock unit awards will be granted pursuant to the Company’s 2014 Omnibus Incentive Plan, following the election or re‑election, as applicable, of non‑employee directors to the Board at the annual meeting of stockholders.

 

PROPOSAL 2: ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS

 

In accordance with Section 14A of the Exchange Act, we are providing our stockholders with an opportunity to approve, on a nonbinding, advisory basis, the compensation of our Named Executive Officers. This advisory proposal is commonly referred to as a “say‑on‑pay” proposal. Although this advisory vote is not binding upon the Board of Directors, our Board and Compensation Committee will review and consider the voting results of this vote when making future decisions regarding our Named Executive Officer compensation and related executive compensation program.

 

As discussed under the “Compensation Discussion and Analysis” section of this proxy statement, our executive compensation program is designed to attract, retain and motivate superior executive talent, including our Named Executive Officers, who are critical to our success. We seek to align pay and performance by making a significant portion of our Named Executive Officers’ compensation dependent on:

 

·

the achievement of specific annual and long‑term strategic or financial goals; and

 

·

the realization of increased stockholder value.

 

Please read the “Compensation Discussion and Analysis” section of this proxy statement, the accompanying tables, and the related narrative disclosures for a description of our executive compensation program, including information about the fiscal year 2015 compensation of our Named Executive Officers.

 

We are asking our stockholders to support our Named Executive Officer compensation described in this proxy statement. Your vote is not intended to address any specific item of our compensation program, but rather our overall approach to the compensation of our Named Executive Officers described in this proxy statement. Our Board and Compensation Committee believe our overall program effectively implements our compensation approach and achieves our goals. Accordingly, we ask you to vote “FOR” the following resolution at the Annual Meeting:

 

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, the accompanying tables, and related narrative in the Proxy Statement for the Company’s Annual Meeting of Stockholders.”

 

The Board of Directors Recommends a Vote “FOR”

the Advisory Resolution to Approve the Compensation of Our Named Executive Officers.

 

14


 

PROPOSAL 3: APPROVAL OF THE 2014 OMNIBUS INCENTIVE PLAN, AS AMENDED

At the Annual Meeting, our stockholders will be asked to approve the Company’s 2014 Omnibus Incentive Plan, as amended (“Omnibus Incentive Plan”) to increase the number of shares available for issuance under the Omnibus Incentive Plan by 2,800,000 shares from 2,542,361 to 5,342,361 and make certain other amendments described below.

The Board, the Compensation Committee and Tribune Publishing management believe that the Omnibus Incentive Plan is an essential component of our compensation program, allowing us the ability to compensate our employees, consultants, advisers and non-employee directors whose contributions are important to our success by offering them the opportunity to participate in our future performance, while at the same time providing an incentive to build long-term stockholder value. The effective use of incentive compensation is vital to the Company’s ability to recruit, hire and retain the individuals required to successfully execute the Company’s strategic plans and achieve performance in the future by providing a link between compensation and long-term stockholder value creation.

In the event that the required votes to approve the Omnibus Incentive Plan are not obtained, the amendments included in the Omnibus Incentive Plan will not become effective and the Company will continue to make grants of awards pursuant to the terms of the Omnibus Incentive Plan as in effect prior to amendment.  

Highlights of the Omnibus Incentive Plan

The Omnibus Incentive Plan includes several features that are consistent with the interests of our stockholders and sound corporate governance practices, including the following:

•  No automatic share replenishment or “evergreen” provision.  There is no evergreen feature pursuant to which the shares authorized for issuance under the Omnibus Incentive Plan can be automatically replenished.

•  Added minimum vesting schedule of at least one year on vast majority of awards.  As part of the amendment of the Omnibus Incentive Plan, a specific provision was added that awards with respect to at least 95% of the shares that are authorized to be issued under the Omnibus Incentive Plan must have a vesting schedule of at least one year. 

•  Added limitation on discretion to accelerate vesting of awards.  As part of the amendment of the Omnibus Incentive Plan, a specific provision was added that limits the ability of the Plan Committee (defined below) to use its discretion after the grant of awards to accelerate their vesting other than in relation to a change in control or a participant’s death or disability.

•  Double-trigger change in control vesting.  Awards assumed by a successor company in connection with a change in control will not automatically vest and pay out solely as a result of the change in control.

•  No liberal change in control definition.  Change in control benefits are triggered only by the consummation, rather than stockholder approval, of a merger or other change in control event.

•  No discounted stock options or SARs.  All stock options and SARs must be issued with an exercise or grant price at fair market value.

•  No repricing without stockholder approval.  Repricing or other exchanges or buyouts of stock options and SARs are prohibited without prior stockholder approval.

•  No dividends on stock options or SARs.  No dividends or dividend equivalents accrue on stock options or SARs.

•  No dividends on unearned performance awards.  No dividends or dividend equivalents are paid on performance-based awards before they are earned.

•  No tax gross ups.  The Omnibus Incentive Plan does not provide for the gross-up of any excise tax liability on awards.

•  Awards subject to forfeiture/clawback.  The Omnibus Incentive Plan makes awards subject to the Company’s clawback policy.

•  No reload options.  The Omnibus Incentive Plan does not provide for the grant of reload stock options.

15


 

•  Administration by an independent committee.  The Omnibus Incentive Plan is administered by the Compensation Committee whose members are all independent directors.

Share Reserve

 The Omnibus Incentive Plan is the Company’s primary equity incentive plan.  Currently, there are no other equity incentive plans from which the Company can issue options and stock units.  As of December 27, 2015, only 359,301 shares remained available for the future grant of equity awards under the Omnibus Incentive Plan. 

The Board of Directors believes that the Omnibus Incentive Plan has contributed to strengthening the incentive of participating employees to achieve the objectives of the Company and its stockholders by encouraging employees to acquire a greater interest in the Company.  The Compensation Committee believes that additional shares should be reserved for use under the Omnibus Incentive Plan to enable the Company to attract and retain high performing key employees through the granting of awards under the Omnibus Incentive Plan.

In setting the number of proposed additional shares issuable under the Omnibus Incentive Plan, the Compensation Committee considered a number of factors including:  shares currently available under the Omnibus Incentive Plan, how long the shares available are expected to last, historical equity award granting practices, impact of equity awards under the Omnibus Incentive Plan and expected value transfer and dilution.

In fiscal years 2014 and 2015, the Company used 1,985,288 of the shares authorized under the Omnibus Incentive Plan to make equity awards.  The approximate annual “run rate” for fiscal years 2014 and 2015 was on average 3.86% per year, based on the number of shares of Common Stock outstanding as reported in the Form 10-Ks for each of the two fiscal year end periods.  Based on our current grant practices, stock price, and competitive pay practices, we estimate that the increased share reserve will allow us to continue to grant additional equity awards for approximately one (1) to two (2) years.  In fiscal year 2013, Tribune Media Company granted stock options and restricted stock units to employees who became our employees after the spin-off.  These stock options and restricted stock units were converted into Tribune Publishing Company common stock upon the consummation of the spin-off.  This conversion resulted in 739,652 shares being reduced from the shares available to grant from the Omnibus Incentive Plan.

The equity overhang, which represents the potential dilution to which the Company’s stockholders are exposed as a result of stock-based compensation that may be awarded under all of our equity plans, is 13.97% calculated as (x) the sum of (i) total shares issuable upon exercise of outstanding stock options and vesting of outstanding restricted stock and restricted stock units plus (ii) total shares available for future awards divided by (y) shares of common stock outstanding, plus (b) the number represented by clause (x).

Summary of the Omnibus Incentive Plan

The complete text of the Omnibus Incentive Plan is attached to this proxy statement as Appendix A.  The following description of the Omnibus Incentive Plan is a summary of certain provisions of the Omnibus Incentive Plan and is qualified in its entirety by reference to the full text of the Omnibus Incentive Plan.

Purpose

The purposes of the Omnibus Incentive Plan are to attract and retain key personnel, including non-employee directors, and to provide a means whereby directors, officers, employees, consultants and advisors of Tribune Publishing and its affiliates can acquire and maintain an equity interest in Tribune Publishing, or be paid incentive compensation, thereby strengthening their commitment to the welfare of Tribune Publishing and its affiliates and aligning their interests with those of the stockholders of Tribune Publishing.

Eligibility

Persons who serve as employees, officers, non-employee directors, consultants and advisors of Tribune Publishing or its affiliates are eligible to be granted awards under the Omnibus Incentive Plan.  As of April 1, 2016, approximately 7,165 employees and nine non-employee directors were eligible to participate in the Omnibus Incentive Plan.

16


 

Administration

The Omnibus Incentive Plan is administered by the Compensation Committee or such other committee as the Board may from time to time designate (the “Plan Committee”). Among other things, the Plan Committee has the authority to select individuals to whom awards may be granted, to determine the type of award as well as the number of shares of Tribune common stock to be covered by each award, and to determine the terms and conditions of any such awards. The Plan Committee may delegate all or any portion of this authority to any person or persons, other than with respect to awards to officers or directors of Tribune subject to the reporting requirements of Section 16(a) of the Exchange Act, and only to the extent that such delegation is permitted under applicable law. The Plan Committee, pursuant to the terms of the Omnibus Incentive Plan, also makes all other necessary decisions and interpretations under the Omnibus Incentive Plan.

Shares Subject to the Omnibus Incentive Plan

Under the Omnibus Incentive Plan, the Plan Committee may grant awards of various types of compensation, including stock options (which may be either incentive stock options or non-qualified stock options), stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), performance shares and performance units, dividend equivalents, cash awards and other types of equity-based awards.

