We are pleased to invite you to our Annual Meeting of Stockholders, which will be held on Wednesday, May 10, 2017, at 10:00 a.m. local time at Gannett’s
corporate headquarters, located at 7950 Jones Branch Drive, McLean, Virginia 22107.
Details regarding admission to the meeting and the business to be conducted are
more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. Please request a ticket in advance if you would like to attend the Annual Meeting. The Proxy Statement contains advance registration instructions.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we encourage you to vote by telephone, over the Internet or by signing, dating and
returning your proxy card by mail. You may also vote in person at the Annual Meeting.
On behalf of the Board of Directors and management, we extend our appreciation
for your support and interest in Gannett.
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PROPOSAL 3
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APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2015 OMNIBUS INCENTIVE COMPENSATION PLAN
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Summary of the 2015 Plan
not added back to the number of shares available for future awards. If any award under the 2015
Plan is terminated, surrendered, canceled or forfeited, or if an award is settled in cash, the unused shares of Company common stock covered by such award are again available for grant under the 2015 Plan, subject, however, in the case of incentive
stock options, to any limitations under the Internal Revenue Code.
Types of Awards.
The Committee may grant the following types of awards under the 2015
Plan: stock options; stock appreciation rights; restricted stock; stock awards; RSUs; performance shares; performance units; and cash-based awards. Each type of award is subject to a maximum limit on the grant that may be made to any one participant
in a fiscal year.
Stock Options.
A stock option is the right to purchase one or more shares of Company common stock at a specified price, as determined
by the Committee. The Committee may grant
non-qualified
stock options and incentive stock options. A stock option is exercisable at such times and subject to such terms and conditions as the Committee
determines. No more than 1,000,000 shares of Company common stock subject to stock options may be granted to any participant in a fiscal year. The exercise price of a stock option may not be less than 100% of the fair market value of a share of
Company common stock on the date that the option is granted. No option may remain exercisable beyond ten years after its grant date. Incentive stock options may only be granted to employees of the Company or its affiliates or subsidiaries (provided
that the affiliate or subsidiary is a type of entity whose employees can receive such options under the tax rules that apply to such awards), and the maximum number of shares that may be issued under incentive stock options cannot exceed 5,000,000.
Stock Appreciation Rights.
A stock appreciation right (“SAR”) is a right to receive an amount in any combination of cash or Company common
stock (as determined by the Committee) equal in value to the excess of the fair market value of the shares covered by such SAR on the date of exercise over the aggregate exercise price of the SAR for such shares. SARs may be granted freestanding or
in tandem with related options. The exercise price of a SAR granted in tandem with an option will be equal to the exercise price of the related option, and may be exercised for all or part of the shares covered by such option upon surrender of the
right to exercise the equivalent portion of the related option. The exercise price of a freestanding SAR may not be less than the fair market value of a share of Company common stock on the date the SAR is granted. No SAR may remain exercisable
beyond ten years after its grant date. No more than 1,000,000 shares of Company common stock may be granted in the form of SARs to any participant in a fiscal year.
Restricted Stock/Stock Awards.
Restricted stock is an award of Company common stock that is subject to a substantial risk of forfeiture for a period of time
and such other terms and conditions as the Committee determines. A stock award is an award of Company common stock that is not subject to such a risk of forfeiture, but which may be subject to such other terms and conditions as the Committee
determines. No more than 500,000 shares of Company common stock may be granted to any participant in a fiscal year pursuant to stock awards or awards of restricted stock.
RSUs.
A RSU is an award whose value is based on the fair market value of Company common stock and whose payment is conditioned on the completion of
specified service requirements and such other terms and conditions as the Committee may determine. Payment of earned RSUs may be made in a combination of cash or shares of Company common stock (as determined by the Committee). The maximum aggregate
grant of RSUs or performance shares that may be awarded to any participant in any fiscal year may not exceed 500,000 shares of Company common stock.
Performance
Units/Shares and Cash-Based Awards.
Performance Units/Shares and Cash Based Awards are other equity-type or cash-based awards that may be granted to participants. These awards may be valued in whole or in part by reference to, or are
otherwise based on, the fair market value of Company common stock or other criteria established by the Committee and the achievement of performance goals. These awards are subject to such terms and conditions as the Committee determines. Performance
goals may include a service requirement. Payment of earned performance units/shares and cash-based awards may be made in any combination of cash or shares of Company common stock (as determined by the Committee) that have an aggregate fair market
value equal to the value of the earned awards at the close of the applicable performance period. The maximum aggregate grant of performance shares or RSUs that may be awarded to any employee participant in any fiscal year may not exceed 500,000
shares of Company common stock. The maximum aggregate amount of performance units or cash-based awards that may be awarded to any employee participant in any fiscal year may not exceed $10,000,000.
Adjustments.
In the event of a change in the outstanding shares of Company common stock due to a stock split, stock dividend, recapitalization, merger,
consolidation,
spin-off,
reorganization, repurchase or exchange of Company common stock or other securities, or other corporate transaction or event, the Committee shall take certain actions to prevent the
dilution or enlargement of benefits under the 2015 Plan. These actions include adjusting (1) the number of shares of Company common stock that may be issued under the 2015 Plan (including the authorized share limitations); (2) the number of
shares or price of shares subject to outstanding awards; and (3) the consideration to be paid upon the grant or exercise of any award.
Change in
Control.
Generally, in the event of a change in control of the Company, as defined in the 2015 Plan, unless otherwise specified in the award agreement, outstanding awards are not subject to accelerated vesting unless (a) they are not
continued or assumed in connection with the change in control or (b) the holder has a qualifying termination of employment, as defined in the applicable award agreement, within two years following the change in control. Unless otherwise
specified in the award agreement, if either condition described in (a) or (b) is satisfied, (1) all outstanding options and SARs will become immediately exercisable in full during their remaining term; (2) all restriction periods and
restrictions imposed on
non-performance
based restricted stock awards will lapse; (3) all outstanding awards of performance-based restricted stock, performance units and performance shares will vest and
be paid assuming achievement of all relevant target performance goals; (4) all RSUs will vest and be paid; and (5) all outstanding cash-based awards will vest and be paid (and, in the case of performance-based cash-based awards, based on
an assumed achievement of all relevant target performance goals).
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GANNETT CO., INC.
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2017 Proxy Statement
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17
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PROPOSAL 3
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APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2015 OMNIBUS
INCENTIVE COMPENSATION PLAN
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Summary of the 2015
Plan
Performance Measures/Section 162(m).
The 2015 Plan permits the Committee to
make awards that are intended to be exempt from the deduction limitations under Section 162(m) of the Internal Revenue Code because they satisfy the requirements of performance-based compensation. The 2015 Plan lists the performance measures the
Committee may use to make performance-based awards under Section 162(m). These performance measures include: (1) earnings per share (basic or diluted); (2) income before income taxes; (3) income from continuing operations; (4) net
income or net income attributable to the Company; (5) operating income; (6) cash flow from operating activities, operating cash flow (defined as operating income plus
non-cash
charges for
depreciation, amortization and impairment of operating assets) or free cash flow; (7) EBITDA, or net income attributable to the Company, before interest, taxes, depreciation/amortization; (8) return measures (including, but not limited to,
return on assets, equity, capital or investment); (9) cash flow return on investments, which equals net cash flows divided by owner’s equity; (10) internal rate of return or increase in net present value; (11) dividend payments;
(12) gross revenues; (13) gross margins; (14) operating measures such as trends in digital metrics, circulation, television ratings and advertising measures; (15) internal measures such as achieving a diverse workforce;
(16) share price (including, but not limited to, growth measures and TSR) and market value; and (17) debt (including, but not limited to, measures such as debt (book value or face value) outstanding and debt to earnings before interest,
taxes, depreciation and amortization). This wide range of potential performance goals is intended to ensure that the Company can readily adapt to changing business needs. The performance goals the Committee establishes for the performance measures
described above which are based on operating results will be adjusted to take into account the effects of “Extraordinary Items” unless the Committee determines otherwise at the time the performance goals are established. Under the 2015
Plan, “Extraordinary Items” include (a) items presented as such (or other comparable terms) on the Company’s audited financial statements, (b) unusual, special or nonrecurring charges, costs, credits or items of gain or
loss, (c) changes in tax or accounting laws or rules, or (d) the effects of mergers, acquisitions, divestitures, spin-offs or significant transactions (including, without limitation, a corporate merger, consolidation, acquisition of
property or stock, reorganization, restructuring charge, or joint venture), each of which are identified in the quarterly and/or annual audited financial statements and notes thereto or in the “Management’s Discussion and Analysis”
section of the Company’s periodic reports filed with the SEC.
Any of the above measures may be compared to peer or other companies. Additionally, performance
measures may be set either at the consolidated level, segment level, division level, group level, or the business unit level and performance measures may be measured either annually or cumulatively over a period of years, on an absolute basis or
relative to
pre-established
targets, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee.
Corporate Governance Provisions.
The 2015 Plan contains several other provisions intended to make sure that awards under the 2015 Plan comply with established
principles of corporate governance. These provisions include:
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No Discounted Stock Options or Stock Appreciation Rights.
Absent stockholder approval, stock options and stock appreciation rights may not be granted with an exercise price of less than the fair market value
of Company common stock on the date the stock option or stock appreciation right is granted.
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No Stock Option or Stock Appreciation Rights Repricings.
Stock options and stock appreciation rights may not be repriced absent stockholder approval. This provision applies to both direct
repricings—lowering the exercise price of an outstanding stock option or stock appreciation right—and indirect repricings—canceling an outstanding stock option or stock appreciation right and granting a replacement stock option or
stock appreciation right with a lower exercise price.
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No Evergreen Provision.
The 2015 Plan does not contain an “evergreen provision” (i.e., there is no automatic provision to replenish the shares of Company common stock authorized for issuance under
the 2015 Plan).
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No Cash Buyouts of Underwater Stock Options or Stock Appreciation Rights.
The 2015 Plan does not permit cash buyouts of underwater stock options or stock appreciation rights without stockholder approval.
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Minimum Vesting Period.
The 2015 Plan generally mandates a one year minimum vesting period for the total amount of shares subject to employee equity incentive awards that vest and are paid solely based on
service; provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one year: (1) in connection with terminations of employment due to death, disability, retirement or other circumstances
that the Committee determines to be appropriate; (2) in connection with a change in control in which the award is not continued or assumed (e.g., the awards are not equitably converted or substituted for awards of the successor company); (3)
for grants made in connection with an acquisition by the Company in substitution for
pre-existing
awards; or (4) for new hire inducement awards or off cycle awards.
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Substitute Awards and Adjusted Awards.
Substitute awards or adjusted awards may be granted under the 2015 Plan under certain circumstances such as a merger,
acquisition,
spin-off
or other corporate event, in which case certain of the limits and rules discussed above may not apply to such substitute or adjusted awards.
Transferability of Awards.
Except as otherwise provided in an award agreement, awards may not be sold, assigned, transferred, pledged or otherwise encumbered
by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution. Except as otherwise provided in an award agreement, during the life of the participant, awards are exercisable
only by the participant or such participant’s legal representative.
Provisions for Foreign Participants.
The Committee may modify awards granted to
participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the 2015 Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax,
securities, currency, employee benefits or other matters.
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18
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2017 Proxy Statement
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GANNETT CO., INC.
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PROPOSAL 3
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APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2015 OMNIBUS INCENTIVE COMPENSATION PLAN
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Federal Income Tax Aspects of the 2015 Plan
Amendment and Termination.
The Committee may amend or terminate the 2015 Plan at any
time, but no such amendment or termination may adversely affect in any material way the rights of a participant with respect to an outstanding award without that participant’s consent. No awards may be granted on or after 10 years from the date
the 2015 Plan was adopted. Stockholder approval is required for certain amendments to the 2015 Plan.
Federal
Income Tax Aspects of the 2015 Plan
This is a brief summary of the U.S. federal income tax aspects of awards that may be made under the 2015 Plan based on
existing U.S. federal income tax laws as of the date of this Proxy Statement. This summary provides only the basic tax rules and is not intended as, and should not be relied upon, as tax guidance for participants in the 2015 Plan. It does not relate
to the income tax circumstances of any individual participant or describe the implications, if any, of a number of special tax rules, including, without limitation, the alternative minimum tax, the golden parachute tax rules under Sections 280G and
4999 of the Internal Revenue Code, and foreign, state and local tax laws. In addition, this summary assumes that all awards are exempt from, or comply with, the rules under Section 409A of the Internal Revenue Code regarding non-qualified deferred
compensation. Changes to the tax laws could alter the tax consequences described below.
Incentive Stock Options.
The grant of an incentive stock option
will not be a taxable event for the participant or for the Company. A participant will not recognize taxable income upon exercise of an incentive stock option (except that the alternative minimum tax may apply), and any gain realized upon a
disposition of common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the participant holds the shares of common stock for at least two years after the date of grant and for one year
after the date of exercise (the “holding period requirement”). The Company will not be entitled to any business expense deduction with respect to the exercise of an incentive stock option, except as discussed below. For the exercise of an
option to qualify for the foregoing tax treatment, the participant generally must exercise the option while the participant is our employee or an employee of our subsidiary or, if the participant has terminated employment, no later than three months
after the participant terminated employment.
If all of the foregoing requirements are met except the holding period requirement mentioned above, the participant will
recognize ordinary income upon the disposition of the common stock in an amount generally equal to the excess of the fair market value of the common stock at the time the option was exercised over the option exercise price (but not in excess of the
gain realized on the sale).
The balance of the realized gain, if any, will be capital gain. The Company will generally be allowed a business expense deduction when
and to the extent the participant recognizes ordinary income, subject to the restrictions of Section 162(m) of the Internal Revenue Code.
Non-Qualified
Options.
The grant of a
non-qualified
stock option will not be a taxable event for the participant or the Company. Upon exercising a
non-qualified
option, a participant will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Upon a
subsequent sale or exchange of shares acquired pursuant to the exercise of a
non-qualified
option, the participant will have a taxable capital gain or loss, measured by the difference between the amount
realized on the disposition and the tax basis of the shares of common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised). Subject to the restrictions of Section 162(m) of
the Internal Revenue Code, the Company will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Stock Appreciation Rights.
There are no immediate tax consequences of receiving an award of stock appreciation rights under the 2015 Plan. Upon exercising a
stock appreciation right, a participant will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Subject to the restrictions of Section
162(m) of the Internal Revenue Code, the Company will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Restricted Stock/Stock Awards.
A participant who is awarded restricted stock will not recognize any taxable income for federal income tax purposes at the time
of grant, provided that the shares of common stock are subject to certain restrictions (that is, the restricted stock is nontransferable and subject to a substantial risk of forfeiture). However, the participant may elect under Section 83(b) of the
Internal Revenue Code to recognize ordinary income in the year of the award in an amount equal to the fair market value of the common stock on the date of the award (less the purchase price, if any), determined without regard to the restrictions. If
the participant does not make such a Section 83(b) election, the fair market value of the common stock on the date the restrictions lapse (less the purchase price, if any) will be treated as ordinary income to the participant and will be taxable in
the year the restrictions lapse. A participant who is awarded shares that are not subject to a substantial risk of forfeiture will recognize ordinary income equal to the fair market value of the shares on the date of the award. Subject to the
restrictions of Section 162(m) of the Internal Revenue Code, the Company will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
RSUs, Performance Units/Shares and Cash-Based Awards.
The taxation of these awards will depend on the specific terms of the award. Generally, the award of
RSUs, Performance Units/Shares and Cash-Based Awards will have no federal income tax consequences for the Company or for the participant. Generally, the payment of the award is taxable to a participant as ordinary income. Subject to the restrictions
of Section 162(m) of the Internal Revenue Code, the Company will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
The Board of Directors unanimously recommends that the stockholders of the Company vote FOR approval of the amendment to the 2015 Plan.
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GANNETT CO., INC.
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2017 Proxy Statement
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19
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
In this Compensation Discussion and Analysis, the term “Committee” refers to the Executive Compensation Committee of the Company’s Board of Directors, and
the term “NEOs” refers to the Company’s named executive officers, who for the 2016 fiscal year were:
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NAME
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TITLE
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Robert J. Dickey
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President and Chief Executive Officer
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Alison K. Engel
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Senior Vice President, Chief Financial Officer and Treasurer
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John M. Zidich
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President/US Domestic Publishing
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Sharon T. Rowlands(1)
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Chief Executive Officer of ReachLocal
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Joanne Lipman
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Senior Vice President and Chief Content Officer
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(1)
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Ms. Rowlands joined the Company as Chief Executive Officer of ReachLocal in connection with our acquisition of ReachLocal on August 9, 2016.