The maximum number of shares of common stock of Tribune that may be issued under the Omnibus Incentive Plan will be 5,342,361, all of which may be issued in the form of incentive stock options. Shares issued under the Omnibus Incentive Plan may be authorized but unissued shares, shares held in the treasury of Tribune Publishing, shares purchased on the open market or by private purchase, or a combination of the foregoing.

For those awards intended to qualify as performance-based compensation under Section 162(m) of the Code, during a calendar year, no single participant may be granted (a) more than 950,000 (increased from 250,000 by the amendment) stock options, stock appreciation rights or any other award based solely on the increase in value of the common stock from the date of grant, (b) more than 950,000 (increased from 200,000 by the amendment) performance shares, performance units to be settled in common stock or other stock-based awards, or (c) performance units to be settled in cash or cash awards with a value of more than $10,000,000 (increased from $3,000,000 by the amendment) (or the equivalent of such amount denominated by the participant’s local currency).

Any shares covered by an award granted under the Omnibus Incentive Plan will be deemed to have been used in settlement of awards whether or not they are actually delivered, provided that if the fair market value equivalent of such shares is paid in cash, such shares will again become available for other awards under the Omnibus Incentive Plan. In addition, any shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligations pursuant to any award under the Omnibus Incentive Plan will again become available for issuance. To the extent that any award expires, terminates, is canceled or forfeited, including if shares are not issued on the settlement of awards, without the participant having received any benefit therefrom, the shares covered by such award will again become available for awards under the Omnibus Incentive Plan. The Omnibus Incentive Plan permits Tribune Publishing to issue substitute awards to service providers of companies acquired by Tribune Publishing, but those substitute awards would not count against the share maximum listed above.

The number of shares of common stock or other securities covered by outstanding awards (including the various maximum limitations), the number and kind of shares or other property that may be delivered under the Omnibus Incentive Plan, the exercise or purchase price of each outstanding award, and the other terms of outstanding awards, are subject to adjustment by the Plan Committee in the event of any dividend, recapitalization, stock split, reorganization, merger, spin-off, repurchase or other similar corporate transaction or event affecting the common stock (including, but not limited to, a change in control). Any such adjustment would not be considered repricing for purposes of the prohibition on repricing described below.

Awards with respect to at least 95% of the shares that are authorized to be issued under the Omnibus Incentive Plan must have a vesting schedule of at least one year. 

The closing price of the Company’s common stock as reported on the New York Stock Exchange on April 1, 2016 was $7.91 per share.

17


 

Types of Awards

As indicated above, several types of grants can be made under the Omnibus Incentive Plan. A summary of these grants is set forth below.

Stock Options and Stock Appreciation Rights

The Plan Committee may grant awards of stock options and SARs under the Omnibus Incentive Plan. The stock options may be either “incentive stock options” (as that term is defined in Section 422 of the Code), which provide the recipient with favorable tax treatment, or options that are not incentive stock options (“non-qualified stock options”). The terms of options and SARs are determined by the Plan Committee and reflected in the award agreements, but the exercise period for any stock options and SARs awarded under the Omnibus Incentive Plan may not extend beyond ten years from the date of grant. The Plan Committee has the authority to determine the terms and conditions of the stock options and SARs, including the number of shares subject to each stock option and SAR, the vesting and exercise schedule of each stock option and SAR, and the exercise price of each option and strike price of each SAR (which must be at least the fair market value of the stock underlying the award on the date of grant).

The exercise price of the options (and any applicable required withholding taxes) will be payable in any manner approved by the Plan Committee or provided in an applicable award agreement which may include, but is not limited to, cash, Tribune Publishing common stock (valued at its fair market value on the date of exercise) or a combination thereof, or by a “cashless exercise” through a broker or by withholding shares otherwise receivable on exercise.

SARs are similar to stock options, except that no exercise price is required to be paid. Upon exercise of a SAR, the participant will receive payment equal to the increase in the fair market value of a share of common stock on the date of exercise over the strike price (which is no less than the fair market value of a share of common stock on the date of grant) times the number of shares of common stock as to which the SAR is being exercised. The payment will be made in cash, in shares of common stock of Tribune Publishing, or any combination thereof. Any fractional shares of common stock will be settled in cash.

The Omnibus Incentive Plan prohibits repricing of options and SARs without stockholder approval.

Restricted Stock and RSUs

The Plan Committee may grant awards of restricted stock and RSUs under the Omnibus Incentive Plan. The Plan Committee has the authority to determine the terms and conditions of the restricted stock and RSUs, including the restricted periods during which the awards are subject to forfeiture. Upon expiration of the restricted period with respect to restricted stock, the restricted stock will no longer be subject to forfeiture and, upon expiration of the restricted period with respect to each RSU, Tribune Publishing will deliver a share of common stock, or at the Plan Committee’s discretion, cash or a combination of shares of common stock and cash.

Performance Awards; Performance Criteria

The Plan Committee may grant awards of performance shares, performance units or cash awards (collectively, the “Performance Awards”) under the Omnibus Incentive Plan based upon the achievement of specified performance objectives or the occurrence of other events, as determined by the Plan Committee in its discretion. The Plan Committee has the authority to determine other terms and conditions of the Performance Awards, including conditioning payment on the participant’s completing a minimum period of service following the grant date.

The Plan Committee may establish performance goals applicable to any Performance Award. When establishing a performance goal, the Plan Committee will determine the performance cycle over which performance against the goal will be measured and the amount of cash or number or value of shares of common stock that may be earned based on the level of the performance goal achieved. Additional provisions that relate to the setting of the performance goal, certifying achievement of performance against the goal and the amount earned, and exercising negative discretion to reduce the amount earned and that apply to awards made to executive officers may be intended to meet the tax deductibility rules for “performance-based” compensation under Section 162(m) of the Code.

The Omnibus Incentive Plan provides that the Plan Committee may base the performance goals upon one or more of the following performance criteria: (A) net or operating income (before or after taxes); (B) earnings before income taxes, interest, depreciation and/or amortization (“EBITDA”); (C) 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, stock-based compensation expense, related

18


 

party management fees, reorganization items, restructuring charges, transaction expenses, and depreciation and amortization expense and net income attributable to noncontrolling interests (“Adjusted EBITDA”); (D) basic or diluted earnings per share or improvement in basic or diluted earnings per share; (E) sales (including, but not limited to, total sales, net sales and revenue growth); (F) net operating profit; (G) financial return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales and revenue); (H) cash flow measures (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment); (I) productivity ratios (including, but not limited to, measuring liquidity, profitability and leverage); (J) share price (including, but not limited to, growth measures and total stockholder return); (K) expense/cost management targets; (L) margins (including, but not limited to, operating margin, net income margin, cash margin, gross, net or operating profit margins, EBITDA margins and Adjusted EBITDA margins); (M) operating efficiency; (N) market share or market penetration; (O) customer targets (including, but not limited to, customer growth and customer satisfaction); (P) working capital targets or improvements; (Q) economic value added; (R) balance sheet metrics (including, but not limited to, inventory, inventory turns, receivables turnover, net asset turnover, debt reduction, retained earnings, year-end cash, cash conversion cycle and ratio of debt to equity or to EBITDA); (S) workforce targets (including, but not limited to, diversity goals, employee engagement or satisfaction, employee retention and workplace health and safety goals); (T) implementation, completion or attainment of measurable objectives with respect to research and development, key products or key projects, lines of business, acquisitions and divestitures and strategic plan development and/or implementation; or (U) comparisons with various stock market indices, peer companies or industry groups or classifications with regard to one more of these criteria. At any time when Section 162(m) is not applicable to Tribune Publishing and the Omnibus Incentive Plan and at any time for awards not intended to qualify as performance-based awards under Section 162(m) or for persons whose compensation is not subject to Section 162(m) of the Code, performance goals may be based on such other criteria as may be determined by the Plan Committee. Performance criteria may be established on a company-wide basis or with respect to one or more business units, divisions or affiliates.

Performance goals may be expressed in absolute terms, or relative to (i) current internal targets or budgets, (ii) the past performance of Tribune Publishing (including the performance of one or more subsidiaries, divisions or operating units), (iii) the performance of one or more similarly situated companies, (iv) the performance of an index covering a peer group of companies or (v) other external measures of the selected performance criteria. When establishing performance goals for a performance cycle, the Plan Committee may determine that any or all unusual or infrequently occurring items as identified in the financial statements and related notes thereto, prepared in accordance with U.S. generally accepted accounting principles, or management’s discussion and analysis in the annual report, including, but not limited to, the charges or costs associated with restructurings of Tribune Publishing, discontinued operations, extraordinary items, capital gains and losses, dividends, repurchase of shares, litigation, other unusual or infrequently occurring items, and the cumulative effects of accounting changes shall be excluded from the determination as to whether the performance goals have been met. Except in the case of awards intended to be performance-based compensation under Section 162(m) of the Code to the extent that such adjustments would cause the awards not to be performance-based compensation under Section 162(m) of the Code, the Plan Committee may also adjust the performance goals for any performance cycle as it deems equitable in recognition of unusual or non-recurring events affecting Tribune Publishing, changes in applicable tax laws or accounting principles, or such other factors as the Plan Committee may determine.

Other Stock-Based Awards

The Plan Committee may grant other equity-based or equity-related awards not otherwise described by the terms of the Omnibus Incentive Plan.

Dividends and Dividend Equivalents

The Plan Committee may, in its discretion, grant dividends or dividend equivalents to a participant in tandem with another award or as freestanding awards. Except in the event of a corporate transaction that results in the adjustment of such awards under the provisions of the Omnibus Incentive Plan, no dividend equivalents may be credited in respect of options or SARs.

Effect of a Change in Control

Upon a change in control, no cancellation, acceleration of exercisability or vesting, lapse of any restricted period or settlement or other payment shall 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.

19


 

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) each outstanding option and 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; (B) 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; (C) cash awards that are vested but unpaid shall be paid in cash; and (D) each outstanding restricted stock, RSU 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 in connection with a change in control.

Amendment and Termination

The Board may amend or terminate the Omnibus Incentive Plan at any time, but no amendment or termination may materially and adversely affect the rights of any participant without the participant’s consent. Amendments to the Omnibus Incentive Plan will require stockholder approval if such approval is required by tax or regulatory law or requirement. The Omnibus Incentive Plan, therefore, cannot be amended to remove the prohibition on re-pricing or to permit the grant of options or SARs at below fair market value exercise prices without stockholder approval.

U. S. Federal Income Tax Considerations

The following is a general summary of the U.S. federal income tax consequences of awards under the Omnibus Incentive Plan to Tribune Publishing and to participants in the Omnibus Incentive Plan who are citizens or residents of the United States for U.S. federal tax purposes. The summary is based on the Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this proxy statement and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local, or foreign tax laws.

Nonqualified Stock Options.    A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the option on the date of exercise and the option exercise price. When a participant sells the shares acquired upon exercise, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the option exercise price.

Incentive Stock Options.    A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment as an employee or within three months after his or her employment ends (12 months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the option exercise price. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the option exercise price (or, if less, the excess of the amount

20


 

realized on the disposition of the shares over the option exercise price). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.

Stock Appreciation Rights.    A participant generally will not recognize taxable income upon the grant or vesting of an SAR with a specified grant price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon the exercise of an SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the specified grant price of the SAR. When a participant sells any shares acquired upon exercise, the participant generally will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the total base value.

Restricted Stock Awards.    A recipient of a restricted stock award generally will recognize compensation taxable as ordinary income when the shares cease to be subject to restrictions in an amount equal to the excess of the fair market value of the shares on the date the restrictions lapse over the amount, if any, paid by the participant with respect to the shares. Instead of postponing the federal income tax consequences of a restricted stock award until the restrictions lapse, the participant may elect to recognize compensation taxable as ordinary income in the year of the award in an amount equal to the fair market value of the shares at the time of receipt. This election is made under Section 83(b) of the Code. A Section 83(b) election is made by filing a written notice with the Internal Revenue Service office with which the participant files his or her federal income tax return. The notice must be filed within 30 days of the date of grant of the restricted stock award for which the election is made and must meet certain technical requirements.

The tax treatment of a subsequent disposition of restricted stock will depend upon whether the participant has made a timely and proper Section 83(b) election. If the participant makes a timely and proper Section 83(b) election, when the participant sells the restricted shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. If no Section 83(b) election is made, any disposition after the restrictions lapse generally will result in short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the amount, if any, paid by the participant with respect to the shares, plus the amount of taxable ordinary income recognized by the participant either at the time the restrictions lapsed or at the time of the Section 83(b) election, as the case may be. If the participant forfeits the shares to Tribune Publishing (e.g., upon the participant’s termination prior to expiration of the restriction period), the participant may not claim a deduction with respect to the income recognized as a result of making a Section 83(b) election.

Restricted Stock Units.    A participant generally will not recognize income at the time a restricted stock unit is granted. When any part of a restricted stock unit is issued or paid, the participant generally will recognize compensation taxable as ordinary income at the time of such issuance or payment in an amount equal to the cash and then fair market value of any shares the participant receives.

Performance Share or Performance Unit Awards.    A participant generally will not recognize income at the time a performance share or performance unit award is granted. When any part of a performance share or performance unit award is issued or paid, the participant generally will recognize compensation taxable as ordinary income at the time of such issuance or payment in an amount equal to the cash and then fair market value of any shares the participant receives.

Other Awards.    The U.S. federal income tax consequences of other awards under the Omnibus Incentive Plan will depend upon the specific terms of each award.

Tax Consequences to the Company.    In the foregoing cases, the Company generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code.

Section 162(m) of the Code.    Under Section 162(m) of the Code, the Company is generally prohibited from deducting compensation paid to our chief executive officer and three other most highly compensated executive officers (other than the chief financial officer) in excess of $1 million per person in any year. Compensation that qualifies as “performance-based” is excluded for purposes of calculating the amount of compensation subject to the $1 million limit. If the Omnibus Incentive Plan is approved by the stockholders, the Plan Committee will have the flexibility to grant awards under the Omnibus Incentive Plan that are intended to qualify as “performance-based” compensation under Section 162(m) of the Code.

Tax Withholding.    Tribune Publishing is authorized to deduct or withhold from any award granted or payment due under the Omnibus Incentive Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. Tribune Publishing is

21


 

not required to issue any shares of common stock or otherwise settle an award under the Omnibus Incentive Plan until all tax withholding obligations are satisfied.

Awards Granted to Certain Persons.

All awards to directors, executive officers, and employees under the Omnibus Incentive Plan are made at the discretion of the Plan Committee. Therefore, the benefits and amounts that will be received or allocated under the Omnibus Incentive Plan are not determinable at this time; however, the employment agreements for Messrs. Hunter and Ryan provide that for 2016, 2017 and 2018, subject to their continued employment, they will receive annual equity grants having an aggregate fair market value of $550,000 on the grant date, of which half of the value of the award will be stock options and half will be restricted stock units. No awards have been granted that are contingent on the approval of the Omnibus Incentive Plan; however, Mr. Ryan’s employment agreement conditions the grants set forth in his employment agreement upon approval of the Omnibus Incentive Plan. As of December 27, 2015, there were (i) 968,526 shares of common stock subject to outstanding options; and (ii) 982,073 shares of common stock subject to outstanding unvested restricted stock units.

For information regarding grants made to our Named Executive Officers under the Omnibus Incentive Plan in respect of fiscal year 2015, see the table entitled “2015 Grants of Plan-Based Awards Table” which appears elsewhere in this proxy statement. During fiscal year 2015, Tribune Publishing issued 464,892 options and 514,164 restricted stock units under the Omnibus Incentive Plan – an aggregate of 102,062 options and 44,694 restricted stock units were granted to all current executive officers as of April 1, 2016 as a group (“Executive Group”); an aggregate of 39,037 restricted stock units and no options were granted to all current directors as of April 1, 2016 who are not executive officers as a group (“Non-Executive Director Group”); and an aggregate of 362,830 options and 430,433 restricted stock units were granted to all employees, including current officers who are not current executive officers as of April 1, 2016 as a group (“Non-Executive Officer Employee Group”).

Since the initial adoption of the Omnibus Incentive Plan through April 1, 2016, the following number of stock options have been granted under the Omnibus Incentive Plan to the individuals described in the table. 

 

 

 

Name and Position

    

Number of Options
Granted

Tony W. Hunter

 

127,696

President of National Revenue and Strategic Initiatives

 

 

 

 

 

Timothy E. Ryan

 

37,312

President of Publishing

 

 

 

 

 

John H. Griffin, Jr.

 

335,834

Former President and Chief Executive Officer

 

 

 

 

 

Sandra J. Martin

 

32,196

Former Executive Vice President and Chief Financial Officer

 

 

 

 

 

John B. Bode

 

40,000

Former Executive Vice President and Chief Financial Officer

 

 

 

 

 

Austin M. Beutner

 

148,441

Former Publisher and Chief Executive Officer, Los Angeles Times

 

 

 

 

 

Denise Warren

 

82,583

Former President of Digital, CEO East Coast Publishing and EVP

 

 

 

 

 

Executive Group

 

217,505

 

 

 

Non-Executive Director Group(1)

 

52,333

 

 

 

Non-Executive Officer Employee Group(2)

 

985,088

(1) Granted when director was an employee.

 

(2) Includes former employees and officers.

 

The Board of Directors Recommends a Vote “FOR” approval of the Omnibus Incentive Plan, As Amended.

22


 

 

EQUITY COMPENSATION PLAN INFORMATION

 

Information regarding securities authorized for issuance under our equity compensation plan, the Tribune Publishing Company 2014 Omnibus Incentive Plan, in effect as of December 27, 2015, is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Plan Category

 

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)

 

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(2)

 

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

 

 

 

(a)

 

(b)

 

(c)

 

Equity compensation plans approved by security holders(3)

 

1,950,599

 

 

$

16.80

 

 

359,301

 

 

Equity compensation plans not approved by security holders

 

 

 

 

 

 

 

Total

 

1,950,599

 

 

$

16.80

 

 

359,301

 

 


(1) Represents options and restricted stock units.

(2) Represents weighted average exercise price of outstanding options. The weighted average exercise price does not take into account restricted stock units.

(3) On April 1, 2014, the Tribune Publishing Company 2014 Omnibus Incentive Plan was approved by Tribune Media Company as Tribune Publishing’s sole stockholder.

 

PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

The Audit Committee has engaged Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm for the fiscal year ending December 25, 2016.  EY will replace PricewaterhouseCoopers LLP (“PwC”), who formerly served as the Company’s independent registered public accounting firm prior to EY’s engagement.  See “Recent Change in Auditor” below.

 

Representatives of EY are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.  Representatives of PwC are not expected to attend the Annual Meeting.

 

Stockholder ratification of the appointment of EY as the Company’s independent registered public accounting firm is not required by our By Laws or otherwise. However, the Board of Directors is submitting the appointment of EY to the stockholders for ratification as a matter of corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain EY. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.

 

Recent Change in Auditor

 

As reported on the Company’s Current Report on Form 8-K filed on March 28, 2016 (the “Change in Auditor 8-K”), effective March 22, 2016, the Audit Committee dismissed PwC as the Company’s independent registered public accounting firm and engaged EY to serve in this role for the fiscal year ending December 25, 2016.