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Impact of the Separation and Recent Acquisitions on Our Executive Compensation Program
On June 29, 2015, the Company completed the legal and structural separation of the publishing business from its former parent, TEGNA, and became an independent
public company. The separation was effected by the distribution by TEGNA of 98.5% of the outstanding common stock of the Company to TEGNA’s stockholders. Until the completion of the separation, decisions regarding the compensation of our
officers were made primarily by our former parent’s compensation committee. In addition, our initial compensation programs following the separation were prescribed to a great extent by the terms of the Employee Matters Agreement that we entered
into with our former parent in connection with the separation. As a result, our executive compensation programs largely reflect the historical compensation philosophy and practices of our former parent and remain consistent in many respects with
programs in place at our former parent prior to the separation. Since the separation, we have been evaluating our executive compensation programs in light of our compensation guiding principles and expect our programs to evolve over time consistent
with those principles. For example, certain transitional executive benefit plans applicable to some of our NEOs that were adopted in connection with the separation were terminated.
In connection with the separation, several NEOs, including Mr. Dickey, Ms. Engel and Mr. Zidich, entered into letter agreements with the Company or the
Company’s former parent, as applicable, in contemplation of their service in executive roles with the Company following the separation. Ms. Lipman entered into a letter agreement with the Company when she joined the Company in December
2015. These agreements specified certain compensation payable to them for such service.
On August 9, 2016, we completed the acquisition of 100% of the
outstanding common stock of ReachLocal. In connection with the acquisition, the Company entered into a letter agreement with Ms. Rowlands that specified certain compensation payable to her for service as CEO of ReachLocal following the
acquisition. The terms of this agreement, as well as the agreements with Mr. Dickey, Ms. Engel, Mr. Zidich and Ms. Lipman mentioned above, are described under “Additional Information Regarding the Summary Compensation Table
and the Grants of Plan-Based Awards Table” on page 41 of this Proxy Statement.
Elements of the
Company’s Executive Compensation Program
The Company’s executive compensation program consists of the following core elements:
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ELEMENT
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COMPENSATORY OBJECTIVES
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Base
salaries
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Established at competitive levels reflecting the Company’s goal of retaining executives and rewarding them for their service based on the nature and responsibility of the position, the
executive’s achievement of key performance indicators, competitive market data and individual and Company performance
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Annual
cash-based incentive opportunities
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Designed to reward executives for attaining individual and Company qualitative and quantitative performance
goals
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Targets are established based on executives’ responsibilities and
competitive market data
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Payouts generally are based on the Company’s achievement of
specified financial goals and the Committee’s assessment of the executive’s achievement of individual strategic and Company culture goals
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Performance share awards
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Long-term equity incentives designed to retain senior executives, align their interests with those of stockholders and motivate them through an opportunity to earn shares of the
Company’s common stock based upon how the Company’s TSR over a three-year performance period compares to the TSRs of the companies in the Company’s TSR Peer Group (as defined below) over the same
period
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20
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2017 Proxy Statement
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GANNETT CO., INC.
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Compensation Governance
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ELEMENT
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COMPENSATORY OBJECTIVES
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RSU awards
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Long-term equity incentives intended to retain executives in a rapidly evolving business environment through the delivery of shares of the Company’s common stock upon continued
employment over a multi-year vesting period and to align their interests with those of stockholders by increasing executive stock ownership levels
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Employee benefits and limited perquisites
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Designed to provide our senior executives and their families with health, welfare and retirement benefits offered to other employees of the Company as well as limited executive benefits and
perquisites in some cases, in order to complement other compensation components and to help minimize distractions
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Post-termination pay programs
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The Company sponsors several other benefit plans, listed below, which are described in greater detail
beginning on page 34 of this Proxy Statement:
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the Gannett Retirement Plan (“GRP”), a
tax-qualified
defined benefit retirement plan;
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the Gannett 2015 Supplemental Retirement Plan (“SERP”), a
non-qualified supplemental executive retirement plan;
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the Gannett Co., Inc. 401(k) Savings Plan (“401(k) Plan”) a
tax-qualified
defined contribution plan;
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the Gannett Co., Inc. 2015 Deferred Compensation Plan
(“DCP”), a non-qualified deferred compensation plan;
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the Gannett Co., Inc. 2015 Change in Control Severance Plan, a
change-in-control
severance plan;
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the Gannett Co., Inc. Executive Severance Plan, an executive severance
plan; and
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certain other plans that provide post-termination benefits such as
retiree life insurance and medical coverage.
Except for the Gannett Co., Inc. Executive Severance
Plan and the Gannett Co., Inc. 2015 Change in Control Severance Plan, each of these plans was either assumed by the Company from the Company’s former parent in connection with the separation, or was newly created with terms and conditions that
generally mirror the terms of the similar program or plan retained by the Company’s former parent. As a result, benefits available to our executives under these programs and plans generally track those to which the executives were entitled
during their employment with the Company’s former parent. Taken together, the plans assist the Company in recruiting and retaining employees and in providing leadership stability and long-term commitment from its executives.
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Compensation Governance
COMMITTEE RESPONSIBILITIES
The Committee oversees the Company’s executive
compensation program and is responsible for:
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approving and evaluating the Company’s executive compensation plans, principles and programs;
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administering the Company’s 2015 Omnibus Incentive Compensation Plan and granting and approving annual and long-term incentive awards to senior executives;
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reviewing the Company’s compensation plans, policies and programs to confirm they do not encourage unnecessary or excessive risk-taking;
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reviewing and making recommendations to the Board regarding director compensation;
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reviewing and recommending for approval by all of our independent directors on an annual basis the corporate goals and objectives relevant to the compensation of the Company’s President and CEO; and
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reviewing and approving on an annual basis the corporate goals and objectives relevant to the compensation of the Company’s other senior executives.
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GUIDING PRINCIPLES
In making compensation decisions for our senior executives,
the Committee is guided by the following principles:
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Pay for performance
. The Committee places heavy emphasis on pay for performance and believes that substantial portions of each executive’s total compensation should be “at risk.”
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Attract, retain and motivate
. The Committee is committed to attracting and retaining superior executive talent by offering competitive target total compensation that rewards and motivates our senior executives to
enhance Company performance and ensure our overall success and long-term strength.
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Fairness
. The Committee believes that the compensation offered to our senior executives should be fair both to the executives and to our stockholders.
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GANNETT CO., INC.
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2017 Proxy Statement
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21
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Compensation Governance
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Promote stock ownership
. The Company is committed to fostering a compensation structure that aligns executives’ interests with those of its stockholders. As a key part of these alignment efforts, the
Committee expects each senior executive to acquire and maintain a meaningful level of investment in the Company’s common stock. The required levels of senior executive stock ownership are regularly reviewed by the Committee and approved by the
full Board. Senior executives are expected to increase their stock ownership until they reach a minimum guideline equal to a multiple of their annual base salary. The following table reflects the minimum guideline for the NEOs as of
December 31, 2016.
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EXECUTIVE
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MINIMUM GUIDELINE
MULTIPLE
OF BASE SALARY
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President and Chief Executive Officer
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5X
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Senior Vice President, Chief Financial Officer and Treasurer
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3X
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Other NEOs
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1.5X
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Pay competitively
. As a leader in our industry, the Company should award compensation that reflects our position in the market and is generally in line with that paid to executives holding similar positions at
peer and comparable companies.
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COMPENSATION-RELATED GOVERNANCE PRACTICES
The Board’s commitment to strong corporate governance practices extends to the compensation plans, principles, programs and policies established by the Committee.
The Company’s notable compensation-related governance practices and policies include the following:
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Performance-based pay
. The Company provides the majority of target total compensation for our NEOs in the form of performance-based compensation, and in furtherance of this guiding principle the Committee has
committed that for each year at least 50% of NEO annual equity awards (based on the target number of shares) will be performance-based awards that are earned or paid out based on achievement relative to performance targets. Ms. Rowlands’s
special compensatory arrangements negotiated in connection with her retention as CEO of ReachLocal following our acquisition of that company in August 2016 did not conform to this principle. See “Additional Information Regarding the Summary
Compensation Table and the Grants of Plan-Based Awards Table” on page 41 for additional information regarding these compensatory arrangements. However, her annual equity awards are expected to consist of at least 50% performance-based awards
going forward.
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•
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Outcome alignment
. Each year, the Committee reviews the Company’s compensation programs and financial results against annual quantitative and qualitative goals, internal budgets, financial results from prior
years and peer group market data to ensure that executive compensation outcomes are aligned with the relative performance of the Company and promote the Company’s overall strategic plan.
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•
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Clawback
. The Company’s clawback policy applies to the Company’s NEOs and all other officers subject to Section 16 of the Securities Exchange Act of 1934, and any individual who served as an
executive officer of the Company in the three-year period prior to the date of the event that triggered the clawback policy. The Board may apply the clawback policy in a number of situations, including where:
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•
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a financial restatement results from an executive’s misconduct;
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•
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an executive’s unsanctioned actions have a materially detrimental effect on the Company’s reported financial results; or
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•
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an executive is terminated following a felony conviction that directly and materially harms the Company’s business or reputation.
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If the clawback policy is applied to an executive, the Board (or designated Board committee) may require the reimbursement and/or forfeiture of certain
bonus, incentive or equity-based compensation awarded by the Company and vested or paid to the executive, with the amounts and periods for the clawback depending on the reason for the application of the policy.
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•
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No income tax
gross-ups
. The Company does not offer income tax
gross-ups
except in our executive housing and relocation programs.
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•
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No hedging, short-selling or pledging
. The Board maintains a policy that prohibits the Company’s employees and directors from hedging, pledging or short-selling the Company’s shares.
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•
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Risk evaluation
. The Committee regularly evaluates the risks associated with the Company’s executive compensation plans and programs and considers the potential relationship between compensation and risk
taking.
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•
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TSR peers
. The Committee annually reviews the Company’s TSR Peer Group in connection with new grants and adjusts it as needed to ensure it accurately reflects the Company’s business and competitors.
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•
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No unearned dividends
. The Company does not pay dividends or dividend equivalents on unearned TSR performance shares or unpaid RSUs granted to employees.
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22
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2017 Proxy Statement
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GANNETT CO., INC.
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How the Committee Determines NEO Compensation
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•
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Minimum vesting periods
. The 2015 Plan mandates a
one-year
minimum vesting period for the total amount of shares subject to employee equity incentive awards that vest and
are paid solely based on service, provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one year: (1) in connection with terminations of employment due to death, disability, retirement
or other circumstances that the Committee determines to be appropriate; (2) in connection with a change in control in which the award is not continued or assumed (e.g., the awards are not equitably converted or substituted for awards of the
successor company); (3) for grants made in connection with an acquisition by the Company in substitution for
pre-existing
awards; or (4) for new hire inducement awards or off cycle awards.
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•
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Holding periods
. The Company’s ownership guidelines require that senior executives hold at least 50% of the
after-tax
shares they receive from the Company as
compensation until they have met the applicable stock ownership guidelines.
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•
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Moderate severance arrangements
.
Change-in-control
related cash severance is double-trigger and market-level.
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•
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No excise tax
gross-ups
. In accordance with the Company’s
change-in-control
severance
plans, executives are not eligible for an excise tax
gross-up.
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•
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Double-trigger equity vesting upon a change in control
. For awards granted on or after January 1, 2016, a change in control of the Company will only accelerate full vesting of equity awards to executives if
the awards are not continued or assumed (e.g., the awards are not equitably converted or substituted for awards of the successor company) in connection with the change in control or if the recipient has a qualifying termination of employment within
two years following the date of the change in control.
|
How the Committee Determines NEO
Compensation
The Committee determines overall NEO compensation (including with respect to base salary, annual incentives, long-term incentives and other
compensation) in its sole discretion based on its business judgment, informed by the experience of the Committee members, input from the Committee’s independent consultant, the Committee’s assessment of the NEOs and the Company’s
performance and achievement of its strategic plan. While the Committee takes management recommendations and comparative peer group market data into account when determining NEO compensation, the Committee relies primarily on its collective judgment
of the performance of the Company and the NEOs in light of the challenges confronting our core businesses and our progress toward achieving our strategic plan. In making decisions with respect to NEO compensation, the Committee generally focuses on
what it considers to be value-added quantitative and qualitative goals in furtherance of our compensation guiding principles described under “—Compensation Governance—Guiding Principles” above. In addition, in connection with
2016 annual bonus determinations, the Committee focused on the specific objectives and financial metrics described below under “—Annual Cash Bonuses.”
FACTORS CONSIDERED BY THE COMMITTEE
Key Performance Indicators
(“KPIs”)
.
The Committee uses KPIs as a key evaluation tool for making NEO compensation decisions generally. KPIs consist of individually designed qualitative and quantitative goals organized around individual, operating
unit and/or Company performance in the areas of profit, product and people. Quantitative KPIs include, where appropriate, revenue, adjusted EBITDA, and digital goals for the Company and the respective divisions and functions over which each NEO has
operational or overall responsibility. Qualitative KPIs include, where appropriate, measures of leadership, innovation, collaboration, new products and programs in support of the Company’s strategic plan, Company culture and diversity
initiatives, First Amendment activities, and other significant qualitative objectives. The CEO’s KPIs are heavily weighted toward the Company’s financial performance, TSR, and the execution of a strategic plan that positions the Company
for the future.
Financial Measures
.
In making NEO compensation decisions generally, the Committee also considers a variety of Company financial
measures, such as those specified in our 2015 Plan. In assessing these financial measures, the Committee compares them to management budgets approved by the Board at the beginning of the year and the Company’s financial results from prior
years. The Committee considers these measures broad enough to capture the most significant financial aspects of an organization of our size and structure yet also focused enough to represent the financial measures that we believe drive our financial
and strategic success. The Committee generally gives no one measure greater weight than the others, except that the Committee focused substantially on budgeted Adjusted EBITDA and digital revenue metrics in making annual bonus determinations for
2016 as described below under “—Annual Cash Bonuses.”
Qualitative Considerations
.
In addition, the Committee evaluates the
Company’s progress with respect to its strategic and culture goals, including expanding the Company’s footprint, transforming to digital, leadership in defending the First Amendment, promoting an ethical Company work environment and
diverse workforce, and maintaining its reputation as a good corporate citizen of the local, national and international communities in which it does business. These considerations factor into NEO compensation decisions overall, and many were
specifically incorporated into the Committee’s decision-making process for determining 2016 bonuses.
Comparative Market Data.
The Company
compares its NEO salaries, bonuses and equity compensation to those of public companies in the media and digital sectors, as well as other companies with comparable revenues, in order to obtain a general understanding of the compensation structures
maintained by similarly situated companies and to confirm that the elements of our compensation program are appropriate in the context of the broad market reference points provided by the Comparative Market Data described below. The Company does
not, however, target elements of compensation to a certain range, percentage or percentile within the Comparative Market Data.
To that end, in October 2015,
management provided the Committee with a report that, among other things, outlined current executive compensation trends and practices and compared each executive’s compensation against compensation of similar officers at market, industry
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GANNETT CO., INC.
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2017 Proxy Statement
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23
|
Base Salary
and
revenue-size
peer companies drawn from the following
surveys (which ranged from broad-based to industry-specific): Towers Watson Media Compensation Survey, the Towers Watson General Industry Executive Compensation Survey, the Empsight General Industry Survey, Equilar’s General Industry Survey
(scoped for role) and ERIXA’s General Industry Survey (scoped for role) (collectively, “Comparative Market Data”). The Committee reviewed this information and used it in its decisions affecting the 2016 base salaries, target annual
bonus and long-term equity awards granted to executives on January 1, 2016.
Say-on-Pay
Results and Stockholder Engagement Efforts.
In evaluating executive
compensation programs, policies and practices, and in making decisions impacting 2016 NEO compensation, the Committee noted that the Company’s existing executive compensation program has been well received by stockholders. At the Company’s
2016 annual meeting of stockholders, approximately 95% of the votes cast were in favor of the Company’s
Say-on-Pay
proposal. The Committee will continue to consider
the outcome of upcoming
Say-on-Pay
votes when making future NEO compensation decisions.
The Company is committed to the interests of its stockholders and recognizes that communicating with stockholders on a regular basis is a critical component of the
Company’s corporate governance program. As part of this commitment, the Company actively engages with its stockholders in order to fully understand their viewpoints concerning the Company, to garner feedback on what the Company can do better
and to help stockholders understand Company performance and strategy. In addition to answering questions from stockholders on its quarterly earnings calls, management regularly engages with investors by participating in industry media conferences.
Management also meets in person and by telephone with many stockholders at other times throughout the year to solicit input and answer questions on a variety of topics. Where these discussions yield significant feedback, it is shared with the Board
so that the Committee can consider it when reviewing the Company’s executive compensation program.