 

PwC’s reports on the consolidated financial statements of the Company for the fiscal years ended December 27, 2015, and December 28, 2014, did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.

 

During the fiscal years ended December 27, 2015, and December 28, 2014, and the subsequent interim period through March 22, 2016, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to

23


 

the satisfaction of PwC, would have caused PwC to make reference to the subject matter of the disagreements in connection with their reports on the Company’s consolidated financial statements for such fiscal years.

 

During the fiscal years ended December 27, 2015, and December 28, 2014, and the subsequent interim period through March 22, 2016, there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K), other than the identification of material weaknesses in the Company’s internal control over financial reporting as described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2015 (the “2015 10-K”) and Annual Report on Form 10-K for the fiscal year ended December 28, 2014 (the “2014 10-K”). As more fully disclosed in the 2015 10-K, the Company’s management concluded that the Company’s internal control over financial reporting was not effective as of the fiscal year ended December 27, 2015 due to material weaknesses in the Company’s internal control over financial reporting. Management identified a material weakness related to an ineffective control environment, which contributed to material weaknesses related to review and approval of insert volume forecasts and variance analysis for preprint advertising, documentation of approval of rates for circulation and other revenue, and the review of compensation expense, including sales commissions and bonus plans. Further, as disclosed in the 2014 10-K, the Company’s management identified the following material weaknesses in the Company’s internal control over financial reporting as of the fiscal year ended December 28, 2014: (1) an insufficient complement of finance and accounting resources within the organization commensurate with the Company’s financial reporting requirements and (2) an ineffective control environment due to (a) lack of formalized accounting policies and review controls including procedures and controls over completeness and accuracy of journal entry review and account reconciliations, (b) deficiencies in business processes related to placing fixed assets in service and retirement of fixed assets, and (c) deficiencies over information technology controls around system security, user access and change management.

 

The Audit Committee has discussed these material weaknesses with PwC and the Company has authorized PwC to respond fully to the inquiries of the successor independent registered public accounting firm concerning these matters.

 

The Company provided PwC with a copy of the Change in Auditor 8-K and requested that PwC furnish the Company with a copy of PwC’s letter addressed to the SEC stating whether PwC agrees with the statements made by the Company in the Change in Auditor 8-K. The Company received the requested letter from PwC and a copy of PwC’s letter was attached as Exhibit 16.1 to the Change in Auditor 8-K.

 

During the fiscal years ended December 27, 2015, and December 28, 2014, and the subsequent interim period prior to engaging EY, the Company did not consult with EY regarding (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might have been rendered on the Company’s consolidated and combined financial statements, and no written report or oral advice was provided that EY concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (b) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) or a “reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K).

 

The Board of Directors Recommends a Vote “FOR” the Ratification of the

Appointment of ERNST & YOUNG LLP as Our Independent Registered Public Accounting Firm.

24


 

REPORT OF THE AUDIT COMMITTEE

 

The Audit Committee serves as the representative of the Board of Directors for general oversight of the quality and integrity of the Company’s financial statements, the qualifications and independence of the Company’s independent auditor, the performance of the Company’s internal audit function and independent auditor, the Company’s compliance with legal and regulatory requirements and management’s process to assess and manage the Company’s enterprise risk issues. Management has responsibility for preparing the Company’s financial statements as well as for the Company’s financial reporting process, including internal controls thereon. The Company’s independent registered public accounting firm is responsible for auditing those financial statements.

 

In connection with our review of the Company’s consolidated audited financial statements for the fiscal year ended December 27, 2015, we relied on reports received from PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm for fiscal 2015, as well as the advice and information we received during discussions with the Company’s management. In this context, we hereby report as follows:

 

(i)

The Audit Committee has reviewed and discussed the audited financial statements for fiscal year 2015 with the Company’s management.

 

(ii)

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under Auditing Standard No. 16, Communications with Audit Committees.

 

(iii)

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under Rule 2‑07 of Regulation S‑X, Communications with Audit Committees.

 

(iv)

The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence.

 

(v)

Based on the review and discussion referred to in paragraphs (i) through (iv) above, the Audit Committee recommended to the Board of Directors, and the Board approved, that the audited financial statements be included in the Annual Report on Form 10‑K for the year ended December 27, 2015, for filing with the SEC.

 

The Audit Committee

 

Philip G. Franklin, Chairperson

David E. Dibble

Ellen Taus

25


 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES REPORT

 

Fees Paid to Independent Registered Public Accounting Firm

 

PricewaterhouseCoopers LLP served as the Company’s independent registered public accounting firm for fiscal years 2014 and 2015. The following table sets forth aggregate fees billed or expected to be billed for services rendered by PricewaterhouseCoopers LLP for the 2014 and 2015 fiscal years, inclusive of out‑of‑pocket expenses. Fees billed by PricewaterhouseCoopers LLP to Tribune Media Company for periods prior to the August 4, 2014 date of the spin-off transaction are not included below, whether or not any portion of such fees may have been allocated to its subsidiaries.

 

 

 

 

 

 

 

 

 

Type of Fees

 

 

2015

    

2014

 

Audit Fees

 

$

3,983,339

 

$

2,030,000

 

Audit-Related Fees

 

$

0

 

$

0

 

Tax Fees

 

$

5,960

 

$

0

 

All Other Fees

 

$

0

 

$

300,000

 

 

Audit Fees consist of fees for professional services rendered for the audit of our consolidated annual financial statements, reviews of our interim consolidated financial statements included in quarterly reports, and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements, including relating to the SEC.

 

Audit‑Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”

 

Tax Fees consist of fees for professional services rendered for assistance with federal, state, and international tax compliance, tax advice, and tax planning.

 

All Other Fees consist of fees for consulting services rendered by Strategy&, an affiliate of PricewaterhouseCoopers LLP, to the Company in fiscal year 2014. These consulting services were related to a sales compensation redesign evaluation.

 

Audit Committee Review and Pre‑Approval of Independent Registered Public Accounting Firm’s Services

 

The Audit Committee has considered the non‑audit services provided by PricewaterhouseCoopers LLP as described above and believes that they were compatible with maintaining PricewaterhouseCoopers LLP’s independence as the Company’s independent registered public accounting firm for the 2014 and 2015 fiscal years.

 

Pursuant to its charter, 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 Committee. The Audit Committee establishes 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 chairperson of the Audit Committee may grant the approvals (including pre‑approvals) on behalf of the Committee. The decision of the chairperson of the Audit Committee to approve (including to pre‑approve) an activity is required to be reported to the full Audit Committee at its next scheduled meeting. The Audit Committee may not delegate to management the Audit Committee’s responsibilities to pre‑approve services performed by the independent auditor. The Audit Committee pre‑approved all of the Audit Fees, Audit‑Related Fees, Tax Fees, and All Other Fees listed above.

 

EXECUTIVE OFFICERS

 

The following table sets forth the name, age, and position of each of our executive officers as of April 15, 2016:

 

 

 

 

 

 

 

Name

    

Age

    

Position

 

Justin C. Dearborn

 

46

 

Chief Executive Officer and Director

 

Terry Jimenez

 

44

 

Executive Vice President and Chief Financial Officer

 

Tony W. Hunter

 

55

 

President of National Revenue and Strategic Initiatives

 

Timothy E. Ryan

 

57

 

President of Publishing 

 

Julie K. Xanders

 

51

 

Executive Vice President, General Counsel and Secretary

 

 

26


 

Justin C. Dearborn.  For biographical information for Mr. Dearborn, please refer to the section entitled “Proposal 1: Election of Directors”.

 

Terry Jimenez.    Mr. Jimenez has served as Executive Vice President and Chief Financial Officer since April 2016.  Prior to joining the Company, Mr. Jimenez was a Partner for IBM’s Global Business Services, where he served in that capacity since 2012.  Before that, from April 2012 until October 2012, Mr. Jimenez worked as a consultant for Wrapports, LLC. From September 2009 through February 2012, he served as President of Newsday Media Group, a subsidiary of Cablevision Systems Corporation. From 2008 to 2009, Mr. Jimenez served as Chief Operating Officer/Chief Financial Officer of Newsday, LLC and Publisher of amNew York, subsidiaries of Cablevision Systems Corporation. Prior to Cablevision’s acquisition of Newsday from Tribune Company (now known as Tribune Media Company), he served in various roles at Tribune Media Company.  From 2005 to 2008, he was Vice President Finance/Chief Financial Officer of Newsday, Inc. and from 2003 to 2005, he served as Controller for the Chicago Tribune Group.  Prior to joining Tribune Media Company, from 1994 to 2002, Mr. Jimenez served in roles at McDonald’s Corporation, including Finance Director for McDonald’s Partner Brands Group, Controller for Donatos Pizzeria and other accounting, financial consulting, strategy and merger & acquisition roles.  Mr. Jimenez holds a B.S. in accountancy from Northern Illinois University and an M.B.A. from J.L. Kellogg Graduate School of Management, Northwestern University.

 

Tony W. Hunter.  Mr. Hunter has served as President of National Revenue and Strategic Initiatives since February 2016.  Prior to that, he served as Publisher and Chief Executive Officer of Chicago Tribune Company, LLC since the Distribution in August 2014. Mr. Hunter previously served in such role and as CEO of Tribune Media Company’s publishing operation since July 2011, where he was responsible for the strategic priorities and day‑to‑day digital and print operations of seven newspapers, including The Baltimore Sun,  Daily Press,  The Morning Call,  Orlando Sentinel and Sun‑Sentinel. Mr. Hunter also previously served as one of the four members of Tribune Media Company’s Executive Council, which exercised the responsibilities of the office of Chief Executive and President from October 2010 to May 2011. Since September 2008, Mr. Hunter has served as Publisher and CEO of Chicago Tribune Company, overseeing a robust print and digital media portfolio including the Chicago Tribune,  RedEye, Hoy, chicagotribune.com, TribLocal, and Chicago Magazine. Mr. Hunter previously was Senior Vice President/Circulation and Operations for Chicago Tribune, a position he assumed in 2007. In this capacity, he was responsible for production, technology and circulation, as well as marketing strategy, customer acquisition/retention, manufacturing and distribution. Mr. Hunter joined Chicago Tribune in 1994 as manager/circulation planning and analysis. Prior to joining Chicago Tribune, Mr. Hunter worked for the Audit Bureau of Circulations (ABC) as Director of Field Auditing‑Newspapers and held a variety of auditing positions from 1984 to 1994. Mr. Hunter holds an M.B.A. in leadership and organizational development from DePaul University and a B.A. in accounting, business administration and economics from Coe College in Cedar Rapids, Iowa. He is a non-practicing Certified Public Accountant.

 

Timothy E. Ryan.  Mr. Ryan has served as President of Publishing since February 2016.  Prior to that, he served as Chief Executive Officer, California News Group, since September 2015, overseeing the Los Angeles Times,  The San Diego Union-Tribune and various community newspapers. Prior to that position, Mr. Ryan served as Publisher and Chief Executive Officer of The Baltimore Sun and The Morning Call since the Distribution in August 2014, and as Publisher, President and Chief Executive Officer of the Baltimore Sun Media Group since 2007. In 2010, he also became Publisher and CEO for additional Tribune media properties, The Morning Call and mcall.com. In Baltimore, Mr. Ryan oversaw not only The Baltimore Sun but also 30 community newspapers and magazines and the region’s leading website, baltimoresun.com. Mr. Ryan joined The Baltimore Sun after having served as Vice President of Circulation and Consumer Marketing since 2005 at the Chicago Tribune, where he was responsible for sales, marketing and distribution throughout Chicago and the Midwest. Prior to joining the Chicago Tribune, Mr. Ryan served as Vice President of Circulation and Operations at The Baltimore Sun from July 2000 to February 2005. Mr. Ryan also worked as Vice President of Circulation at The Philadelphia Inquirer from 1993 to 2000. Mr. Ryan holds a B.A. in political science from the University of Notre Dame and an M.B.A. from J.L. Kellogg Graduate School of Management, Northwestern University.

 

Julie K. Xanders.  Ms. Xanders has served as Executive Vice President, General Counsel and Secretary of Tribune Publishing since the Distribution in August 2014. Ms. Xanders previously served as the Assistant General Counsel/West Coast Media of Tribune Media Company and served as Senior Vice President, Legal for the Los Angeles Times. Ms. Xanders joined The Times Mirror Company, a media company, in 1993 as Corporate Counsel for Times Mirror Cable Television, Inc. and was promoted to Assistant General Counsel in 1995 for Times Mirror, Associate General Counsel in 1997, Deputy General Counsel in 1998, and Senior Vice President and General Counsel for the Los Angeles Times in August 1998. Prior to joining Times Mirror, Ms. Xanders worked for four years in private practice with Gibson, Dunn & Crutcher, a law firm, as an associate attorney. Ms. Xanders earned a J.D. from Boalt Hall School of Law (UC Berkeley) and has a B.A. from Yale University, where she graduated summa cum laude and was elected Phi Beta Kappa. She is a past chair and continues to serve as a member of the Executive Committee of the Corporate Law Departments Section of the Los Angeles County Bar Association. She served on the Board of Trustees and several Board committees of the Los Angeles County Bar Association from July 2004 to June 2009 and from July 2010 to June 2011. She serves as Vice Chair of the Board of Trustees of Southwestern Law School and is co‑chair of the Membership Committee, chair of the Executive Committee and a member of the Compensation Committee.

27


 

From October 2013 to October 2015, she served on the Board of Directors of the California Newspaper Publishers Association and was Chair of its Governmental Affairs Committee. She was a member of the Board of Directors of the Los Angeles Area Chamber of Commerce from January 2002 to June 2005.

 

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 April 1, 2016 by: (i) all those known by us to be beneficial owners of more than 5% of our outstanding common stock as of April 1, 2016; (ii) each director as of April 1, 2016; (iii) each of the Named Executive Officers listed in the “2015 Summary Compensation Table”; and (iv) the directors and executive officers as a group as of April 1, 2016.

 

Unless otherwise indicated, beneficial owners listed in the table may be contacted at the Company’s corporate headquarters at 435 N. Michigan Avenue, Chicago, Illinois 60611.

 

 

 

 

 

 

 

 

    

Number of

    

 

 

 

 

Shares

 

Percentage of

 

 

 

Beneficially

 

Outstanding

 

Name

 

Owned(1)

 

Shares(1)

 

More Than 5% Stockholders:

 

 

 

 

 

Merrick Media, LLC(2)

 

5,220,000

 

16.5

%

350 North Orleans Street, 10th Floor

 

 

 

 

 

Chicago, IL 60654

 

 

 

 

 

Oaktree Capital Group Holdings GP, LLC(3)

 

4,695,947

 

14.8

%

333 South Grand Avenue, 28th Floor

 

 

 

 

 

Los Angeles, CA 90071

 

 

 

 

 

PRIMECAP Management Company(4)

 

3,744,143

 

11.8

%

225 South Lake Avenue, #400

 

 

 

 

 

Pasadena, CA 91101

 

 

 

 

 

 

 

 

 

 

 

Non-Employee Directors:

 

 

 

 

 

Carol Crenshaw(5)

 

2,212

 

*

 

David E. Dibble(6)

 

10,956

 

*

 

Michael W. Ferro, Jr.(2)(7)

 

5,222,212

 

16.5

%

Philip G. Franklin(8)

 

10,956

 

*

 

Eddy W. Hartenstein(9)

 

89,124

 

*

 

Renetta McCann(10)

 

10,956

 

*

 

Richard A. Reck(11)

 

1,659

 

*

 

Donald Tang

 

 

 

 

Ellen Taus(12)

 

10,956

 

*

 

 

 

 

 

 

 

Named Executive Officers:

 

 

 

 

 

Tony W. Hunter(13)

 

77,560

 

*

 

Timothy E. Ryan(14)

 

31,238

 

*

 

John H. Griffin, Jr.(15)

 

282,788

 

*

 

Sandra J. Martin(16)

 

13,087

 

*

 

John B. Bode

 

5,710

 

*

 

Austin M. Beutner(17)

 

7,459

 

*

 

Denise Warren(18)

 

23,706

 

*

 

 

 

 

 

 

 

All directors and current executive officers as a group (14 persons)(19)

 

5,484,786

 

17.2

%


*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 or provided to the Company, 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 31,660,737 shares of the Company’s common stock outstanding as of April 1, 2016, plus the number of shares of common

28


 

stock, if any, that such person, entity, or group had the right to acquire pursuant to the exercise of stock options or vesting of restricted stock units or other rights within 60 days of April 1, 2016. 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 filed with the SEC on February 12, 2016 by Merrick Media, LLC (“Merrick Media”), Merrick Venture Management, LLC (“Merrick Management”) and Michael W. Ferro, Jr.  Pursuant to the filing, Merrick Media directly holds, and has sole voting power and sole dispositive power over, the shares, and Mr. Ferro is the manager of Merrick

Management, which is the sole manager of Merrick Media. As a result, Merrick Management and Mr. Ferro have sole voting and dispositive power over the shares owned by Merrick Media. Merrick Management and Mr. Ferro do not directly own any shares of the Company’s common stock. Merrick Management and Mr. Ferro, by virtue of their relationship to Merrick Media, may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 under the Act) the shares of common stock which Merrick Media directly beneficially owns. Mr. Ferro disclaims beneficial ownership of the Common Stock, except to the extent of his pecuniary interests therein.

 

(3)

According to information provided to the Company by Oaktree Capital Management, L.P., as of November 9, 2015, Oaktree Tribune, L.P. beneficially owned 4,691,371 shares of the Company’s common stock and OCM FIE, LLC (“FIE”) beneficially owned 4,576 shares of the Company’s common stock. The general partner of Oaktree Tribune, L.P. is Oaktree AIF Investments, L.P. (“AIF Investments”). The general partner of AIF Investments is Oaktree AIF Holdings, Inc. (“AIF Holdings”). The holder of all of the voting shares of AIF Holdings is Oaktree Capital Group Holdings, L.P. (“OCGH”). The managing member of FIE is Oaktree Capital Management, L.P. (“OCM”). The general partner of OCM is Oaktree Holdings, Inc. (“Holdings”). The sole shareholder of Holdings is Oaktree Capital Group, LLC (“OCG”). The duly appointed manager of OCG and the general partner of OCGH is Oaktree Capital Group Holdings GP, LLC (“OCGH GP”). The media company business of OCGH GP is managed by a media company committee, which controls the decisions of OCGH GP with respect to the vote and disposition of the shares held by Oaktree Tribune, L.P. and FIE. The members of such committee are Howard S. Marks, Bruce A. Karsh, John B. Frank, David M. Kirchheimer and Stephen A. Kaplan.

 

(4)

Information presented is based on a Schedule 13G/A filed with the SEC on February 12, 2016 by PRIMECAP Management Company (“Primecap”) as of December 31, 2015. Pursuant to the filing, Primecap has sole voting power over 3,437,118 shares of the Company’s common stock and sole dispositive power over 3,744,143 shares.

 

(5)

The number of shares beneficially owned by Ms. Crenshaw includes 2,212 shares (attributable to deferred cash retainer converted to stock units) issuable within 60 days of April 1, 2016 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).