The Company also has a policy that all directors attend the
Annual Meeting of Stockholders, which presents stockholders the ability to interact with the Board at the Annual Meeting. For those who are unable to attend any of our investor meetings, transcripts of all management presentations are available on
our website at www.gannett.com. Any stockholder who has an inquiry or meeting request is invited to contact Michael Dickerson, Vice President of Investor Relations, at
703-854-6185.
Base Salary
Base salaries compensate senior executives for service in their executive roles and are set based on the following factors:
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the nature and responsibility of the position;
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•
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the achievement of KPIs, both historically and in the immediately prior year;
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•
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internal pay equity among positions; and
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•
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Comparative Market Data (as described above under “—Comparative Market Data”).
|
On an annual basis, the
Committee reviews and considers changes to each senior executive’s base salary in light of the factors described above, changes in the executive’s position or responsibilities, and the executive’s tenure in his or her current
position. In respect of 2016, the Committee approved the following base salary changes for our NEOs (other than Ms. Lipman, who joined the Company in December 2015, and Ms. Rowlands, who joined the Company during 2016), which became effective
January 1, 2016 and remained in effect until December 31, 2016. The Committee approved these base salary changes in order to maintain compensation at a level it views as competitive with industry and market peers in our Comparative Market
Data set, as well as in light of each NEO’s individual performance and contributions during 2015.
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NAME
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|
ANNUALIZED BASE
SALARY AS OF
12/31/2015
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ANNUALIZED BASE
SALARY AS OF
1/1/2016
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CHANGE (%)
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CHANGE
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Mr. Dickey
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$895,000
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$925,000
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3.4%
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$30,000
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Mr. Zidich
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$600,000
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$625,000
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4.2%
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$25,000
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Ms. Engel
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$480,000
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$505,000
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5.2%
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$25,000
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Ms. Lipman
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$500,000
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$500,000
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N/A
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N/A
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Ms. Rowlands
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(1)
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(1)
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N/A
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N/A
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(1)
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In connection with our acquisition of ReachLocal on August 9, 2016, the Company entered into a letter agreement with Ms. Rowlands that specified, among other matters, that her annual base salary following the
acquisition initially would be $550,000.
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The “Summary Compensation Table” on page 38 of this Proxy Statement reports the 2016 base
salary earned by each NEO for the entire year.
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24
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2017 Proxy Statement
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GANNETT CO., INC.
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Annual Cash Bonuses
Annual Cash Bonuses
In
2016, our senior executives other than Ms. Rowlands participated in the Company’s annual cash bonus program, which offered an incentive opportunity linked to attainment of certain annual financial goals of the Company, as well as the
Committee’s assessment of each officer’s individual contributions relative to Company-wide strategic and cultural objectives. Because bonuses generally are designed to reflect Company and individual performance during the year, they can
vary significantly in amount from year to year. Ms. Rowlands’s bonus for 2016 was determined pursuant to ReachLocal’s annual incentive program, which provided an incentive opportunity based upon ReachLocal’s attainment of
specified financial goals. The manner in which the Committee determined bonus targets and actual payout amounts for 2016 is described below.
ANNUAL BONUS TARGETS
The Committee, in consultation with its independent compensation consultant, generally approves
annual bonus targets for our senior executives, which are
developed and recommended by our President and CEO. These targets are calculated by multiplying each executive’s base salary by a target percentage, which takes into account:
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the nature and responsibility of the position;
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•
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internal pay equity among positions;
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•
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each executive’s particular experience and knowledge base; and
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•
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Comparative Market Data (as described above under “—Comparative Market Data”), which indicated that the 2016 bonus targets were generally in line with those disclosed by the comparator group.
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In addition, as described under “Additional Information Regarding the Summary Compensation Table and the Grants of Plan-Based Awards Table”
on page 41 of this Proxy Statement, the Company entered into a letter agreement with Ms. Rowlands that specified that her target bonus for 2016 would be 120% of her base salary.
Based on the foregoing, the 2016 bonus targets for each NEO were approved by the Committee as follows:
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NAME
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2016
ANNUALIZED
BASE SALARY
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TARGET
BONUS AS
PERCENTAGE OF
BASE SALARY
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2016 TOTAL
TARGET
ANNUALIZED
BONUS
OPPORTUNITY(1)
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Mr. Dickey
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$925,000
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125%
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$1,156,250
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Mr. Zidich
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$625,000
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75%
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$468,750
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Ms. Engel
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$505,000
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75%
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$378,750
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Ms. Lipman
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$500,000
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65%
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$325,000
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Ms. Rowlands(2)
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$550,000
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120%
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$660,000
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(1)
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For each NEO other than Ms. Rowlands, the total target bonus opportunity represented an opportunity to earn a bonus based upon the Company’s achievement of annual financial goals and the officer’s
achievement relative to individual performance and culture goals, as follows:
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•
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The portion of Mr. Dickey’s annual bonus tied to the Company’s achievement of financial goals was 70% of his total target bonus. For Mr. Zidich, Ms. Engel and Ms. Lipman, the portion of
each officer’s annual bonus tied to the Company’s achievement of financial goals was 60%.
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•
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The portion of Mr. Dickey’s bonus tied to individual performance and culture goals was 30% of his total target bonus. For Mr. Zidich, Ms. Engel and Ms. Lipman, the portion of each officer’s
annual bonus tied to individual performance and culture goals was 40%.
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See “—Annual Bonus Determinations” below for
information on the financial goals and the
non-financial
individual performance and culture goals on which actual bonus amounts were based.
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(2)
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For Ms. Rowlands, whose 2016 bonus was determined in accordance with ReachLocal’s annual incentive program, 100% of her bonus was based on achievement of ReachLocal financial goals. Ms. Rowlands’s
annual bonus target was fixed at the amount set forth in her letter agreement with the Company executed in connection with the acquisition of ReachLocal on August 9, 2016. Also pursuant to her letter agreement, Ms. Rowlands’s annual
bonus target will be reduced to 75% starting with the 2017 bonus period in order to promote internal pay equity among positions.
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GANNETT CO., INC.
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2017 Proxy Statement
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25
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Annual Cash Bonuses
ANNUAL BONUS DETERMINATIONS
In making final 2016 bonus determinations, the Committee evaluated the performance of each executive officer other than Ms. Rowlands against certain Company-wide
financial performance goals, as well as strategic and culture goals specific to the executive. Our CEO’s strategic and culture goals were approved by the Committee, and the strategic and culture goals of each other NEO (aside from
Ms. Rowlands) were developed by our CEO in collaboration with such NEO. Each element of an executive’s annual bonus was evaluated and earned independently of the others; the Company’s success or failure in achieving one or more of its
financial performance goals had no impact on whether an executive was determined to achieve and receive a payment in respect of the executive’s strategic or culture goals, or vice versa.
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BONUS WEIGHTING
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BONUS ELEMENT
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•
70% (for CEO)
•
60% (for other NEOs)
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Company Financial
Performance Goals
•
Of the portion of the annual bonus tied to Company financial
performance, 75% was determined based on the Company’s performance relative to a budgeted Adjusted EBITDA target of $324.6 million, with no payout below 75% of target ($243.4 million), 50% payout upon achieving 75% of target, 100% payout
upon achieving target and 150% payout upon achieving 120% or more of target ($389.5 million). Payouts for performance between 75% and 120% of target were calculated based on straight-line interpolation. The budgeted Adjusted EBITDA target was
determined in February 2016 based on the Company financial plan approved by the Board at that time. All contributions to Adjusted EBITDA made by businesses acquired during the 2016 fiscal year were excluded for purposes of determining whether the
budgeted Adjusted EBITDA target was achieved.
For these purposes, budgeted
Adjusted EBITDA was defined as the Company’s earnings before interest, taxes, depreciation and amortization, excluding items deemed to be “one time” in nature that impacted the comparability of our financial results, and reflecting
the following further adjustments: (1) pension expense was fixed at the budgeted amount approved in February 2016, resulting in the exclusion of variances to budgeted pension expense occurring during the year; (2) medical expense was fixed
at the budgeted medical expense approved in February 2016, resulting in the exclusion of variances due to higher claims during the year; and (3) Newsquest’s contribution to Adjusted EBITDA was calculated at the budgeted exchange rate of
1.50 USD to GBP approved in February 2016, eliminating the impact of exchange rate fluctuations during the year.
•
The remaining 25% portion of the annual bonus tied to Company
financial performance was determined based on the Company’s performance relative to a digital revenue target of $454.2 million, with no payout below 75% of target ($340.6 million), 50% payout upon achieving 75% of target, 100% payout upon
achieving target and 150% payout upon achieving 120% or more of target ($545.0 million). Payouts for performance between 75% and 120% of target were calculated based on straight-line interpolation. As with the Adjusted EBITDA described above,
digital revenue contributions from businesses acquired during the 2016 fiscal year were excluded for purposes of determining whether the digital revenue target was achieved.
For these purposes, digital revenue was defined as the Company’s revenue from digital advertising plus its revenue from digital-only
subscriptions. Digital advertising revenue includes revenues earned by selling display and video advertising on desktop and mobile platforms as well as classified revenues earned through sales on third party platforms. It also includes revenues
generated through email advertising, directories, digital syndication, archives, third party partners and various digital-related products. Digital-only subscriptions revenue includes revenue earned through the purchase of digital-only newspaper
subscriptions on desktop, mobile web or native applications (for Domestic Publishing only), but excludes revenues generated by
e-editions
(Kindle, Nook, etc.) and certain digital circulation revenues. In
calculating digital revenues for annual bonus purposes, Newsquest’s contribution to digital revenues was calculated at the budgeted exchange rate of 1.50 USD to GBP approved in February 2016.
Each executive’s 2016 payouts relating these components were determined solely based upon the
Company’s actual financial results relative to the financial performance goals.
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•
15% (for CEO)
•
25% (for other NEOs)
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Contributions to the Company’s
Strategic Pillars
The Company’s overall strategic plan centers around the following
seven strategic pillars:
•
Unified Culture
•
Expand Footprint
•
Nationwide News
•
Optimize Existing Assets
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26
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2017 Proxy Statement
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GANNETT CO., INC.
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Annual Cash Bonuses
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BONUS WEIGHTING
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BONUS ELEMENT
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•
Lead with
Digital
•
World Class Data
•
New Business
This portion of each NEO’s bonus was determined based upon the Committee’s assessment of
the executive’s performance against KPIs specific to the executive relating to the advancement of one or more of the strategic pillars. Examples of such KPIs include, among others: executing on our local market acquisition strategy; executing
on the USA TODAY NETWORK concept and branding; creating a digital product and sales environment that improves the Company’s revenue trend; identifying and implementing ways to reduce business unit costs; and similar objectives specific to each
executive’s areas of responsibility. This portion of each NEO’s bonus could payout at a maximum of 150% of target.
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•
15% (for CEO)
•
15% (for other NEOs)
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Contributions to the Company’s
Culture
This portion of each NEO’s bonus was determined based upon the Committee’s
assessment of the executive’s performance against KPIs specific to the executive relating to the executive’s contribution to the Company’s culture. Examples include, among others: modeling inclusive values and behaviors; enhancing
effective communication with employees; working to improve employee engagement; developing key employee retention plans; and building departments to mirror our communities by encouraging and promoting diversity. Developing and fostering an
innovative and collaborative culture is integral to our transformation journey and transition to digital. This portion of each NEO’s bonus could payout at a maximum of 150% of target.
|
In accordance with the foregoing, the Committee determined the 2016 bonus amount for each NEO other than Ms. Rowlands based upon the
following considerations:
Company Financial Performance for Purposes of Calculating Annual Bonuses.
Adjusted EBITDA was approximately $319.9 million and
digital revenue was approximately $416.0 million for 2016, resulting in 97% funding relative to target for the portion of each executive’s bonus tied to Adjusted EBITDA, 83% funding relative to target for the portion of each
executive’s bonus tied to digital revenue, and 94% funding on a blended basis relative to target for the entire portion of each executive’s bonus tied to financial performance.
Contributions to Strategic Pillars
. Below are several ways in which the Company continued to execute on its strategy, including: further expanding its footprint by
making strategic acquisitions in a consolidating industry; continuing to unite the Company’s local to national news organization under the USA TODAY NETWORK; optimizing our use of existing assets; and developing, innovating and investing in
digital media technologies to grow digital revenues. As discussed above, however, the Committee ultimately determined this portion of each executive officer’s bonus based upon the executive’s performance against strategic KPIs specific to
the executive.
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•
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Journal Media Group
. In line with the Company’s strategy of consolidating the publishing industry and increasing scale under the USA TODAY NETWORK, on April 8, 2016 we completed the acquisition of 100%
of the outstanding common stock of Journal Media Group for approximately $260.6 million in cash, net of cash acquired. The acquisition expanded our print and digital publishing operations domestically. Journal Media Group has print and digital
publishing operations serving 15 domestic markets in nine states, including the
Milwaukee Journal Sentinel,
the
Knoxville News Sentinel,
and
The Commercial Appeal
in Memphis.
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•
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North Jersey Media Group
.
On July 6, 2016, we completed the acquisition of certain assets of North Jersey Media Group, which has print and digital publishing operations serving primarily the northern
New Jersey market. Its brands include such established names as
The Record (Bergen County)
and
The Herald
.
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•
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Golfweek
. On October 5, 2016, the Company acquired Golfweek, which has been an “Official Media Partner” of the PGA TOUR since 2012. Golfweek has been the leading producer of event programs for some
of golf’s biggest tournaments across the PGA TOUR, LPGA, PGA of America and United States Golf Association. This acquisition accelerates the Company’s efforts to become a leader in golf media.
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•
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Nationwide News
. The Company continued its transformation into one, integrated organization, uniting its local and national media brands under the USA TODAY NETWORK, to create the largest local to national media
network in the country. Following our 2016 acquisitions, the network is powered by an integrated and award-winning news organization with deep roots in 109 local communities, plus USA TODAY, more than 3,500 journalists and a combined reach of more
than 110 million unique online visitors monthly. We believe the vast portfolio of trusted local brands combined with USA TODAY position the USA TODAY NETWORK to deliver high quality content to more consumers than any other media organization in
the country. In addition, the network provides the opportunity for advertisers to scale their messages from hyper-local to national while reaching millions of consumers through a variety of platforms.
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Optimize Existing Assets
. The Company responded to continuing revenue challenges with commensurate cost reduction actions. For fiscal 2016, operating expenses (adjusted for acquisitions) were down
$227 million year-over-year. During the fourth quarter of 2016, the Company also implemented incremental headcount reductions with an annual impact of approximately $30 million, which largely will be realized in 2017.
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GANNETT CO., INC.
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2017 Proxy Statement
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27
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Annual Cash Bonuses
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•
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Lead with Digital
. Digital revenues were $779 million for 2016 (of which $162 million were attributable to 2016 acquisitions) and were $643 million for 2015 (of which $9 million were
attributable to 2015 acquisitions), representing an increase of 21.3% year-over-year. Unique digital visitors to the Company’s sites averaged 110 million per month in 2016, a year-over-year increase of 10%, according to comScore Media
Metrix. In addition, in furtherance of the Company’s transition to digital, on August 9, 2016 we completed the acquisition of 100% of the outstanding common stock of ReachLocal. The acquisition of ReachLocal is expected to accelerate our
digital transition by enabling us to offer
state-of-the-art
online marketing, digital advertising,
software-as-a-service,
and web presence products and solutions to our customers.
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Contributions to Company Culture
. In 2016, the Company’s core cultural values were promoted through many significant initiatives, including those described
below. However, the Committee ultimately determined this portion of each executive officer’s bonus based upon the executive’s performance against culture-related KPIs that were specific to the executive in many cases (certain core culture
goals were shared by the entire senior executive team).
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The Company completed the recruitment of the senior executive team and facilitated mentoring and coaching throughout the year to promote collaboration and team dynamics.
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•
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The Company enhanced its communication with current and prospective employees, customers, and the communities it serves through several initiatives, including: increasing the frequency of communications; innovating in
the ways the Company communicates (e.g., town hall meetings with executives, executive videos, and more frequent employee newsletters); launching an employee engagement survey; and conducting employee focus groups.
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The Company generally retained employees in critical roles and made significant progress in the development of its succession plans for such employees.
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In addition to the above, the Committee also considered the extent to which each senior executive role modeled behaviors that reflect the Company’s values and
fostered diverse and inclusive working environments. Company-wide diversity initiatives completed in 2016 include: analyzing the Company’s employee diversity in its 21 largest markets as compared with local demographic data; implementing new
hiring goals and contests for the recruiting team; launching a Company diversity council; and conducting discussions at the local level regarding the Company’s diversity goals.