 

(6)

The number of shares beneficially owned by Mr. Dibble includes 6,789 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016.

 

(7)

The number of shares beneficially owned by Mr. Ferro also includes 2,212 shares (attributable to deferred cash retainer converted to stock units) issuable within 60 days of April 1, 2016 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).

 

(8)

The number of shares beneficially owned by Mr. Franklin includes 6,789 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016.

 

(9)

The number of shares beneficially owned by Mr. Hartenstein includes (a) 39,249 shares subject to options that are currently exercisable or that will become exercisable within 60 days of April 1, 2016 and (b) 11,881 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016.

 

(10)

The number of shares beneficially owned by Ms. McCann includes 6,789 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016.

 

(11)

The number of shares beneficially owned by Mr. Reck includes 1,659 shares (attributable to deferred cash retainer converted to stock units) issuable within 60 days of April 1, 2016 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).

 

29


 

(12)

The number of shares beneficially owned by Ms. Taus includes 6,789 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016.

 

(13)

The number of shares beneficially owned by Mr. Hunter includes 57,102 shares subject to options that are currently exercisable or that will become exercisable within 60 days of April 1, 2016.

 

(14)

The number of shares beneficially owned by Mr. Ryan includes 23,434 shares subject to options that are currently exercisable or that will become exercisable within 60 days of April 1, 2016. 

 

(15)

The number of shares beneficially owned by Mr. Griffin includes (a) 208,067 shares subject to options that are currently exercisable or that will become exercisable within 60 days of April 1, 2016 and (b) 20,535 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016.

 

(16)

The number of shares beneficially owned by Ms. Martin includes 8,049 shares subject to options that are currently exercisable or that will become exercisable within 60 days of April 1, 2016.

 

(17)

The Company was unable to confirm current holdings for Mr. Beutner. Information presented is based on the most recently filed Form 4 for Mr. Beutner plus 4,598 shares (net of shares withheld for taxes) issued upon the vesting of restricted stock units following termination of his employment. 

 

(18)

The number of shares beneficially owned by Ms. Warren includes 20,645 shares subject to options that are currently exercisable or that will become exercisable within 60 days of April 1, 2016.

 

(19)

The number of shares beneficially owned by all directors and current executive officers as a group as of April 1, 2016 includes (a) 129,760 shares subject to options which are currently exercisable or which will become exercisable within 60 days of April 1, 2016, (b) 39,037 shares issuable upon the vesting of restricted stock units within 60 days of April 1, 2016, and (c) 6,083 shares issuable within 60 days of April 1, 2016 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 2015.

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Introduction

 

2015 was the Company’s first full year as a standalone company. Prior to August 4, 2014, we were a wholly‑owned subsidiary of Tribune Media Company (“TCO”). On August 4, 2014, shares of the common stock of the Company, comprised of the Publishing business segment of TCO, were distributed to stockholders of record of TCO as of the record date (the “Distribution”). Effective upon completion of the Distribution, our Board of Directors formed its own Compensation Committee (the “Compensation Committee”). The Compensation Committee oversaw, evaluated and reviewed all aspects of our executive compensation philosophy and programs during 2015.

 

30


 

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

 

Tony W. Hunter

 

President of National Revenue and Strategic Initiatives (former Publisher and Chief Executive Officer, Chicago Tribune)

 

Timothy E. Ryan

 

President of Publishing (former Chief Executive Officer, California News Group)

 

John H. Griffin, Jr.

 

Former Chief Executive Officer, President and Director

 

Sandra J. Martin

 

Former Executive Vice President, Chief Financial Officer

 

John B. Bode

 

Former Executive Vice President, Chief Financial Officer

 

Austin M. Beutner

 

Former Publisher and Chief Executive Officer, Los Angeles Times

 

Denise Warren

 

Former President of Digital, CEO of East Coast Publishing, and EVP

 

 

Mr. Griffin, the former Chief Executive Officer and President of Tribune Publishing, Ms. Martin, the former Executive Vice President, Chief Financial Officer of Tribune Publishing, and Mr. Bode, the former Executive Vice President, Chief Financial Officer of Tribune Publishing, are considered Named Executive Officers because they served as our Chief Executive Officer or Chief Financial Officer, as applicable, for all or a portion of fiscal year 2015. Mr. Beutner, the former Publisher and Chief Executive Officer, Los Angeles Times, is considered a Named Executive Officer because he would have been among the top three highest paid executive officers of Tribune Publishing if he had remained in our employment through the end of the 2015 fiscal year. The employment of Mr. Griffin, Ms. Martin and Ms. Warren terminated in 2016.

 

2015 Overview

 

In 2015, the Company made significant progress with its strategic plan. We completed the acquisition of The San Diego Union-Tribune and its portfolio of nine community weeklies and related digital properties.  We also executed on our plan to reduce costs across the organization and achieved significant expense savings in 2015.  As discussed below, some of the compensation decisions made in 2015 were in support of these efforts.

 

2015 Compensation Highlights

 

1.

NEO Compensation Tied to Business Performance, Key Corporate Initiatives and Long‑Term Share Price Performance

 

Our compensation program tied a substantial portion of executive compensation to business performance. Under the 2015 management incentive program (“MIP”), if business performance fell below identified thresholds, at‑risk compensation would have been reduced or not paid at all. Compensation design for executives was structured to achieve long‑term stockholder value creation without undue business risk. The Compensation Committee also recognized the Company’s achievement of certain key corporate initiatives, including, without limitation, the cost-containment project referred to above.

 

2.

Pay for Performance—Compensation At Risk

 

·

Fiscal year 2015 Compensation Adjusted EBITDA performance for the applicable business units varied by business unit while Compensation Adjusted EBITDA performance for the Company (on a consolidated basis) was below the target objective established by the Compensation Committee in the 2015 MIP.  The Compensation Committee had designed the 2015 MIP so that incentive amounts would be reduced or not paid at all if performance fell below the specified thresholds.  As a result, payouts were below target for all of the applicable Named Executive Officers except Mr. Ryan, whose payout was above target.  Pursuant to Mr. Ryan’s employment agreement, his 2015 MIP was calculated based on fiscal year 2015 performance for the Baltimore Sun business unit and the Los Angeles Times business unit, in each case, prorated based on his period of service with each business unit.

 

·

Stock option and restricted stock unit grants of the Company’s common stock directly tie Named Executive Officer compensation to absolute share price performance.

 

31


 

·

The following charts reflect the 2015 target pay mix of Mr. Griffin, the Company’s Chief Executive Officer during 2015, and the average of the other Named Executive Officers, in each case, as if such Named Executive Officers had worked the full year.

 

 

 

CEO

Other NEOs

Picture 10

Picture 12

 

3.

Good Pay Practices

 

The Company has adopted best practices with respect to the executive compensation program, including the following:

 

·

We pay for performance. A significant portion of total executive compensation is earned by attaining annual and long‑term goals that increase stockholder value.

 

·

We emphasize equity compensation to reward long‑term growth and stockholder value creation.

 

·

We have a Policy on Trading Securities that prohibits hedging, pledging and other speculative transactions in our securities.

 

·

Our Compensation Committee has retained an independent compensation consultant to advise the Committee regarding the executive compensation program and the risk profile of the Company’s compensation programs.

 

·

Our Compensation Committee has reviewed a risk analysis of our compensation programs and practices to ensure that appropriate risk mitigation controls are in place.

 

·

The Company’s 2014 Omnibus Incentive Plan prohibits repricing or replacing stock options with exercise prices below the current fair market value without stockholder approval.

 

·

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 statement that results in the amount of any performance‑ based compensation paid or awarded to an executive officer being a greater amount than it would have been had it been calculated based on the restated financial statement.

 

·

We do not pay dividend equivalents on our restricted stock units until such units vest.

 

·

We offer executive officers the same group benefit programs as we provide other employees.

 

·

We provide limited executive perquisites.

 

·

We do not have any excise tax gross‑up provisions in our compensation plans or agreements.

 

Independent Compensation Consultant

 

In January 2015, our Compensation Committee retained Willis Towers Watson (the “Compensation Consultant”) as its independent compensation consultant. The Compensation Consultant regularly attends Compensation 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 non‑employee directors.

32


 

 

Our Approach to Executive Compensation

 

Our approach to executive compensation is aimed at achieving the following:

 

·

Attract and retain top talent;

 

·

Motivate and reward the performance of senior executives to achieve strategic, financial and operating performance objectives;

 

·

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

 

·

Align our executives’ interests with the long‑term interests of our stockholders.

 

NEO Compensation

 

The Compensation Committee oversees all components of the Company’s executive compensation program. During 2015, the Company’s Chief Executive Officer and senior human resources executives made recommendations to the Compensation Committee regarding executive compensation actions and equity awards for the Named Executive Officers. Based on their recommendations, the Compensation Committee approved (i) the compensation package and employment agreement with Ms. Warren in connection with her hire, (ii) the compensation packages and employment agreements with Ms. Martin and Mr. Ryan in connection with their respective promotions, and (iii) the employment agreement with Mr. Hunter. The Compensation Committee also awarded equity grants to the Named Executive Officers based on such recommendations.