Based on the foregoing, the Committee awarded 2016 annual bonuses to each NEO other than Ms. Rowlands in the amounts described in the “Summary Compensation
Table” on page 38 of this Proxy Statement.
ANNUAL BONUS DETERMINATIONS UNDER 2016 REACHLOCAL BONUS PROGRAM
As a result of negotiations between Gannett and ReachLocal management in connection with our acquisition of ReachLocal, Ms. Rowlands’s 2016 bonus was determined
pursuant to ReachLocal’s 2016 Executive Bonus Plan. ReachLocal’s 2016 Executive Bonus Plan was adopted by its compensation committee prior to the acquisition, and ReachLocal believed its program to be consistent with the annual bonus
programs of its peers. In accordance with her letter agreement with the Company executed in connection with the acquisition closing, Ms. Rowlands’s target annual incentive was 120% of her
year-end
base salary specified in the letter agreement. Bonus payouts under ReachLocal’s 2016 Executive Bonus Plan were based upon ReachLocal’s performance against the following targets:
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a total revenue target for the year, which was derived from the 2016 financial plan approved by ReachLocal’s board at the outset of the year; and
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a “stretch” EBITDA target for the year, which was approved by ReachLocal’s compensation committee in connection with the adoption of the bonus plan and which exceeded the amount included in
ReachLocal’s 2016 financial plan.
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Achievement of threshold, target and maximum performance goals under the plan would result in a multiplier
applicable to Ms. Rowlands’s target bonus opportunity for that goal. Based on ReachLocal’s 2016 total revenue and EBITDA results against those targets, the Committee approved a 2016 bonus payout to Ms. Rowlands equal to
94.2% of her target.
Based on the foregoing, the Committee awarded a 2016 annual bonus to Ms. Rowlands in the amount described in the “Summary Compensation
Table” on page 38 of this Proxy Statement.
2016 Cash Incentives for Stretch Goals
In 2016, each NEO also had an opportunity to earn an additional cash incentive if the Company achieved one or more predetermined “stretch” goals, which related
to the following:
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USA TODAY NETWORK’s ranking in the News & Information category of ComScore;
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the Company’s number of digital-only paid subscribers; and
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the relative portion of total revenue for 2016 that constitutes digital revenue.
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Each stretch goal was evenly weighted
and would have paid out independently if achieved. The target incentive payout for each stretch goal was 8.33% of base salary, for a maximum payout opportunity of 25% of base salary. Each NEO would have been entitled to receive an incentive payout
equal to: (1) 8.33% of base salary If the Company achieved any one stretch goal; (2) 16.66% of base salary if the Company achieved two stretch goals; and (3) 25% of base salary if all three of the stretch goals were achieved. However, the Company
did not achieve any of its stretch goals for 2016. Therefore no payments were awarded in respect of the stretch goals.
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28
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2017 Proxy Statement
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GANNETT CO., INC.
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Long-Term Incentives
Special Cash and RSU Retention Awards
In connection with the acquisition
of ReachLocal, Ms. Rowlands received a special cash retention award with an aggregate value of $825,000. The “Summary Compensation Table” on page 38 of this Proxy Statement does not include any amounts relating to this cash
retention award, which will be reported in respect of the fiscal year in which each portion of the award vests and is settled in cash. She also received a special retention RSU award with an aggregate value of $825,000. For additional information
regarding the terms of Ms. Rowlands’s special cash and RSU retention awards, see “Additional Information Regarding the Summary Compensation Table and the Grants of Plan-Based Awards Table” on page 41 of this Proxy Statement.
Long-Term Incentives
Equity-based awards recognize the performance of certain executives who drive the development and execution of our business strategies and goals. The primary purposes of
these awards are to align further the executive’s interests with those of the Company’s stockholders and the Company’s longer-term objectives, to drive stockholder return, to foster executive stock ownership and to promote retention.
OVERVIEW OF 2016 LONG-TERM INCENTIVES FOR NEOS
During 2016, the long-term
equity component of the compensation received by Messrs. Dickey and Zidich and Mses. Engel and Lipman consisted of annual grants of Performance Shares and RSUs in amounts approved by the Committee in December 2015 and granted as of January 1,
2016. The long-term equity compensation received by Ms. Rowlands consisted of a prorated annual grant of RSUs in an amount approved by the Committee in connection with the Company’s acquisition of ReachLocal, as well as a special,
one-time
retention RSU award approved by the Committee to provide additional long-term incentives to Ms. Rowlands in respect of her role as CEO of ReachLocal following the acquisition. Set forth below is a
summary of the key terms of the Performance Shares and RSUs, followed by further information as to the process followed by the Committee in determining the size of the each NEO’s 2016 awards. The “Summary Compensation Table” on
page 38 of this Proxy Statement reports the entire grant date fair value of awards made to the NEOs in 2016.
IMPACT OF THE SEPARATION ON LONG-TERM
INCENTIVES GRANTED PRIOR TO THE SEPARATION
The Company and TEGNA entered into an Employee Matters Agreement prior to the separation setting forth the allocation
of liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters. The Employee Matters Agreement covered certain compensation and employee benefit obligations with
respect to the current and former employees and
non-employee
directors of each company. Among other matters, the Employee Matters Agreement provided for the conversion of the outstanding awards granted under
the Company’s former parent’s equity compensation programs into adjusted awards relating to shares of TEGNA and/or Company common stock. The adjusted awards generally are subject to substantially the same terms, vesting conditions,
post-termination exercise rules and other restrictions that applied to the original award immediately before the separation. See our proxy statement filed in connection with our 2016 annual meeting for additional information.
PERFORMANCE SHARES
General Terms of the Performance Share
Plan.
Under the Company’s performance share plan (the “Performance Share Plan”), the Company may issue shares of Company common stock (“Performance Shares”) to senior executives following the completion of a
three-year period beginning on the grant date (each, an “Incentive Period”). Generally, if an executive remains in continuous employment with the Company during the Incentive Period, the number of Performance Shares that the executive will
receive will be determined based upon how the Company’s TSR compares to the TSRs of a group of peer companies (the “TSR Peer Group”) established by the Committee, with assistance from its independent compensation consultant, for the
applicable Incentive Period. By tying the payout of the Performance Shares to the Company’s TSR, a purely objective standard, the Committee is aligning executive compensation with stockholders’ interests.
For each grant of Performance Shares, the Company’s TSR is ranked against the TSR of each company in the TSR Peer Group over the Incentive Period. For purposes of
the Performance Share Plan, a company’s TSR equals a fraction, the numerator of which is the company’s stock price change plus the dividends paid on such stock (which are assumed to be reinvested in the stock) from the first day of the
Incentive Period to the applicable measurement date, and the denominator of which is the company’s closing stock price on the business day preceding the first day of the Incentive Period.
In connection with the separation, the compensation committee and board of directors of the Company’s former parent approved modifications to the Performance Share
Plan that affected the calculation of the “Company’s TSR” for purposes of the 2014-2016 and 2015-2017 Incentive Periods, as follows:
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For the 2014-2016 Incentive Period, the “Company’s TSR” would be calculated by giving effect to the
separation, with returns prior to the separation based on TEGNA’s performance prior to the separation, and returns for periods after the separation calculated by aggregating the performance of the Company and TEGNA after the separation and
taking into account the number of the Company’s shares distributed per share of the Company’s former parent in the separation. Performance Shares earned for the 2014-2016 Incentive Period would be paid in shares of both TEGNA common stock
and shares of the Company’s common stock, with the number of shares
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GANNETT CO., INC.
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2017 Proxy Statement
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29
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Long-Term Incentives
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of TEGNA common stock subject to the award remaining unchanged and the number of shares of the Company’s common stock subject to the award being determined based on the number of the Company’s shares distributed per share
of the Company’s former parent in the separation.
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For the 2015-2017 Incentive Period, the “Company’s TSR” will be calculated based on returns for periods after the separation based solely on the Company’s performance and an assumed January 1,
2015 price of one share of the Company’s stock of $11.23, a price derived from adjusting the price of one share of the Company’s former parent’s stock on December 31, 2014 by the relative value of a share of Company stock
immediately following the separation to the value of a share of Company’s former parent immediately prior to the separation. Dividends paid by the Company’s former parent between January 1, 2015 and the separation will be adjusted
similarly in calculating the Company’s TSR. Performance Shares for the 2015-2017 Incentive Period will be paid solely in shares of the Company’s common stock, with the target number of shares underlying the award adjusted in a manner
intended to preserve the aggregate intrinsic value of the original award as measured immediately before and immediately after the separation, subject to rounding.
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For each Incentive Period, the Committee will calculate the number of Performance Shares earned by multiplying the target number of Performance Shares (as specified in
the executive’s award agreement) by a percentage determined by the number of TSR Peer Group companies whose performance is exceeded by the Company’s TSR during the Incentive Period. The percentages for each Incentive Period are set forth
on the following table, with percentiles between the thresholds determined by straight line interpolation:
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3 YEAR COMPANY TSR V. PEER GROUP
COMPANIES
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RESULTING SHARES EARNED
(% OF TARGET)
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90th percentile or above
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200%
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70th percentile
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150%
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50th percentile
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100%
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30th percentile
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50%
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Less than 30th percentile
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0%
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Relative TSR performance is measured at the end of each of the last four quarters in the Incentive Period, and the average results of
these measurements are used to calculate the number of Performance Shares that an executive earns, so that the calculation does not solely rely upon the applicable company’s stock price on the first day and the last day of the Incentive Period.
With certain exceptions noted in the section below entitled “Other Potential Post-Employment Payments” for terminations due to death, disability,
retirement (defined as 65 years of age or at least 55 years of age with at least 5 years of service) or a change in control, Performance Shares generally vest on the expiration of the Incentive Period only if the executive continues to be employed
by the Company through the last day of the Incentive Period. After the end of the Incentive Period, each executive who is entitled to Performance Shares based on the satisfaction of the applicable service and performance requirements will receive
the number of Performance Shares that the executive has earned, less withholding taxes. Dividends are not paid or accrued on Performance Shares.
The Performance
Share Plan has additional rules that affect calculations in the event of the bankruptcy or change in control of a TSR Peer Group company during an Incentive Period:
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TSR Peer Group companies that are involved in bankruptcy proceedings (and thus no longer traded on a national securities exchange) during the Incentive Period will remain in the group at a negative 100% TSR;
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For the 2014-2016 Period, (i) TSR Peer Group companies acquired during Year 1 of the Incentive Period were excluded from all calculations; and (ii) TSR Peer Group companies acquired during Year 2 or 3 of the
Incentive Period had their TSR position fixed above or below the Company’s TSR using the average closing price of their stock during the 20 consecutive trading days ending on the trading day immediately preceding the announcement of the
acquisition;
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For the 2015-2017 Incentive Period, (i) a TSR Peer Group company that enters into a definitive agreement to be acquired during Year 1 or Year 2 of the Incentive Period will be excluded from all calculations;
(ii) a TSR Peer Group company that enters into a definitive agreement to be acquired during Year 3 of the Incentive Period will have its TSR position fixed above or below the Company’s TSR using the average closing price of both
companies’ stock during the 30 consecutive trading days ending on the trading day immediately preceding the announcement of the transaction; and (iii) notwithstanding the foregoing, if at any time during the Incentive Period, a TSR Peer
Group company enters into a definitive agreement to be acquired by the Company, the TSR Peer Group company will be excluded from all calculations; and
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For the 2016-2018 Incentive Period, (i) a TSR Peer Group company that enters into a definitive agreement to be acquired
during Year 1 or Year 2 of the Incentive Period will be excluded from all calculations; provided that if such agreement is rescinded, revoked or abandoned by the end of Year 2 of the Incentive Period and no new agreement is entered into by the end
of Year 2, the TSR Peer Group company will be taken into account unless it is subject to another rule set forth below, (ii) a TSR Peer Group company that is subject to a public announcement of a takeover attempt or enters into a definitive
agreement to be acquired during Year 3 will have its TSR position fixed above or below the Company’s TSR using the average closing price of both companies’ stock during the 30
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2017 Proxy Statement
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GANNETT CO., INC.
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Long-Term Incentives
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consecutive trading days ending on the trading day immediately preceding the announcement of the takeover attempt or definitive agreement, and (iii) notwithstanding the foregoing, if at any time during the Incentive Period, a
TSR Peer Group company enters into a definitive agreement to be acquired by the Company, the TSR Peer Group company will be excluded from all calculations.
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The number of Performance Shares granted to an executive will be reduced if the price of the shares when paid exceeds 300% of the price of the shares on the first day of
the Incentive Period. The price of the shares on the first day of the Incentive Period generally is equal to the closing price of a share of Company common stock on the last trading day prior to that date. However, as a result of the separation, for
the 2014-2016 Incentive Period, the “first day price” is equal to the closing price of a share of the Company’s former parent’s common stock on the last trading day of December 2013 ($29.58). As noted above, as a consequence of
the separation, the “first day price” for the 2015-2017 Incentive Period was derived by adjusting the closing price of a share of the Company’s former parent’s common stock on December 31, 2014 by the relative value of a
share of the Company’s stock immediately following the separation to the value of a share of the Company’s former parent immediately prior to the separation. As a consequence of this adjustment, the “first day price” for the
2015-2017 Incentive Period is $11.23. The “first day price” for the 2016-2018 Incentive Period is $16.29.
TSR Peer Groups
The TSR Peer Group for the 2016-2018 Incentive Period comprises the following companies:
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A. H. Belo Corp.
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New York Times Co.
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Angie’s List, Inc.
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News Corp.
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Constant Contact, Inc.
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New Media Investment Group
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Harte Hanks, Inc.
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ReachLocal, Inc.
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Lee Enterprises, Inc.
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Time, Inc.
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The McClatchy Company
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tronc,Inc.
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Meredith Corp.
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Yelp Inc.
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The TSR Peer Group for the 2015-2017 Incentive Period, as adjusted in respect of the separation as described above, comprises the
following companies:
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A.H. Belo Corp.
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Meredith Corp.
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Angie’s List, Inc.
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New Media Investment Group
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Constant Contact, Inc.
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New York Times Co.
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Dex Media, Inc.
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News Corp.
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Harte Hanks, Inc.
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ReachLocal, Inc.
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Journal Communications Inc.
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Time, Inc.
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Lee Enterprises, Inc.
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tronc, Inc.
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The McClatchy Company
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The TSR Peer Group for the 2014-2016 Incentive Period comprised the following companies:
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A.H. Belo Corporation
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Meredith Corporation
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AOL Inc.
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Monster Worldwide, Inc.
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Discovery Communications, Inc.
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The New York Times Company
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The E. W. Scripps Company
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News Corporation
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Journal Communications, Inc.
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NexStar Broadcasting Group, Inc.
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LinkedIn Corporation
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ReachLocal, Inc.
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The McClatchy Company
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Sinclair Broadcast Group
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Media General, Inc.
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Yahoo! Inc.
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Impact of Certain Peer Group Transactions on the 2014-2016 Performance Share Awards
AOL Inc.: Effective June 23, 2015, AOL Inc. was acquired by Verizon. As a result of the transaction taking place after Year 1 of the 2014-2016 Incentive Period, AOL
Inc.’s relative TSR performance was fixed below the TSR position of the Company for the 2014-2016 Incentive Period based on TSR results through the day immediately preceding the announcement of the acquisition.
Journal Communications, Inc.: Effective April 1, 2015, E.W. Scripps acquired Journal Communications, Inc. in connection with the merger of the broadcast assets of
the two companies and the
spin-off
of their respective newspapers to form Journal Media Group. As a result of the transaction taking place after Year 1 of the 2014-2016 Incentive Period, Journal
Communications’ relative TSR performance was fixed below the TSR position of the Company for the 2014-2016 Incentive Period based on TSR results through the day immediately preceding the announcement of the acquisition.
E.W. Scripps: As noted above, E.W. Scripps
spun-off
its newspaper business in connection with its acquisition of Journal
Communications, Inc. to form Journal Media Group. As a result, effective April 1, 2015, the TSR of E.W. Scripps was calculated by assuming that a share of
pre-spin
E.W. Scripps held as of the effective
date of the
spin-off
was converted into one share of post-spin E.W. Scripps and a 1/4 share of Journal Media Group until Journal Media Group reached a definitive agreement to be acquired by Gannett on
October 7, 2015, at which time Journal Media Group was treated as a reinvestment into E.W. Scripps.
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GANNETT CO., INC.