 

During 2015, the Compensation Committee developed a group of peer companies (the “Peer Group”) and the Compensation Consultant provided competitive market compensation data for the Company’s executive officers based on the Peer Group. The Compensation Committee used this market compensation data, along with other qualitative information, in making its determination of target and actual compensation for the executive officers. The Peer Group serves as one data input for determining compensation for the Named Executive Officers. The Peer Group consisted of nine companies primarily from the newspaper publisher and content industry with a secondary emphasis on digital media. The companies in the Peer Group are:

 

 

 

 

 

Company (Ticker Symbol)

 

 

Revenue (millions)

 

Time, Inc. (TIME)

 

$

3,241.0

 

Gannett Co., Inc. (GCI)

 

$

3,171.9

 

IAC/InterActive Corp (IAC)

 

$

3,109.5

 

Scripps Networks Interactive, Inc. (SNI)

 

$

2,665.5

 

The New York Times Company (NYT)

 

$

1,588.5

 

Meredith Corporation (MDP)

 

$

1,468.7

 

The McClatchy Company (MNI)

 

$

1,146.6

 

The E. W. Scripps Company (SSP)

 

$

816.9

 

Lee Enterprises, Incorporated (LEE)

 

$

656.7

 

 

Based on the Peer Group analysis, the Compensation Committee determined to increase the base salary of Ms. Martin to $440,000 for 2016.  None of the other Named Executive Officers received a base salary increase in 2015, except for Mr. Ryan in connection with his promotion.

 

Our Compensation Cycle

 

In general, compensation is reviewed during the first quarter of every year. This review includes:

 

·

Annual performance reviews for the prior year;

 

·

Base salary increases;

 

·

MIP target awards; and

33


 

 

·

Long‑term incentive target awards (including stock options, restricted stock units and/or performance‑based awards).

 

The actual award date of stock options or restricted stock unit awards is determined on the date on which the Compensation Committee approves these awards, which is typically the March meeting of the Compensation Committee. Our Compensation Committee will review and assess the performance of the Chief Executive Officer and all executive officers and authorize 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

 

 

 

 

General Principle

    

Specific Approach

A competitive salary provides a necessary element of stability. Base salary should recognize individual performance, market value of a position and the executive officer’s tenure, experience, responsibilities, contribution to the Company, and growth in his or her role.

 

Salary levels are intended to be reviewed annually. Commencing with the 2016 fiscal year, our Compensation Committee will use compensation data from the Peer Group. Any increases will be based on overall performance and relative competitive market position.

 

MANAGEMENT INCENTIVE PROGRAM (MIP)

 

 

 

 

General Principle

    

Specific Approach

The MIP is designed to provide an opportunity for our executive officers to earn incentive awards tied to annual performance. The program aligns the focus of our executive officers with Company‑wide and business unit‑specific financial and operating measures. The MIP is the key compensation tool for aligning short‑term realized pay for the management team with the attainment of key operating imperatives.

 

The 2015 MIP was designed to emphasize financial and strategic goals.  For corporate-level NEOs, which includes Mr. Griffin and Ms. Martin, target bonus opportunities were based on consolidated financial performance (i.e., no weighting on individual business unit performance). For business unit level NEOs, which includes Messrs. Hunter and Ryan, the target bonus opportunities were based on consolidated financial performance, business unit financial performance, as well as print revenue and digital revenue.

 

 

 

Structure MIP target awards to achieve competitive compensation levels when targeted performance results are achieved. Use objective formulas to establish potential MIP performance awards.

 

The 2015 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 Compensation Committee may approve negative discretionary adjustments with respect to MIP awards for executive officers.

 

Overview of the MIP

 

2015 Internal Performance Metrics (Corporate Level)

 

The bonus opportunity for Mr. Griffin and Ms. Martin was subject to corporate‑level metrics (which measured performance across the enterprise) and based solely on company-wide performance goals.

 

34


 

 

 

 

Performance Metric

    

Why these Metrics

Corporate Compensation Adjusted EBITDA

 

Corporate Compensation Adjusted EBITDA reflects the Company’s emphasis on profitability and cost‑containment and is a measure of total operating performance of the enterprise.

 

 

 

 

 

“Compensation Adjusted EBITDA” is defined as income from operations plus depreciation, amortization and stock-based compensation, excluding the effect of the following (each of which is subject to Compensation Committee approval for purposes of determining award payouts):

(i) the impairment of tangible and intangible assets and related charges;

(ii) litigation or claim judgments or settlements; and

(iii) costs, revenue and gains associated with future and completed business combinations, reorganizations and/or restructuring programs.

 

 

 

Unlevered Free Cash Flow

 

“Unlevered Free Cash Flow” is defined as Compensation Adjusted EBITDA less income tax payments, current year capital expenditures, and cash outlays related to restructuring expenses.

 

 

 

Net Income

 

“Net Income” is defined in accordance with accounting principles generally accepted in the United States.

 

2015 Internal Performance Metrics (Business Unit Level)

 

The business unit level MIP design applicable to Messrs. Hunter and Ryan rewarded individual business unit performance as well as corporate-level financial performance. 75% of the bonus opportunity was based on individual business unit performance and 25% was based on corporate level performance goals.

 

 

 

 

Performance Metric

    

Why these Metrics

Business Unit Compensation Adjusted EBITDA

 

Business Unit Compensation Adjusted EBITDA reflects the Company’s emphasis on profitability and cost‑containment at the business unit level and is a measure of total operating performance of the specified business unit.

 

 

 

Print Revenue

 

Print revenue is defined to include all other business unit revenue, excluding digital and is not limited to print advertising revenue.

 

 

 

Digital Revenue

 

Digital revenue is defined as revenue from digital operations, excluding ForSaleByOwner revenue, allocated and certain other digital circulation revenue, and Tribune Content Solutions revenue.

 

35


 

2015 Internal Performance Metric Attainment and Payout Design

 

We pay for MIP performance that clearly demonstrates substantial achievement of plan goals. The Compensation Committee set the goals for our Compensation Adjusted EBITDA, Unlevered Free Cash Flow, Net Income and Revenue metrics. In order to achieve an MIP payout, the metric must meet a certain threshold for that component to be considered in the calculation. In addition, for corporate level participants, the threshold Corporate Compensation Adjusted EBITDA level of $145.7 million had to be achieved in order for any MIP bonus to be earned. For business unit level participants, the threshold Business Unit Compensation Adjusted EBITDA level for the applicable business unit had to be achieved in order for the business unit level participant to earn an MIP bonus. The plan design was also heavily weighted towards performance above target. Performance at target yielded a payout of less than the full targeted bonus amount as outlined in the table below. Payout of the targeted bonus amount was only possible with performance above target.

 

 

 

 

 

 

 

 

 

 

 

2015 MIP Attainment and

 

 

 

Payout Design

 

 

 

Adjusted

 

 

 

EBITDA

 

 

    

Threshold

 

Target

 

Max

 

Performance Percentage of Target

 

95%

 

100%

 

120%

 

Payout Percentage of Target

 

50%

 

75%

 

200%

 

 

For the 2015 MIP, each performance component of the MIP and the overall MIP award was capped at 200%. Results between points are interpolated.

 

2015 MIP Performance Targets and Performance

 

The Compensation Committee established 2015 MIP performance targets for the Named Executive Officers based on the applicable performance metrics and the Company’s approved annual operating plan, taking into consideration the Company’s aspirational business and strategic goals. Successful attainment is achievable only if the Company or the business unit, as applicable, performs at the established levels.  Goals are set to be attainable but yet to stretch an executive officer to perform at a high level.

 

2015 Target MIP Award Percentage of Base Salary

 

The following table shows the performance metric and target award percentage of base salary for each Named Executive Officer under the 2015 MIP.

 

 

 

 

 

 

 

 

 

    

 

    

Target

 

 

 

 

Award

 

 

 

 

Percentage

 

 

 

 

of Base

Named Executive Officer(1)

 

Metric

 

Salary

Tony W. Hunter

 

Corporate Compensation Adjusted EBITDA, Business Unit Compensation Adjusted EBITDA, Print Revenue and Digital Revenue

 

100%

 

 

 

 

 

Timothy E. Ryan(2)

 

Corporate Compensation Adjusted EBITDA, Business Unit Compensation Adjusted EBITDA, Print Revenue and Digital Revenue

 

100%

 

 

 

 

 

John H. Griffin, Jr.

 

Corporate Compensation Adjusted EBITDA, Net Income, Unlevered Free Cash Flow

 

100%

 

 

 

 

 

Sandra J. Martin

 

Corporate Compensation Adjusted EBITDA, Net Income, Unlevered Free Cash Flow

 

75%

 

 

 

 

 

Denise Warren(3)

 

Corporate Compensation Adjusted EBITDA, Business Unit Adjusted EBITDA, Print Revenue and Digital Revenue (above guaranteed amount)

 

100%

(1)  Mr. Bode is not included because his employment terminated in January 2015. Mr. Beutner, who had a 100% of salary target award, is not included because his employment terminated in September 2015.

(2)  Pursuant to Mr. Ryan’s employment agreement, his bonus was prorated based on the period he was employed by the Baltimore Sun business unit and the Los Angeles Times business unit and determined based on the results of the Baltimore Sun business unit at a 60% of salary target award and the Los Angeles Times business unit at a 100% of salary target award.

(3)  Pursuant to Ms. Warren’s employment agreement, she was entitled to a minimum incentive amount for 2015 equal to 75% of her target bonus pro-rated for her 2015 service.

36


 

 

Actual 2015 MIP Awards

 

In determining 2015 MIP awards, the Compensation Committee based the calculations on the MIP performance targets established by the Committee. The percentage of target performance for each applicable Named Executive Officer based on financial performance is shown in the table above.

 

In March 2016, the Compensation Committee determined the 2015 MIP awards for each of Messrs. Griffin, Hunter and Ryan and Ms. Martin based on the actual performance of the Company or the applicable business unit as described below. In determining Corporate Compensation Adjusted EBITDA achievement, the Compensation Committee included the results of The San Diego Union-Tribune, which was acquired in 2015, only to the extent that the threshold Corporate Compensation Adjusted EBITDA level of $145.7 million would be achieved. In determining the payout amount for Mr. Ryan, who changed business units during 2015 in connection with his promotion, the Compensation Committee based his 2015 MIP award on the financial results of each of the applicable individual business units, prorated based on his period of service at each business unit.