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2017 Proxy Statement
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31
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Long-Term Incentives
LinkedIn Corporation. Effective December 8, 2016, LinkedIn Corporation was acquired by
Microsoft, Inc. As a result of the transaction taking place after Year 1 of the 2014-2016 Incentive Period, LinkedIn Corporation’s relative TSR performance was fixed below the TSR position of the Company for the 2014-2016 Incentive Period based
on TSR results through the day immediately preceding the announcement of the acquisition.
Monster Worldwide, Inc. Effective November 1, 2016, Monster Worldwide,
Inc. was acquired by Randstand. As a result of the transaction taking place after Year 1 of the 2014-2016 Incentive Period, Monster Worldwide, Inc.’s relative TSR performance was fixed below the TSR position of the Company for the 2014-2016
Incentive Period based on TSR results through the day immediately preceding the announcement of the acquisition.
ReachLocal, Inc. Effective April 9, 2016,
ReachLocal was acquired by the Company. As a result of the transaction taking place after Year 1 of the 2014-2016 Incentive Period, ReachLocal’s relative TSR performance was fixed below the TSR position of the Company for the 2014-2016
Incentive Period based on TSR results through the day immediately preceding the announcement of the acquisition.
2014-2016 TSR Performance
Comparing the “Company TSR” calculated as described above to the TSR of the 2014-2016 TSR Peer Group companies at the end of each of the last four quarters in
the 2014-2016 Incentive Period, the Company and TEGNA outperformed 11 of 17 companies overall. Accordingly, Performance Shares (paid in shares of both TEGNA common stock and the Company’s common stock) were awarded to participating executives
at a level equal to 177% of the target number of Performance Shares granted to them in connection with the 2014-2016 Incentive Period.
RSUS
RSUs generally represent the right to receive a share of Company stock at a specified date, provided certain service requirements are satisfied. The Company’s former
parent established a practice, which the Company’s Committee also has adopted, of granting RSUs with four-year terms to help retain executives over an extended period of time. As described above, RSU awards granted by the Company’s former
parent and held by persons now employed by the Company were converted at the time of the separation into RSU awards denominated in whole or in part in Company shares, but the vesting and other terms and conditions of the original awards generally
were not changed as a result of the separation. RSUs granted during or before 2014 which are held by the Company’s NEOs generally vest on a “cliff” basis (i.e., all shares subject to the award vest at the end of the four-year service
period). RSUs granted in 2015, whether before or after the separation, generally vest in four equal annual installments, with vested shares being delivered to the executive upon the earliest to occur of (1) the executive’s termination of
employment, (2) a change in control of the Company and (3) four years after the grant date. As discussed in the section below entitled “Other Potential Post-Employment Payments,” special vesting rules apply to RSUs upon death,
disability, retirement or a change in control.
Beginning with grants made on or after January 1, 2016, RSUs generally will vest in four equal annual
installments, with vested shares being delivered to the executive shortly after each vesting event. Additionally, for RSU awards granted on or after January 1, 2016, a change in control of the Company will only accelerate full vesting of RSU
awards to executives if the awards are not continued or assumed (e.g., the awards are not equitably converted or substituted for awards of the successor company) in connection with the change in control or the recipient has a qualifying termination
of employment within two years following the date of the change in control.
The 2015 Plan generally mandates a one year minimum vesting period for the total amount
of shares subject to RSU awards, though the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one year in the following circumstances: (1) in connection with terminations of employment due to death,
disability, retirement or other circumstances that the Committee determines to be appropriate; (2) in connection with a change in control in which the award is not continued or assumed (e.g., the awards are not equitably converted or
substituted for awards of the successor company); (3) for grants made in connection with an acquisition by the Company in substitution for
pre-existing
awards; or (4) for new hire inducement awards or off
cycle awards.
Certain awards granted to some of our NEOs are subject to special rules, which are discussed under “Additional Information Regarding the Summary
Compensation Table and the Grants of Plan-Based Awards Table” on page 41 of this Proxy Statement.
LONG-TERM EQUITY AWARDS MADE IN 2016
January
1, 2016 Grants.
For the January 1, 2016 grants, management recommended to the Committee total long-term equity award
target values for each such NEO by multiplying the base salary of each NEO then serving the Company by a target percentage, which took into account:
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the nature and responsibility of the position;
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internal pay equity among positions; and
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Comparative Market Data (as described in more detail in the section above titled “—Comparative Market Data”), which showed that the target values recommended by management were generally consistent with
those disclosed by the comparator group.
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GANNETT CO., INC.
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Benefits and Perquisites
Using management’s recommendations as a guideline, in December 2015 the Committee approved 2016 total long-term award values for each of the senior executives then
serving with the Company. In doing so, the Committee sought to ensure that such executives received a higher proportion of their long-term awards as Performance Shares rather than RSUs, as the Committee believes this approach strengthens the pay for
performance aspect of the long-term incentive program.
On January 1, 2016, the first day of the 2016-2018 Incentive Period, the long-term equity award value was
translated into (1) an award of Performance Shares for each executive then serving with the Company based on the present value per share of the expected payout of the Performance Shares, as calculated using the Monte Carlo valuation method
(which models the Company’s probable TSR achievement relative to its TSR Peer Group for the performance period), and (2) an award of RSUs based upon the Company’s closing stock price on December 31, 2015. Accordingly, on
January 1, 2016, each NEO then serving with the Company was awarded Performance Shares for the 2016-2018 Incentive Period, at target, and RSUs as shown in the table below. The “Summary Compensation Table” gives effect to the full
grant date fair value of these awards, measured assuming the target level of performance is achieved.
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EXECUTIVE
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TARGET
PERFORMANCE
SHARES
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RSUS
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Mr. Dickey
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116,823
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50,953
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Ms. Engel
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30,311
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21,356
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Mr. Zidich
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37,383
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26,339
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Ms. Lipman
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17,876
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15,593
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Ms.
Rowlands’s Long-Term Equity Incentive Compensation.
In connection with our
acquisition of ReachLocal on August 9, 2016, Ms. Rowlands received long-term equity compensation consisting of a regular grant of 14,036 RSUs (reflecting an aggregate grant date value of $145,830), as well as a special retention award of
79,403 RSUs (reflecting an aggregate grant date value of $825,000). In each case, the number of shares subject to the grant was determined based upon the closing price of the Company’s common stock on August 11, 2016. For additional
information regarding the terms of this award, see “Additional Information Regarding the Summary Compensation Table and the Grants of Plan-Based Awards Table” on page 41 of this Proxy Statement.
Benefits and Perquisites
The Company’s NEOs are provided a limited number of personal benefits and perquisites (described in footnote 4 to the Summary Compensation Table). The
Committee’s objectives in providing these benefits are to provide protections for the Company’s NEOs and their families, to complement other compensation components, and to help minimize distractions from our executives’ attention to
important Company initiatives.
The personal benefits and perquisites the Company provides to its NEOs, including medical, life insurance and disability plans, are
generally the same as those offered to other similarly situated senior executives. For additional information about these and other post-employment benefits, see the benefits discussion under the “Other Potential Post-Employment Payments”
section on page 46 of this Proxy Statement.
SUPPLEMENTAL EXECUTIVE MEDICAL PLAN
The Supplemental Executive Medical Plan provides supplemental medical benefits to qualifying executives and their eligible dependents. Executives and their eligible
dependents must be enrolled in other primary medical coverage that constitutes minimum essential coverage under the Affordable Care Act (“Other Primary Medical Coverage”) in order to participate. Where the Other Primary Medical Coverage is
Medicare, the individual must be enrolled in Medicare Parts A, B, and D (or an equivalent Medicare plan, such as a Medicare Advantage plan with prescription drug coverage).
The plan covers qualifying executive’s
out-of-pocket
medical expenses for any covered
medical expense that are not paid under the executive’s Other Primary Medical Coverage. No benefits are payable with respect to certain enumerated expenses. Plan benefits are provided through a contract of insurance, and are limited to those
benefits provided in accordance with the terms of the insurance contract. Mr. Dickey is the only NEO who participates in this plan.
2015 KEY EXECUTIVE LIFE
INSURANCE PLAN
Under the Key Executive Life Insurance Plan (“KELIP”), the Company will pay premiums (or make cash payments in lieu of premiums) on
individual life insurance policies owned by the executive. The obligation to pay premiums (or make cash payments in lieu of premiums) may continue for a limited period of time post termination for participants who terminate employment after
attaining age 55 and completing at least 5 years of service. Mr. Dickey is the only NEO who participates in the KELIP.
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GANNETT CO., INC.
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2017 Proxy Statement
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33
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Post-Termination Pay
Post-Termination Pay
The Company sponsors a
tax-qualified
defined benefit retirement plan, the Gannett Retirement Plan (“GRP”), and a
non-qualified retirement plan, the Gannett Supplemental Retirement Plan (“SERP”). The Company also offers a
tax-qualified
defined contribution plan, the Gannett 401(k) Savings Plan (“401(k)
Plan”), as well as a nonqualified deferred compensation plan, the Gannett Co., Inc. 2015 Deferred Compensation Plan (“DCP”), each of which is described below. In addition, the Company has implemented an executive severance plan and
change-in-control
severance plans, each of which is described below and under “Other Potential Post-Employment Payments” on page 46 of this Proxy Statement.
These plans, together with the GRP and SERP, assist the Company in recruiting and retaining employees and in providing leadership stability and long-term commitment.
GANNETT RETIREMENT PLAN AND SUPPLEMENTAL RETIREMENT PLAN
In connection with
the separation, the Company assumed the GRP and certain liabilities of the Company’s former parent under the SERP, including those relating to the Company’s executives. The SERP is a non-qualified retirement plan that provides eligible
employees with retirement benefits that cannot be provided under the GRP due to the Internal Revenue Code, which limits the compensation that can be recognized under qualified retirement plans and imposes limits on the amount of benefits which can
be paid. Accordingly, benefits under the SERP are tied to benefits under the GRP. The GRP is a qualified defined benefit pension plan that provides retirement income to the majority of the Company’s U.S.-based employees who were employed before
benefits were frozen on August 1, 2008, at which time most participants ceased to earn additional benefits for compensation or service earned on or after that date.
The GRP provides benefits for employees based upon years of credited service, and the highest consecutive five-year average of an employee’s compensation out of the
final ten years of credited service, referred to as final average earnings (“FAE”). Subject to Internal Revenue Code limits, compensation generally includes a participant’s base salary, performance-based bonuses, and
pre-tax
contributions to the Company’s benefit plans other than the Gannett Deferred Compensation Plan. Until benefits commence, participants’ frozen benefits under the GRP are periodically adjusted to
reflect increases in a specified
cost-of-living
index.
Effective January 1,
1998, a significant change was made to the GRP for service after that date. Certain employees who were either retirement-eligible or had a significant number of years of service were “grandfathered” in the plan provisions applicable to
them prior to the change
(pre-1998
plan provisions). Other employees were transitioned to the post-1997 plan provisions under the GRP.
The
pre-1998
GRP provisions provide for a benefit that is expressed as a monthly annuity at normal retirement equal to a gross
benefit reduced by a portion of the participant’s Social Security benefit. Generally, a participant’s annual gross benefit is calculated by multiplying the participant’s years of credited service by specified percentages (generally 2%
for each of a participant’s first 25 years of credited service and 0.7% for years of credited service in excess of 25) and multiplying such amount by the participant’s FAE. Benefits under the
pre-1998
GRP provisions are paid in the form of monthly annuity payments for the life of the participant and, if applicable, the participant’s designated beneficiary. The
pre-1998
GRP provisions provide for early retirement subsidies for participants who terminate employment after attaining age 55 and completing five years of service and elect to commence benefits before age
65. Under these provisions, a participant’s gross benefit that would otherwise be paid at age 65 is reduced by 4% for each year the participant retires before age 65. If a participant terminates employment after attaining age 60 with 25 years
of service, the participant’s gross benefit that would otherwise be paid at age 65 is reduced by 2.5% for each year the participant retires before age 65.
The
post-1997 GRP provisions provide for a benefit under a pension equity formula, which generally expresses a participant’s benefit as a current lump sum value based on the sum of annual percentages credited to each participating employee. The
percentages increase with years of service, and, in some circumstances, with age. Upon termination or retirement, the total percentages are applied to a participant’s FAE resulting in a lump sum benefit value. The pension equity benefit can be
either converted to a lifetime annuity or paid as a lump sum.
The GRP benefits for Mr. Dickey and Mr. Zidich are calculated under the post-1997 GRP
provisions. However, as noted below, the SERP benefits for Mr. Dickey and Mr. Zidich are calculated under the
pre-1998
GRP provisions. Ms. Engel, Ms. Rowlands and Ms. Lipman are not
eligible for GRP or SERP benefits.
For “Grandfathered Participants,” including Mr. Dickey and Mr. Zidich, the SERP also provides a benefit equal
to the difference between the benefits calculated under the
pre-1998
GRP formula and the amount they will receive from the GRP under the post-1997 formula. For all SERP participants, the benefit calculated
under the applicable SERP formula is reduced by benefits payable from the GRP.
In conjunction with the decision to freeze benefits under the GRP, it was also decided
to make changes to benefits under the SERP. Generally, SERP participants whose SERP benefits were calculated under the
pre-1998
GRP formula continue to accrue benefits under the SERP. However, their benefits
for credited service after August 1, 2008 are calculated at a rate that is
one-third
less than the
pre-August
1, 2008 rate. Mr. Dickey and Mr. Zidich were
affected by this change. Mr. Dickey and Mr. Zidich are eligible for early retirement under the
pre-1998
GRP formula that applies to them under the SERP.
Effective August 1, 2008, SERP participants whose SERP benefits were not calculated under the
pre-1998
GRP formula had their
SERP benefits frozen such that they ceased to earn additional benefits for compensation or service earned on or after that date. Until benefits commence, such participants’ frozen benefits are periodically adjusted to reflect increases in a
specified
cost-of-living
index.
SERP benefits are generally paid in the form of a
lump sum amount when a participant separates from service or, if later, the date the participant attains age 55, except that payment is accelerated in the event that the Company undergoes a change in control. In order to
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34
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2017 Proxy Statement
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GANNETT CO., INC.
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2015 Change in Control Severance Plan
comply with federal tax laws, certain executives’ SERP benefits cannot be paid within the first six months after their separation from service with the Company.
Mr. Dickey and Mr. Zidich are fully vested in their SERP and GRP benefits.
DEFINED CONTRIBUTION RETIREMENT PLANS
Most of the Company’s employees based in the United States may participate in the 401(k) Plan, which permits eligible participants to make
pre-tax
contributions and provides for matching and other employer contributions. Effective August 1, 2008, new participants as well as participants whose benefits were frozen under the GRP and, if applicable,
the SERP, commenced receiving higher matching contributions under the 401(k) Plan. At that time, the matching contribution rate generally increased from 50% of the first 6% of compensation that an employee elects to contribute to the plan to 100% of
the first 5% of compensation. During 2016, Ms. Engel and Ms. Lipman received matching contributions under the new formula, and Mr. Dickey and Mr. Zidich received matching contributions under the old formula. Company matching
contributions in 2016 were made in the form of Gannett stock. The Company also makes additional employer contributions to the 401(k) Plan on behalf of certain employees, but none of the NEOs. For purposes of the 401(k) Plan and subject to Internal
Revenue Code limits, compensation generally includes a participant’s base salary, performance-based bonuses, and
pre-tax
contributions to the Company’s benefit plans. Company contributions under the
401(k) Plan vest 25% after one year of service, 50% after two years of service and 100% after three years of service. For these purposes, service with the Company’s former parent is credited. As of the date of this Proxy Statement, Company
contributions are 100% vested for Mr. Dickey and Mr. Zidich, 50% vested for Ms. Engel and 25% vested for Ms. Lipman.
Ms. Rowlands
participates in ReachLocal’s separate 401(k) plan, which does not provide for matching or employer contributions, but does allow her to make
pre-tax
elective contributions.
DEFERRED COMPENSATION PLAN
In connection with the separation, the Company and
the DCP assumed certain liabilities of the Company’s former parent under its deferred compensation plan, including those relating to the Company’s executives. Each executive who participates in the DCP may elect to defer all or a portion
of his or her compensation under the DCP, so long as the minimum deferral is $5,000 for each form of compensation (base salary and bonus) for the year of deferral. The amounts deferred by each executive are vested and will be deemed invested in the
fund or funds designated by such executive from the investment options specified under the plan.
The DCP provides company contributions on behalf of certain
employees whose benefits under the Company’s 401(k) Plan are capped by Internal Revenue Code rules that limit the amount of compensation that can be taken into account when calculating benefits under a qualified plan. Generally, company
contributions to the DCP are calculated by applying the same formula that applies to an employee’s matching and additional employer contributions under the 401(k) Plan to the employee’s compensation in excess of the Internal Revenue Code
compensation limit. However, participants are not required to make elective contributions to the DCP to receive an employer contribution under the DCP. Company contributions under the DCP vest 25% after one year of service, 50% after two years of
service and 100% after three years of service. Executives who accrue benefits under the SERP, including Mr. Dickey and Mr. Zidich, do not receive company contributions under the DCP. Ms. Engel and Ms. Lipman receive Company
contributions under the DCP and are 50% and 25% vested in such benefits, respectively.
Amounts that a participant elects to defer into the DCP are generally paid at
the time and in the form elected by the participant, provided that if the participant terminates employment before attaining age 55 and completing five years of service, benefits are generally paid in a lump sum amount upon such termination
(although for
pre-2005
deferrals the Company’s Executive Compensation Committee may pay such deferrals in five annual installments). The DCP permits participants to receive
in-service
withdrawals of participant contributions for unforeseeable emergencies and certain other circumstances. Prior to when the deferrals are made, a participant may make a special election as to the time
and form of payment for benefits that become payable due to the participant’s death or disability if payments have not already commenced, and deferrals will be paid in accordance with such elections under those circumstances. Company
contributions to the DCP are generally paid in the form of a lump sum amount when a participant separates from service. The payment of post-2004 company and participant DCP contributions is accelerated in the event that the Company undergoes a
change in control.
2015 Change in Control Severance Plan
Following the separation, the Company adopted the 2015 Change in Control Severance Plan (“CIC Severance Plan”), which provides severance pay to participating
key executives of the Company in the event the executive is involuntarily terminated without “cause,” or terminates for “good reason” within two years after a “change in control” of the Company, or is terminated in
anticipation of a “change in control” of the Company.
Following is a summary of several key terms of the CIC Severance Plan:
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“change in control” means the first to occur of: (1) the acquisition of 20% or more of the Company’s then-outstanding shares of common stock or the combined voting power of the Company’s
then-outstanding voting securities; (2) the Company’s incumbent directors cease to constitute at least a majority of the board of directors of the Company, except in connection with the election of directors approved by a vote of at least
a majority of the directors then comprising the incumbent board of directors of the Company; (3) consummation of the Company’s sale in a merger or similar transaction, or sale or other disposition “of all or substantially all of the
Company’s assets; or (4) approval by the Company’s stockholders of the Company’s complete liquidation or dissolution.
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GANNETT CO., INC.
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2017 Proxy Statement
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35
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Executive Severance Plan
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•
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“cause” means: (1) the participant’s material misappropriation of the Company’s funds or property; (2) the participant’s unreasonable and persistent neglect or refusal to perform his
or her duties which is not remedied in a reasonable period of time following notice from the Company; (3) conviction of the participant of a securities law violation or a felony involving moral turpitude; or (4) a finding by a court of
competent jurisdiction in a civil action or by the Securities and Exchange Commission that the participant has violated any Federal or State securities law.
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•
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“good reason” means the occurrence after a change in control of any of the following without the participant’s express written consent, unless fully corrected prior to the date of termination:
(1) the material diminution of the participant’s duties, authorities or responsibilities from those in effect immediately prior to the change in control; (2) a material reduction in the participant’s base salary or target bonus
opportunity as in effect on the date immediately prior to the change in control; (3) the relocation of the participant’s office from the location at which the participant is principally employed immediately prior to the date of the change
in control to a location 35 or more miles farther from the participant’s residence immediately prior to the change in control; (4) the failure by the Company to pay any material compensation or benefits due to the participant; (5) the
failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the CIC Severance Plan; or (6) any purported termination of the participant’s employment that is not effected pursuant to a notice
of termination satisfying the requirements of the CIC Severance Plan.
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If triggered upon a qualifying termination of employment, benefits under the CIC
Severance Plan include:
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Pension. For participants who are “Grandfathered Participants” under the SERP, in addition to their vested Gannett Retirement Plan and SERP benefits, upon their qualifying termination of employment, such CIC
Severance Plan participants are entitled to a lump sum payment equal to the difference between (1) the amount that would have been paid under the SERP and Gannett Retirement Plan had the executive remained in the employ of the Company through
the third year anniversary of the date of the change in control and received the same level of base salary and bonus which the executive received with respect to the fiscal year immediately preceding the date of the change in control or the
termination date, whichever is higher, and (2) the amount payable under the SERP and the Gannett Retirement Plan as of the later of the date of the change in control or the termination date, whichever is higher.
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•
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Payments. Upon a participant’s qualifying termination of employment, the participant is entitled to receive a lump sum amount equal to the sum of (1) any unpaid base salary or bonus through the date of
termination; and (2) a prorated annual bonus for the portion of the fiscal year elapsed prior to the termination date in an amount equal to the average annual bonus the participant earned with respect to three fiscal years immediately prior to
the fiscal year in which the termination date occurs prorated for the portion of the fiscal year elapsed prior to the termination date. Additionally, participants are paid a lump sum cash severance payment equal to a “multiplier” that is
designated for the participant times the sum of (1) the participant’s annual base salary at the highest rate of salary during the
12-month
period immediately prior to the termination date or, if
higher, during the 12 month period immediately prior to the change in control (in each case, as determined without regard for any reduction for deferred compensation, 401(k) plan contributions and similar items), and (2) the higher of
(A) the average annual bonus the participant earned with respect to the three fiscal years immediately prior to the fiscal year in which the change in control occurs; and (B) the average annual bonus the participant earned with respect to
the three fiscal years immediately prior to the fiscal year in which the termination occurs. For participants who formerly participated in the Company’s Transitional Compensation Plan immediately prior to commencing participation in this Plan,
“multiplier” means three (3), and for other participants the “multiplier” shall be either two (2) or one (1) as assigned to the participant. The Transitional Compensation Plan was terminated in 2016.
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•
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COBRA benefit. A participant will receive an amount equal to the monthly COBRA cost of the participant’s medical and dental coverage in effect as of the date of termination multiplied by the lesser of (1) 18; or
(2) 24 minus the number of full months between the date of the change in control and the date of termination.
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Benefits are subject to the participant
executing a release and agreeing to certain restrictive covenants.
Mr. Dickey participates in the CIC Severance Plan, and his “multiplier” (as
described above) is three (3). Ms. Engel, Mr. Zidich, Ms. Lipman and Ms. Rowlands are participants in the CIC Severance Plan, and each of their “multipliers” is two (2). Messrs. Dickey and Zidich are “Grandfathered
Participants” under the Company’s SERP, whereas none of Ms. Engel, Ms. Lipman or Ms. Rowlands is a SERP participant.
Executive Severance Plan
Under the Executive Severance Plan, a participant who experiences an involuntary termination of employment without cause is entitled to a lump sum cash severance payment
equal to the product of (a) a “severance multiple” and (b) the participant’s annual base salary. The “severance multiple” means (i) with respect to the President and Chief Executive Officer of the Company,
three (3); and (ii) with respect to other participants, either two (2) or one (1) as assigned to the participant. Additionally, the participant is entitled to a prorated portion of the participant’s annual bonus for the fiscal
year in which the participant is terminated based on actual performance.
The severance payment is contingent upon the participant’s execution of a separation
agreement containing a release of claims in favor of the Company and its affiliates and covenants restricting the participant’s competition, disclosure of confidential information, solicitation of employees and disparagement of the Company and
its affiliates. The separation agreement also contains a release of claims by the Company, the Company’s former parent and their affiliates in favor of the participant and a covenant restricting the Company’s disparagement of the
participant. In the event that a participant experiences a termination under circumstances that entitles the participant to
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36
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2017 Proxy Statement
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GANNETT CO., INC.
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Tax Considerations
compensation and benefits under the Executive Severance Plan and the CIC Severance Plan, the participant shall receive compensation and benefits under the CIC Severance
Plan and not under the Executive Severance Plan.
Mr. Dickey participates in this plan, and his “severance multiple” (as described above) is three (3).
Ms. Engel, Mr. Zidich, Ms. Lipman and Ms. Rowlands are participants in the Executive Severance Plan, and each of their “severance multiples” is two (2).
Tax Considerations
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid to a company’s CEO and
its three other most highly compensated executive officers other than the CFO for any fiscal year. However, Section 162(m) exempts qualifying performance-based compensation from the deduction limit if specified requirements are met. The Committee
may structure certain performance-based compensation, including future Performance Shares and annual bonuses, to executive officers who may be subject to Section 162(m) in a manner that is intended to satisfy those requirements. For example, in
February 2016, the Committee established a limit on each NEO’s annual bonus based on a percentage of the Company’s adjusted EBTIDA and exercised its negative discretion to pay bonuses that are less than those limits, so that the bonuses
could be deducted under Section 162(m). However, the Committee reserves the authority to award
non-deductible
compensation in circumstances as it deems appropriate. Because of ambiguities and uncertainties as
to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding the Company’s efforts, that compensation intended to satisfy the requirements for deductibility under
Section 162(m) does in fact do so.
DIRECTOR COMPENSATION
The compensation year for
non-employee
directors begins at each Annual Meeting of Stockholders and ends at the following Annual
Meeting of Stockholders. The Outside Director Compensation Program in effect through the Company’s 2016-2017 director compensation year provided that each
non-employee
director is entitled to:
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an annual cash retainer of $100,000, payable quarterly during the compensation year;
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an additional annual retainer fee of $20,000 to committee chairs (other than the chair of the Executive Committee) and an additional annual retainer fee of $120,000 to the independent Chairman of the Board;
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an annual equity award in the form of RSUs with a grant date value equal to $125,000, granted on the first day of the director compensation year, which award vests and is eligible for dividend equivalents on the terms
generally described below;
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travel accident insurance of $1,000,000;
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a match from the Company Foundation of charitable gifts made by directors up to a maximum of $10,000 each year; and
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a cash deferral opportunity, using mutual fund choices and a Company stock fund.
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Subject to the terms and conditions of
the award agreement, each RSU granted to a Company director represents the right to receive a share of Company common stock to the extent they become vested. RSUs granted in 2016 vest in equal installments in each of August 1, November 1,
February 1 and May 1 following the grant date and will receive dividend equivalents, which are deemed to be reinvested in shares of Company common stock. Once vested, these RSUs and dividend equivalents are held by the Company for the
benefit of the director until the director leaves the Board, at which time shares in respect of vested RSUs and dividend equivalents are delivered to the director. RSUs granted in 2016 will fully vest if a
non-employee
director leaves the Board due to death, disability or the age of service limitations set forth in the Company’s Bylaws. RSUs granted in 2016 also will fully vest and be paid out upon a change
of control of the Company. RSUs granted in 2016 that are not vested on the date the director leaves the Board will be forfeited. RSUs to be granted in 2017 respect of the 2017-2018 director compensation year will contain different terms with respect
to vesting and settlement. Specifically, awards will vest in equal installments in each of August 1, November 1, February 1 and May 1 following the grant date and will settle in shares of Gannett common stock delivered to the
director on the first anniversary of the grant date.
Company directors may elect to defer their cash fees under the Company’s Deferred Compensation Plan, which
provides for the same investment choices, including mutual funds and a Company stock fund, made available to other Deferred Compensation Plan participants. In addition, commencing with RSUs to be granted in 2017 respect of the 2017-2018 director
compensation year, directors will be permitted to defer the grant date value of the RSU award under the Deferred Compensation Plan in lieu of receiving the award.
The Company encourages directors to own, directly, beneficially, or through the Deferred Compensation Plan, a number of shares having an aggregate value of at least three
times the value of the director’s cash retainer. Directors are expected to hold all shares received from the Company as compensation until they meet their stock ownership guideline.
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GANNETT CO., INC.
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2017 Proxy Statement
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51
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The below table shows the compensation paid to Company
non-employee
directors for their service on the Board during the 2016 fiscal year ending on December 25, 2016. Robert J. Dickey received no separate compensation for service as a director and therefore is
not included in the following table.
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NAME
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FEES
EARNED
OR
PAID IN
CASH
($)(1)
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STOCK
AWARDS
($)(1)
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CHANGE IN
PENSION VALUE
AND
NON-QUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($)
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ALL OTHER
COMPENSATION
($)(2)
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TOTAL
($)
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John Jeffry Louis(3)
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—
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124,993
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220,000
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10,000
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354,993
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John E. Cody
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120,000
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124,993
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—
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5,000
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249,993
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Stephen W. Coll
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100,000
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124,993
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—
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10,000
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234,993
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Donald E. Felsinger(3)
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—
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124,993
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120,000
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10,000
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254,993
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Lila Ibrahim
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100,000
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124,993
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—
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9,768
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234,760
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Lawrence S. Kramer(4)
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100,000
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124,993
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—
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5,000
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229,993
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Tony A. Prophet(3)
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—
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124,993
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120,000
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10,000
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254,993
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Debra A. Sandler
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120,000
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124,993
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—
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10,000
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254,993
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Chloe R. Sladden
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100,000
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124,993
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—
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10,000
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234,993
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(1)
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Amounts shown in these columns reflect the compensation paid to each director in 2016 based upon the form in which the director elected to receive his or her retainer fees and long-term award during 2016. Amounts in the
stock awards column represent the aggregate grant date fair value of RSU awards computed in accordance with ASC 718 based on the assumptions set forth in note 11 to the Company’s 2016 audited financial statements.
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(2)
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Represents charitable gifts matched by the Gannett Foundation pursuant to the GannettMatch program. The GannettMatch program matches eligible gifts made by Company employees and directors up to an aggregate of $10,000 a
year. Gifts must be made to eligible organizations, including tax exempt charitable organizations, tax exempt hospitals or medical centers, and tax exempt colleges, universities, graduate or professional schools, engineering or technical
institutions and public and private preschools, elementary and secondary schools in the U.S. and its territories.
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(3)
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During 2016, Messrs. Felsinger, Louis and Prophet deferred $120,000, $220,000, and $120,000, respectively, of the fees such director received in the form of cash and invested those amounts in the Company stock fund of
the DCP.
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(4)
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In addition to the amounts shown in the table, as a result of his employment with our former parent prior to the separation, Mr. Kramer held Performance Shares for the 2014-2016 Incentive Period that were
denominated in the Company’s shares and in shares of the Company’s former parent. Mr. Kramer received 6,510 Company shares and 13,020 TEGNA shares as a result of the vesting and payout of those awards in connection with the conclusion
of the 2014-2016 Incentive Period.
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52
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2017 Proxy Statement
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GANNETT CO., INC.
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OUTSTANDING DIRECTOR EQUITY AWARDS AT FISCAL
YEAR-END
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NAME
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RESTRICTED STOCK
AWARDS
& RSU AWARDS
(VESTED/UNVESTED) (#)
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STOCK OPTION AWARDS
(#)
(EXERCISABLE/
UNEXERCISABLE)
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John Jeffry Louis(1)
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22,642/4,191
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977/0
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|
|
John E. Cody(1)
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|
20,121/4,191
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|
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9,451/0
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|
|
Stephen W. Coll
|
|
|
11,223/3,966
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|
|
|
0
|
|
|
Donald E. Felsinger
|
|
|
9,158/3,966
|
|
|
|
0
|
|
|
Lila Ibrahim
|
|
|
12,050/3,966
|
|
|
|
0
|
|
|
Lawrence S. Kramer(2)
|
|
|
12,050/3,966
|
|
|
|
0
|
|
|
Tony A. Prophet(1)
|
|
|
18,318/4,191
|
|
|
|
0
|
|
|
Debra A. Sandler
|
|
|
12,050/3,966
|
|
|
|
0
|
|
|
Chloe R. Sladden
|
|
|
12,050/3,966
|
|
|
|
0
|
|
|
(1)
|
As described elsewhere in this Proxy Statement, pursuant to the Employee Matters Agreement delivered in connection with the separation, equity awards granted by the Company’s former parent prior to 2015 were
converted into awards denominated both in our shares and in TEGNA shares. At the end of our 2015 fiscal year, those persons who previously served as officers and/or directors of the Company’s former parent and who now serve on the Board of
Directors of the Company held certain equity awards denominated in TEGNA shares identified below in addition to the Company awards identified in the above table. Awards held by Mr. Dickey that are denominated in TEGNA shares are identified in
the notes to the “Outstanding Equity Awards at Fiscal
Year-End”
table included on page 43 of this Proxy Statement.
|
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|
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Mr. Louis:
|
|
Vested options to purchase an aggregate of 45,329 TEGNA shares at exercise prices ranging from $11.80 to $17.37 per TEGNA share expiring between 2018 and 2021; and 447 unvested shares of TEGNA restricted stock.