 

The target goals, actual performance achieved and percentage of target bonus awarded to Mr. Griffin and Ms. Martin are reflected in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Target

 

 

Achievement

 

 

 

 

 

 

(millions)

 

 

(millions)

 

Payout %

 

Compensation Adjusted EBITDA

 

$

160.0

 

$

156.1

 

50

 

Net Income

 

$

37.6

 

$

38.3

 

84

 

Unlevered Free Cash Flow

 

$

85.1

 

$

88.0

 

118

 

 

The target goals, actual performance achieved and percentage of target bonus awarded to Mr. Ryan attributable to the Los Angeles Times business unit results are reflected in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prorated

Target

 

 

Achievement

 

 

 

 

 

 

(millions)

 

 

(millions)

 

Payout %

 

Compensation Adjusted EBITDA

 

$

29.5

 

$

30.7

 

94

 

Print Revenue

 

$

88.7

 

$

94.8

 

144

 

Digital Revenue

 

$

24.7

 

$

18.6

 

0

 

 

The target goals, actual performance achieved and percentage of target bonus awarded to Mr. Ryan attributable to the Baltimore Sun business unit results are reflected in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prorated

Target

 

 

Achievement

 

 

 

 

 

 

(millions)

 

 

(millions)

 

Payout %

 

Compensation Adjusted EBITDA

 

$

18.8

 

$

20.0

 

110

 

Print Revenue

 

$

89.3

 

$

87.0

 

95

 

Digital Revenue

 

$

12.2

 

$

11.5

 

0

 

 

The target goals, actual performance achieved and percentage of target bonus awarded to Mr. Hunter attributable to the Chicago Tribune business unit results are reflected in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Target

 

 

Achievement

 

 

 

 

 

 

(millions)

 

 

(millions)

 

Payout %

 

Compensation Adjusted EBITDA

 

$

86.9

 

$

82.6

 

31

 

Print Revenue

 

$

453.7

 

$

436.1

 

51

 

Digital Revenue

 

$

62.8

 

$

56.1

 

0

 

 

The Compensation Committee recognized that Mr. Hunter led an initiative to achieve significant expense savings in 2015, which was a key corporate initiative. The Compensation Committee wanted to award a special bonus to Mr. Hunter to acknowledge his leadership and significant efforts in achieving such key corporate initiative. Accordingly, in March 2015, the Compensation Committee awarded Mr. Hunter an additional bonus in the amount of $100,000.

37


 

 

2015 MIP awards for the Named Executive Officers are included in the 2015 Summary Compensation Table below in the “Non‑Equity Incentive Plan Compensation” column. The Corporate Initiative Award is included in the 2015 Summary Compensation Table below in the “Bonus” column.

 

Long‑Term Incentive Awards Program

 

The Company’s long‑term incentive award program for senior executives has two components, each of which directly tied long‑term compensation to long‑term value creation and stockholder return:

 

·

Restricted stock unit awards, and

 

·

Non‑qualified stock option awards.

 

In March 2015, the Compensation Committee awarded restricted stock units and non‑qualified stock options to Messrs. Griffin, Hunter, Ryan and Beutner and Ms. Martin. With respect to Messrs. Griffin and Beutner, the value and mix of their respective awards were based on the terms of their respective employment agreements. With respect to Messrs. Hunter and Ryan and Ms. Martin, the value of the awards granted by the Compensation Committee was based on the recommendation of the Company’s Chief Executive Officer.

 

In June 2015, the Compensation Committee awarded restricted stock units and non-qualified stock options to Ms. Warren in connection with her joining the Company. The value and mix of her award was based on the terms of her employment agreement.

 

Restricted Stock Unit Component

 

Grants of restricted stock units provide Named Executive Officer with stock ownership of unrestricted shares after the restriction lapses. Executive officers received restricted stock unit awards in 2015 because, in the judgment of the Compensation Committee and based on management recommendations, these individuals were in positions most likely to assist in the achievement of the Company’s long‑term value creation goals and to create stockholder value over time. The Compensation Committee reviewed all proposed grants of restricted stock units for executive officers prior to award, including awards contemplated for new executive officers as part of employment offers.

 

Key elements of the 2015 restricted stock unit program were:

 

·

Restricted stock units 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 restricted stock units. Vested restricted stock units are settled in shares.

 

·

Restricted stock units are subject to a four‑year restriction period and will vest in four equal installments on March 1, 2016, 2017, 2018 and 2019.

 

In certain cases, such as for new hires or to facilitate retention, selected employees may receive restricted stock units 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 2015 non‑qualified stock option program were:

 

·

The option exercise price of stock options awarded was the NYSE closing price of the Company’s common stock on the date the award was approved by the Compensation Committee.

 

·

The options will vest in four equal annual installments on March 1, 2016, 2017, 2018 and 2019.

 

·

Options cannot be exercised prior to vesting.

 

·

The options expire seven years after the grant date.

38


 

 

·

The Omnibus Incentive Plan prohibits the repricing of, or exchange of, stock options that are priced below the prevailing market price with lower‑priced stock options without stockholder approval.

 

The following table provides an overview of some of the main characteristics of restricted stock units and non‑qualified stock options.

 

 

 

 

Restricted Stock Units

    

Non‑Qualified Stock Options

A restricted stock unit award is a promise to deliver to the recipient, upon vesting, shares of the Company’s common stock.

 

Non‑qualified stock options provide the opportunity to purchase the Company’s common stock at a specified price called the “exercise price” at a future date.

 

 

 

Holders of restricted stock units 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 restricted stock units.

 

Stock option holders do not receive dividends on shares underlying options and cannot vote their shares.

 

 

 

Restricted stock units have intrinsic value on the day the award is received and retain some realizable value even if the share price declines during the restriction period, so each provides strong employee retention value.

 

Non‑qualified stock options increase focus on activities primarily related to absolute share price appreciation. The Company’s non‑qualified stock options will expire seven years after their grant date. If the value of the Company’s common stock increases and the optionee exercises his or her option to buy at the exercise price, the optionee receives a gain in value equal to the difference between the option exercise price and the price of the stock on the exercise date. If the value of the Company’s common stock fails to increase or declines, the stock option has no realizable value. Stock options provide less retention value than restricted stock units because stock options have realizable value only if the share price appreciates over the option exercise price before the options expire.

 

 

The Compensation Committee determined allocations among restricted stock units and non‑qualified stock options based on the view that a balanced award of restricted stock units and non‑qualified stock options provides a combination of incentives for absolute share price appreciation. The Compensation Committee selected vesting terms for restricted stock units and stock options taking into consideration the historical vesting terms of equity awards granted by TCO.

 

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 Compensation Committee has adopted non‑binding severance guidelines for employees, including executive officers who do not otherwise have an employment agreement. In connection with the separation of Mr. Bode in January 2015, we entered into a separation agreement that provided for a specified severance payment. The severance‑related terms of the employment agreements with the Named Executive Officers, the severance guidelines, and Mr. Bode’s separation agreement are described in more detail in “Named Executive Officer Compensation—Potential Payments Upon Termination or Change in Control.” In addition, in February 2016, the outstanding restricted stock units and stock options held by Ms. Martin, Messrs. Hunter, Ryan and Griffin, and Ms. Warren were amended to provide for full acceleration of the unvested shares in the event of a termination of employment without cause following a change in control as defined in their respective employment agreements.

 

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. In connection with the employment agreement entered into with Mr. Beutner when he was hired, he negotiated a personal allowance which is described more fully in “Named Executive Officer Compensation—Summary Compensation Table” and the related narrative.

 

39


 

Recoupment Policy

 

The Company has an Executive Compensation Clawback Policy that provides for recoupment of performance‑based compensation in the event of a restatement of the Company’s financial statement. This would include any performance‑based cash incentive and bonus awards and performance‑based equity compensation. If the Compensation Committee determines that the amount of any performance‑based compensation actually paid or awarded to the executive officer would have been a lower amount had it been calculated based on the restated financial statement, the Compensation Committee may, to the extent permitted by applicable law, seek recoupment from that executive officer of such excess amount of compensation previously paid or awarded after a review of all relevant facts and circumstances. The Named Executive Officers are covered by this policy.

 

Consideration of Tax and Accounting Impacts

 

The Compensation Committee considers tax and accounting implications in designing the Company’s compensation programs. However, the Compensation 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 Compensation 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 restricted stock units. The use of such restricted stock units mitigates the potential risk that stock options might otherwise pose to risk taking in the short term. Restricted stock units 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. Secondly, under the 2015 MIP, an individual target 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 his base salary. Accordingly, our overall compensation structure is not overly‑weighted toward short‑term incentives, and the Compensation 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 COMMITTEE REPORT

 

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis with management, and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors of the Company that the Compensation Discussion and Analysis be included in this proxy statement.

 

The Compensation Committee

 

Ellen Taus, Chairperson

David E. Dibble

Renetta McCann

40


 

NAMED EXECUTIVE OFFICER COMPENSATION

 

2015 Summary Compensation Table  

 

The following table shows for the fiscal year ended December 27, 2015, compensation earned by our former Chief Executive Officer, former Chief Financial Officers, the other three most highly compensated individuals who served as executive officers as of December 27, 2015, and the individuals who would have been among the most highly compensated executive officers if they had remained employed as of December 27, 2015 (collectively, the “Named Executive Officers”).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Non-Equity

    

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

Option

 

Incentive Plan

 

All Other

 

 

 

 

Name and Principal Position

    

Year

 

Salary

 

Bonus

 

Awards(1)