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|
|
Mr. Cody:
|
|
Vested options to purchase an aggregate of 11,351 TEGNA shares at exercise prices ranging from $11.80 to $12.90 per TEGNA share expiring between 2019 and 2021; and 8,719 shares of TEGNA restricted stock (447 of which are unvested
and the remainder of which are vested but will not be settled until Mr. Cody’s retirement from our Board).
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|
|
Mr. Prophet:
|
|
8,483 shares of TEGNA restricted stock (447 of which are unvested and the remainder of which are vested but will not be settled until Mr. Prophet’s retirement from our Board).
|
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(2)
|
In addition to the amounts shown in the table, Mr. Kramer holds Performance Shares for the 2015-2017 Incentive Period that are denominated in the Company’s shares. Assuming that the target level of performance
is met for that period, Mr. Kramer would receive 7,741 Company shares. The threshold level of performance would result in his receipt of 50% of such numbers of shares, and the maximum level of performance would result in his receipt of 200% of
such numbers of shares.
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|
GANNETT CO., INC.
|
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2017 Proxy Statement
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53
|
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of the end of the Company’s 2016 fiscal year for (i) compensation plans previously approved by the
Company’s stockholders and (ii) compensation plans not previously approved by the Company’s stockholders: (1) the number of securities to be issued upon the exercise of outstanding stock options, warrants and rights; (2) the
weighted-average exercise price of such outstanding stock options, warrants and rights; and (3) other than securities to be issued upon the exercise of such outstanding stock options, warrants and rights, the number of securities remaining
available for future issuance under the plans.
|
|
|
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|
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|
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|
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NUMBER OF SECURITIES
TO BE
ISSUED UPON
EXERCISE OF
OUTSTANDING
OPTIONS,
WARRANTS AND RIGHTS
|
|
|
WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING
OPTIONS,
WARRANTS AND RIGHTS
|
|
|
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR
FUTURE ISSUANCE
UNDER
EQUITY
COMPENSATION PLANS
(EXCLUDING
SECURITIES
REFLECTED IN
COLUMN(A))
|
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PLAN CATEGORY
|
|
(A)
|
|
|
(B)
|
|
|
(C)
|
|
|
Equity compensation plans approved by stockholders(1)
|
|
|
5,637,614
|
|
|
$
|
5.3748
|
(2)
|
|
|
5,362,386
|
|
|
Equity compensation plans not approved by stockholders(3)
|
|
|
70,228
|
|
|
|
0
|
|
|
|
429,772
|
|
|
Total
|
|
|
5,707,842
|
|
|
|
|
|
|
|
5,792,158
|
|
|
(1)
|
The equity compensation plan approved by the Company’s stockholders is the 2015 Plan. The number in column (a) includes 290,267 shares subject to outstanding stock options, 3,315,799 shares subject to
outstanding unvested RSU grants, 66,238 shares subject to outstanding restricted stock awards and 1,965,310 shares subject to outstanding unvested Performance Share awards. The number of shares subject to outstanding unvested Performance Share
awards assumes the maximum number of Performance Shares are issued upon vesting. The actual number of Performance Shares issued could be zero to 200% of the target number of Performance Shares underlying unvested awards. Assuming the target number
of Performance Shares are issued, the number of shares subject to unvested Performance Share awards would be 982,655, and 6,345,041 shares would remain available for future issuance under the Company’s 2015 Plan.
|
|
(2)
|
Represents the weighted-average exercise price of the outstanding stock options under the 2015 Plan as adjusted in connection with the separation.
|
|
(3)
|
The Company’s Deferred Compensation Plan, or DCP, is a
non-qualified
plan that provides benefits to directors and key executives of the Company. The DCP has not been approved
by the Company’s stockholders. The amounts elected to be deferred by each participant are credited to such participant’s account in the DCP, and the Company credits these accounts with earnings as if the amounts deferred were invested in
the Company’s stock or other selected investment funds as directed by the participant. Amounts that are not treated as if invested in the Company’s stock are distributed in cash, and amounts that are treated as if invested in the
Company’s stock are generally distributed in shares of stock or cash, at the Company’s election. However, deferrals by directors of restricted stock or RSU grants are required to be distributed in stock under the terms of the DCP. The
number in column (a) represents the number of shares credited to participants’ accounts in the DCP. The DCP does not currently include any shares to be issued upon the exercise of outstanding stock options, warrants and rights as a result
of deferrals of grants made under the 2015 Plan. The table above does not include any shares that may in the future be credited to participants’ accounts in the DCP as a result of salary deferrals or transfers of other funds held in the plan.
Participants in the DCP are general unsecured creditors of the Company with respect to their benefits under the plan.
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54
|
|
2017 Proxy Statement
|
|
GANNETT CO., INC.
|
|
|
|
|
SECURITIES BENEFICIALLY OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
The information below regarding beneficial ownership of common stock has been presented in accordance with SEC rules and is not necessarily indicative of
beneficial ownership for any other purpose. Under these rules, beneficial ownership of common stock includes any shares as to which a person, directly or indirectly, has or shares voting power or investment power and any shares as to which a person
has the right to acquire such voting or investment power within 60 days through the exercise of any stock option or other right, including through the settlement of vested RSUs in shares of common stock.
The following table presents, as of March 1, 2017, information based on the Company’s records and filings with the SEC regarding beneficial ownership of each
person who is known to be the beneficial owner of more than five percent of the Company’s common stock, each director and each nominee to the Board of Directors, the Company’s NEOs for 2016, and all directors and executive officers of the
Company as a group. None of the shares owned by the Company’s directors or executive officers was pledged.
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|
|
|
|
|
|
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|
|
NAME OF BENEFICIAL OWNER(1)
|
|
SHARES
OWNED
|
|
|
PERCENT OF
CLASS
|
|
|
Capital International Investors(2)
|
|
|
10,296,036
|
|
|
|
9.06
|
%
|
|
The Vanguard Group(3)
|
|
|
10,183,021
|
|
|
|
8.96
|
%
|
|
NewSouth Capital Management, Inc.(4)
|
|
|
6,975,971
|
|
|
|
6.14
|
%
|
|
BlackRock, Inc.(5)
|
|
|
13,499,060
|
|
|
|
11.88
|
%
|
|
Vanguard Fiduciary Trust Company(6)
|
|
|
7,420,127
|
|
|
|
6.53
|
%
|
|
Robert J. Dickey
|
|
|
213,813
|
|
|
|
*
|
|
|
Alison K. Engel
|
|
|
26,273
|
|
|
|
*
|
|
|
Joanne Lipman
|
|
|
2,645
|
|
|
|
*
|
|
|
Sharon T. Rowlands
|
|
|
1,678
|
|
|
|
*
|
|
|
John M. Zidich
|
|
|
38,356
|
|
|
|
*
|
|
|
John Jeffry Louis
|
|
|
294,821
|
|
|
|
*
|
|
|
John E. Cody
|
|
|
36,172
|
|
|
|
*
|
|
|
Stephen W. Coll
|
|
|
15,189
|
|
|
|
*
|
|
|
Donald E. Felsinger
|
|
|
13,124
|
|
|
|
*
|
|
|
Lila Ibrahim
|
|
|
16,016
|
|
|
|
*
|
|
|
Lawrence S. Kramer
|
|
|
44,733
|
|
|
|
*
|
|
|
Tony A. Prophet
|
|
|
23,509
|
|
|
|
*
|
|
|
Debra A. Sandler
|
|
|
16,016
|
|
|
|
*
|
|
|
Chloe R. Sladden
|
|
|
16,016
|
|
|
|
*
|
|
|
All directors and executive officers as a group (21 persons including those named
above)
|
|
|
839,224
|
|
|
|
*
|
|
|
(1)
|
The following shares of common stock are included in the table because they may be acquired pursuant to stock options exercisable by May 1, 2017:
Mr. Dickey-70,809;
Mr. Louis-977;
Mr. Cody-9,451;
and all directors and executive officers as a
group-81,237.
The following shares of common
stock are included in the table because they may be acquired upon settlement of RSUs that have vested or will vest by May 1, 2017:
Mr. Dickey-50,208;
Ms. Engel-15,396;
Mr. Zidich-19,163;
Mr. Louis-18,266;
Mr. Cody-18,266;
Mr. Coll-15,189;
Mr. Felsinger-13,124;
Ms. Ibrahim-16,016;
Mr. Kramer-16,016;
Mr. Prophet-18,266;
Ms. Sandler-16,016;
Ms. Sladden-16,016;
and all directors and executive officers as a
group-281,094.
The shares
reported in the table do not include shares owned by the Gannett Retirement Plan Trust. The shares reported in the table also do not include investments held through the DCP by certain of the Company’s directors and executive officers that, as
of March 1, 2017, were deemed to be credited in the following number of shares of the Company’s stock:
Ms. Engel-4,795;
Mr. Louis-17,543;
Mr. Cody-4,831;
Mr. Felsinger-13,769;
Mr. Prophet-9,471;
and all directors and executive officers as a
group-61,761.
The shares reported in the table do not include dividend equivalent units credited with respect to director RSU awards.
|
|
(2)
|
Based upon information as of December 31, 2016, contained in a Schedule 13G/A filed with the SEC on February 13, 2017 by Capital International Investors, reporting, in the aggregate, sole voting power over
9,522,181 and sole dispositive power over 10,296,036 shares. The address for Capital International Investors is 11100 Santa Monica Boulevard, 16th Floor, Los Angeles, CA 90025.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GANNETT CO., INC.
|
|
2017 Proxy Statement
|
|
55
|
|
|
|
SECURITIES BENEFICIALLY OWNED BY DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL
STOCKHOLDERS
|
|
(3)
|
Based upon information as of December 31, 2016, contained in a Schedule 13G/A filed with the SEC on February 13, 2017 by The Vanguard Group, Inc., reporting, in the aggregate, sole voting power over 139,614
shares, shared voting power over 19,491 shares, sole dispositive power over 10,029,859 shares, and shared dispositive power over 153,162 shares. The address for The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, PA 19355.
|
|
(4)
|
Based upon information as of December 31, 2016, contained in a Schedule 13G/A filed with the SEC on February 8, 2017 by New South Capital Management, Inc., reporting, in the aggregate, sole voting power over
4,895,378 shares and sole dispositive power over 6,975,971 shares. The address for New South Capital Management, Inc. is 999 S. Shady Grove Rd. Suite 501, Memphis, TN 38120.
|
|
(5)
|
Based upon information as of December 31, 2016, contained in a Schedule 13G/A filed with the SEC on January 12, 2017 by BlackRock, Inc., reporting, in the aggregate, sole voting power over 13,234,428 shares
and sole dispositive power over 13,499,060 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
|
|
(6)
|
Based upon information as of December 31, 2016, contained in a Schedule 13G/A filed with the SEC on February 14, 2017 by Vanguard Fiduciary Trust Company, in its capacity as trustee for certain employee
benefit plan(s) reporting, in the aggregate, shared voting and dispositive power over 7,420,127 shares. The address for Vanguard Fiduciary Trust Company is 500 Admiral Nelson Blvd., Malvern, PA 19355.
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|
|
|
|
|
|
|
|
|
|
|
56
|
|
2017 Proxy Statement
|
|
GANNETT CO., INC.
|
|
|
|
|
GENERAL INFORMATION
Why am I receiving these proxy materials?
These
proxy materials are being furnished to you in connection with the solicitation of proxies by our Board of Directors for the 2017 Annual Meeting of Stockholders to be held on May 10, 2017 at 10:00 a.m. local time at the Company’s
headquarters located at 7950 Jones Branch Drive, McLean, Virginia. This Proxy Statement furnishes you with the information you need in order to vote, whether or not you attend the Annual Meeting.
On what proposals am I being asked to vote and how does the Board recommend that I vote?
You are being asked to vote on the proposals below, and the Board recommends that you vote as follows:
Proposal 1—FOR the election of the ten director nominees nominated by the Board of Directors, each to hold office until the Company’s 2018 Annual Meeting of
Stockholders;
Proposal 2—FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting
firm for fiscal year 2017;
Proposal 3—FOR the approval of an amendment to the Company’s 2015 Omnibus Incentive Compensation Plan; and
Proposal 4—FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in “Compensation Discussion
and Analysis” and accompanying compensation tables and related discussion contained in this Proxy Statement.
In addition, if you grant a proxy, your shares will
be voted in the discretion of the proxy holder on any proposal for which you do not register a vote and any other business that properly comes before the Annual Meeting or any adjournment or postponement thereof.
Will there be any other items of business addressed at the Annual Meeting?
As of the date of this Proxy Statement, we are not aware of any other matter to be presented at the Annual Meeting. If any other matters properly come before the Annual
Meeting, it is intended that the holders of the proxies will act in accordance with their best judgment.
What must I do if I want to
attend the Annual Meeting in person?
Admission to the Annual Meeting is by ticket only. We will provide each stockholder with one admission ticket upon
request. Either you or your proxy may use your ticket. If you are a stockholder of record and plan to attend the Annual Meeting, please call the Company’s stockholder services department at
(703) 854-6960
to request a ticket. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend the Annual Meeting, please send a written request for a ticket, along with
proof of share ownership, such as a bank or brokerage firm account statement or a letter from the intermediary holding your shares, confirming ownership to: Secretary, Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia 22107. Requests for
admission tickets will be processed in the order in which they are received and must be received no later than May 3, 2017. To obtain directions to attend the Annual Meeting, please call the Company’s stockholder services department at
(703) 854-6960.
Who may vote at the Annual Meeting?
If you owned Company stock at the close of business on March 13, 2017, which is the record date for the Annual Meeting (the “Record Date”), then you may
obtain a ticket to attend and vote your shares at the meeting. Please bring proof of your common stock ownership, such as a current brokerage statement, and photo identification, if you wish to vote your shares at the meeting. In addition, if you
hold shares through a bank, broker, or other intermediary, you must obtain a valid legal proxy, executed in your favor, from the holder of record if you wish to vote those shares at the meeting.
At the close of business on the Record Date, we had approximately 113,609,987
shares of common stock outstanding and entitled to vote. Each share is entitled to
one vote on each proposal.
What constitutes a quorum for the Annual Meeting?
The presence, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the Record Date will constitute a quorum to conduct
business. Shares held by an intermediary, such as a banker or a broker, that are voted by the intermediary on any or all matters will be treated as shares present for purposes of determining the presence of a quorum. Abstentions and broker
non-votes
(defined below) also will be counted for the purpose of determining the existence of a quorum.
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|
GANNETT CO., INC.
|
|
2017 Proxy Statement
|
|
57
|
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, and how can I get electronic access to the proxy materials?
Pursuant to SEC rules, we may provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials
(the “Notice”) to our stockholders. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or to request a printed set of the proxy materials. Instructions on how to do so may be found
in the Notice.
Stockholders also may elect to receive an email that will provide an electronic link to future annual reports and Proxy Statements rather than
receiving paper copies of these documents. You can choose to receive future proxy materials electronically by visiting our investor relations website at http://investors.gannett.com. If you choose to receive future proxy materials electronically,
you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your choice to receive proxy materials electronically will remain in effect until you terminate it. Choosing to receive
your proxy materials electronically will save us the cost of printing and mailing documents to you.
Stockholders also can view the Proxy Statement and the
Company’s 2016 Annual Report online on the Company’s investor relations website at http://investors.gannett.com.
What is the
difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record
.
If your
shares are registered directly in your name with our transfer agent, Wells Fargo Shareowner Services, you are considered the stockholder of record with respect to those shares, and the Notice was sent directly to you by the Company.
Beneficial Owner of Shares Held in Street Name
.
If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar
organization, then you are the beneficial owner of shares held in “street name,” and the Notice was forwarded to you by your bank, broker or other intermediary. The organization holding your account is considered the stockholder of record
for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.
If I am a stockholder of record of Company shares, how do I vote?
If you are a stockholder of record, you may vote in person at the Annual Meeting. We will give you a ballot when you arrive.
If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the Internet or by telephone by
following the instructions provided in the Notice. If you request printed copies of the proxy materials by mail, you can vote by mail as well as by telephone or over the Internet. If you are a stockholder of record and intend to vote by proxy,
your proxy must be received by no later than 11:59 p.m. Central Time on May 9, 2017.
If I am a beneficial owner of Company shares
held in street name, how do I vote?
If you are a beneficial owner of shares held in street name and you wish to vote in person at the Annual Meeting, you
must obtain a valid legal proxy from the organization that holds your shares.
If you do not wish to vote in person or you will not be attending the Annual Meeting,
you may vote by proxy. Follow the voting instructions provided to you by your bank, broker or other intermediary. You must provide your nominee with appropriate voting instructions by no later than 11:59 p.m. Central Time on May 9, 2017.
If I hold my Company shares through the Company’s Dividend Reinvestment Plan or 401(k) Plan, or the TEGNA Inc. 401(k) Savings
Plan, how do I vote?
If you participate in the Company’s Dividend Reinvestment Plan or 401(k) Plan, or if you hold shares of the Company’s
common stock through the TEGNA Inc. 401(k) Savings Plan, your shares of stock in those plans can be voted in the same manner as shares held of record. To vote the shares held in either plan, you must provide appropriate voting instructions by no
later than 11:59 p.m. Central Time on May 5, 2017.
What happens if I do not give specific voting instructions?
Stockholders of Record
. If you are a stockholder of record and you:
|
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•
|
|
indicate when voting over the Internet or by telephone that you wish to vote as recommended by our Board of Directors; or
|
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•
|
|
sign and return a proxy card without giving specific voting instructions;
|
then the proxy holders will vote your shares in
the manner recommended by our Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
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58
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|
2017 Proxy Statement
|
|
GANNETT CO., INC.
|
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|
Beneficial Owners of Shares Held in Street Name
.
If you are a beneficial owner of shares held in street name and do not provide the organization
that holds your shares with specific voting instructions, under NYSE rules, the organization that holds your shares may generally vote on routine matters (such as Proposal 2 to ratify our appointment of Ernst & Young LLP as our independent
registered public accounting firm for fiscal year 2017) but cannot vote on
non-routine
matters (such as the uncontested director election described in Proposal 1, the proposal to approve an amendment to the
Company’s 2015 Omnibus Incentive Compensation Plan described in Proposal 3, and the
non-binding
advisory vote described in Proposal 4). If the organization that holds your shares does not receive
instructions from you on how to vote your shares on a
non-routine
matter, it will inform our Inspector of Election that it does not have the authority to vote on the matter with respect to your shares and your
shares will not be voted. This is generally referred to as a “broker
non-vote.”
When our Inspector of Election tabulates the votes for any particular matter, broker
non-votes
will be counted for purposes of determining whether a quorum is present, but will not otherwise be counted. We therefore encourage you to provide voting instructions on each proposal to the
organization that holds your shares.
Holders of Shares through the Company’s Dividend Reinvestment Plan or 401(k) Plan, or the TEGNA Inc. 401(k) Savings
Plan
. If you do not give instructions, your shares held in the Dividend Reinvestment Plan will not be voted. All shares in the Company’s 401(k) Plan or the TEGNA Inc. 401(k) Savings Plan for which no instructions are received will be
voted by the trustee of such plan in the same proportion as instructions provided to the trustee by other participants in such plan.
Can I
change or revoke my vote?
Yes. If you deliver a proxy by mail, by telephone or over the Internet, you have the right to revoke your proxy in writing (by
mailing another proxy bearing a later date), by phone (by calling at a later time), over the Internet (by voting online at a later time), by attending the Annual Meeting and voting in person, or by notifying the Company before the Annual
Meeting (by mail addressed to the Secretary at Gannett Co., Inc., 7950 Jones Branch Dr., McLean VA 22107) that you want to revoke your proxy. Submitting your vote by mail, telephone or over the Internet will not affect your right to vote in person
if you decide to attend the Annual Meeting.
What are the votes required to adopt the proposals?
Each share of our common stock outstanding on the Record Date is entitled to one vote on each of the director nominees and one vote on each other matter. The following
voting standards will apply to the proposals to be considered at the Annual Meeting:
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•
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|
To be elected, directors must receive a majority of the votes cast with respect to that director (the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that
nominee).
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•
|
|
Ratification of the selection of our independent registered public accounting firm requires the affirmative vote of the majority of the shares of common stock present or represented by proxy and entitled to vote at the
meeting.
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•
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|
Approval of the amendment to the Company’s 2015 Omnibus Incentive Compensation Plan requires the affirmative vote of the majority of the shares of common stock present or represented by proxy and entitled to vote
at the meeting.
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|
•
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The vote to adopt the resolution to approve the Company’s executive compensation program described in this Proxy Statement (the
“Say-on-Pay”
proposal) is advisory only and
non-binding
on the Company. The
Say-on-Pay
proposal will be approved on a
non-binding,
advisory basis if the number of votes cast for the proposal exceeds the number of votes cast against it.
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Abstentions, if any, will have no effect on the election of any director or on the
Say-on-Pay
proposal, but will have the same effect as votes “against” each of the other two proposals. Broker non-votes will have no effect on the outcome for
any proposal.
How do I submit a stockholder proposal or nominate a director for election at the 2018 Annual Meeting?
To be eligible for inclusion in the proxy materials for the Company’s 2018 Annual Meeting, a stockholder proposal or nomination must be submitted in writing to
Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary and must be received by November 24, 2017. A stockholder who wishes to present a proposal or nomination at the Company’s 2018 Annual Meeting, but who
does not request that the Company solicit proxies for the proposal or nomination, must submit the proposal to the Company at the same address no earlier than January 10, 2018 and no later than February 9, 2018. The Company’s Bylaws
require that any proposal or nomination must contain specific information in order to be validly submitted for consideration.
Can
stockholders and other interested parties communicate directly with our Board?
Yes. The Company invites stockholders and other interested parties to
communicate directly and confidentially with the full Board of Directors, the Chairman of the Board or the
non-management
directors as a group by writing to the Board of Directors, the Chairman or the
Non-Management
Directors, Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia 22107, Attn: Secretary. The Secretary will forward such communications to the intended recipient and will retain copies for the
Company’s records.
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GANNETT CO., INC.
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2017 Proxy Statement
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How can I obtain a stockholder list?
A list of stockholders entitled to vote at the 2017 Annual Meeting will be open to examination by any stockholder, for any purpose germane to the 2017 Annual
Meeting, during normal business hours, for a period of ten days before the 2017 Annual Meeting and during the 2017 Annual Meeting at the Company’s offices at 7950 Jones Branch Drive, McLean, Virginia 22107.
How may I obtain a copy of the Company’s 2016 Annual Report?
A copy of our 2016 Annual Report, which includes the Company’s Annual Report on Form
10-K
for the fiscal year ended
December 25, 2016, is being provided or made available to all stockholders of record on the Record Date. As permitted by the SEC, the Company is sending a Notice of Internet Availability of Proxy Materials to all stockholders.
If you hold your shares of record on the Record Date, you may request email or paper copies of our 2016 Annual Report over the Internet, at www.investorelections.com/gci,
by toll-free telephone call (in the U.S. and Canada) to
1-866-870-3684,
or by email at paper@investorelections.com. Please put
“GCI Materials Request” in the subject line and include the
11-digit
control number presented on the Notice.
If you
hold your shares on the Record Date in “street name” through a bank, broker or other intermediary, you also may have the opportunity to receive copies of our 2016 Annual Report electronically. Please check the information in the proxy
materials provided by your bank, broker or other intermediary.
You may also obtain a copy without charge by writing to: Gannett Co., Inc., 7950 Jones Branch Drive,
McLean, Virginia 22107, Attn: Secretary. Our 2016 Annual Report and Form
10-K
are also available through the Company’s website at www.gannett.com. The Company’s Annual Report and Form
10-K
are not proxy soliciting materials.
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2017 Proxy Statement
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GANNETT CO., INC.
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COST OF SOLICITING PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to the solicitation of proxies by mail, certain of the officers and employees of the Company,
without extra compensation, may solicit proxies personally, by telephone or other means. The Company also will request that brokerage houses, nominees, custodians and fiduciaries forward soliciting materials to the beneficial owners of stock held of
record and will reimburse them for forwarding the materials.
In addition, the Company has retained Innisfree M&A Incorporated, New York, New York
(“Innisfree”), to aid in the solicitation of proxies at a fee of $17,500, plus out of pocket expenses. The Company has agreed to indemnify and hold harmless Innisfree and certain related persons against certain liabilities arising out of
or in connection with the engagement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that its executive officers and directors complied on a timely basis with all Section 16(a) filing requirements applicable to them during 2016,
except that a Form 4 reporting Donald E. Felsinger’s receipt of phantom shares on May 2, 2016 upon the deferral of his quarterly cash retainer was filed one day late due to an administrative error.
INCORPORATION BY REFERENCE
To the extent that
this Proxy Statement is incorporated by reference into any other filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, the sections of this Proxy Statement entitled “Executive Compensation Committee
Report” and “Report of the Audit Committee” (to the extent permitted by SEC rules) will not be deemed incorporated, unless specifically provided otherwise in such filing.
March 24, 2017
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GANNETT CO., INC.
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2017 Proxy Statement
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ANNEX A
Gannett Co., Inc.
2015
Omnibus Incentive Compensation Plan
CONTENTS
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Introduction
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1
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Article 1.
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Establishment, Objectives, Duration and Service Credit
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1
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Article 2.
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Definitions
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2
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Article 3.
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Administration
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7
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Article 4.
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Shares Subject to the Plan and Maximum Awards; Adjusted and Substituted Awards
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8
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Article 5.
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Eligibility and Participation
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11
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Article 6.
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Stock Options
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12
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Article 7.
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Stock Appreciation Rights
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14
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Article 8.
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Restricted Stock/Stock Awards
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15
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Article 9.
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Restricted Stock Units, Performance Units, Performance Shares, and Cash-Based Awards
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17
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Article 10.
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Performance Measures
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19
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Article 11.
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Beneficiary Designation
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20
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Article 12.
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Deferrals
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21
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Article 13.
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Rights of Employees/Directors
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21
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Article 14.
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Termination of Employment/Directorship
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21
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Article 15.
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Change in Control
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Article 16.
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Amendment, Modification, Termination and Tax Compliance.
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25
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Article 17.
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Withholding
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Article 18.
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Successors
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27
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Article 19.
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General Provisions
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i
GANNETT CO., INC.
2015 OMNIBUS INCENTIVE COMPENSATION PLAN
Introduction
In 2015,
Gannett Co., Inc. separated its digital/broadcast and publishing businesses into two separate publicly traded companies. The separation occurred when Gannett Co., Inc. contributed its publishing businesses to a newly formed subsidiary, Gannett
SpinCo, Inc., and distributed the stock of Gannett SpinCo, Inc. to its shareholders (the “Spin-off”). In connection with the Spin-off, Gannett SpinCo, Inc. was renamed “Gannett Co., Inc.” (the “Company”). The entity
formerly known as Gannett Co., Inc. was renamed TEGNA Inc. (the “Predecessor Company”) and continues the digital/broadcast businesses.
Awards under this Plan include awards granted to employees and directors of the Predecessor Company or its affiliates under the Predecessor
Company’s 2001 Omnibus Incentive Compensation Plan that have been converted in connection with the Spin-off to awards under this Plan (the “Adjusted Awards”). The terms of such conversion are generally specified in that certain
Employee Matters Agreement by and between the Company and Predecessor Company dated June 26, 2015 (the “Employee Matters Agreement”). Notwithstanding any other provision of this Plan or the Predecessor Plan (as defined below), no
Participant shall be entitled to duplicate benefits under both such Plans with respect to the same period of service or compensation.
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ARTICLE 1.
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ESTABLISHMENT, OBJECTIVES, DURATION AND SERVICE CREDIT
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1.1 Establishment of the Plan
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The Company, a Delaware corporation, hereby
adopts this Gannett Co., Inc. 2015 Omnibus Incentive Compensation Plan (hereinafter referred to as the “Plan”), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, and Cash-Based Awards. Subject to approval by the Company’s stockholders, the Plan shall become effective as of June 29, 2015
(the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.
1.2 Objectives of the Plan
.
The objectives of the Plan are to optimize the
profitability and growth of the Company through annual and long-term incentives that are consistent with the Company’s goals and that link the personal interests of Participants to those of the Company’s stockholders, to provide
Participants with an incentive for excellence in individual performance, and to promote teamwork among Participants. The Plan is further intended to provide flexibility to the Company and its Affiliates in their ability to motivate, attract, and
retain the services of Participants who make significant contributions to the Company’s success and to allow Participants to share in that success.
1.3 Duration of the Plan
.
The Plan shall commence on the Effective Date and
shall remain in effect, subject to the right of the Committee to amend or terminate the
Plan at any time pursuant to Article 16 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan’s provisions. However, in no event may an Award be
granted under the Plan on or after the tenth (10th) anniversary of the Effective Date.
1.4 Service Credit
.
For each Employee who is employed immediately following
the Effective Date by the Company or an Affiliate and each “Former SpinCo Group Employee” (as defined in the Employee Matters Agreement), service shall be recognized with the Predecessor Company or any of its subsidiaries or predecessor
entities at or before the Effective Date, to the same extent that such service was recognized by the Predecessor Company under the Predecessor Plan prior to the Effective Date as if such service had been performed for the Company for purposes of
eligibility, vesting and determination of level of benefits under this Plan.
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
2.1 “Affiliate”
shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations of the Exchange Act.
2.2
“
Adjusted Award
” means Awards granted under the Predecessor
Plan that are converted into Awards in respect of Shares pursuant to the Employee Matters Agreement.
2.3 “Award”
means, individually or collectively, a grant under this Plan
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, or Cash-Based Awards, and including Adjusted Awards and Substitute
Awards.
2.4 “Award Agreement”
means a written or electronic
agreement entered into by the Company and each Participant or a written or electronic statement issued by the Company to a Participant, which in either case sets forth the terms and provisions applicable to Awards granted under this Plan.
2.5 “Beneficial Owner”
or “
Beneficial Ownership
”
shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.6 “Board”
or “
Board of Directors
” means the Board of
Directors of the Company.
2.7 “Cash-Based Award”
means an
Award granted to a Participant whose value is denominated in cash as described in Article 9 hereof.
2
2.8 “Change in Control”
means
the first to occur of the following:
(a) the
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of its affiliates, or (D) any acquisition pursuant to a
transaction that complies with (c)(i), (c)(ii) and (c)(iii) below;
(b) individuals who, as of the Effective Date, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election or nomination for election by the
Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board;
(c) consummation of a
reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the
acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals
and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or entity resulting from such Business
Combination (including, without limitation, a corporation or entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries)
3
in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or any corporation or entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation or entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation or entity, except to the
extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation or entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
(d) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, with respect to a Section 409A Award, the
Committee may specify that the definition of Change in Control must also constitute an event that is a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within
the meaning of Section 409A.
2.9 “Code”
means the Internal
Revenue Code of 1986, as amended from time to time.
2.10 “Committee”
means
any committee appointed by the Board to administer Awards to Employees or Directors, as specified in Article 3 hereof.
2.11 “Company”
means Gannett Co., Inc., a Delaware corporation and any successor
thereto as provided in Article 18 hereof.
2.12 “Covered Employee”
means a
Participant who, as of the date of vesting and/or payout of an Award, as applicable, is one of the group of “covered employees,” as defined in the regulations promulgated under Code Section 162(m), or any successor statute, or a
Participant who is designated by the Committee to be treated as a “covered employee”.
2.13 “Director”
means any individual who is a member of the Board of Directors of the
Company; provided, however, that any Director who is employed by the Company shall be considered an Employee under the Plan.
2.14 “Disability”
shall have the meaning ascribed to such term in the Award Agreement.
If no such definition is provided in the Award Agreement, “Disability” shall mean a medically determinable physical or mental impairment which can be
4
expected to result in death or has lasted or can be expected to last for a continuous period of not less than six months if such disabling condition renders the person unable to perform the
material and substantial duties of his or her occupation. With respect to Section 409A Awards that become payable upon a disability, such disability must also qualify as a disability within the meaning of Treasury
Regulation 1.409A-3(i)(4).
2.15 “Effective
Date”
shall have the meaning ascribed to such term in Section 1.1 hereof.
2.16 “Employee”
means any employee of the Company or its Subsidiaries or
Affiliates.
2.17
“
Employee Matters Agreement
” means the Employee
Matters Agreement by and between the Company and Predecessor Company dated June 26, 2015.
2.18 “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.
2.19 “Fair Market Value”
as of any
date and in respect of any Share means the then most recent closing price of a Share, provided that, if Shares shall not have been traded on the New York Stock Exchange for more than 10 days immediately preceding such date or if deemed appropriate
by the Committee for any
other reason, the fair market value of Shares shall be as determined by the Committee in such other manner as it may deem appropriate, provided that such valuation is consistent with the requirements of
Section 409A. In no event shall the fair market value of any Share be less than its par value.
2.20 “Freestanding SAR”
means an SAR that is granted independently of any Options, as
described in Article 7 hereof.
2.21 “Incentive Stock Option”
or
“
ISO
” means an option to purchase Shares granted under Article 6 hereof and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422. To the extent that an option is
granted that is intended to meet the requirements of Code Section 422, but fails to meet such requirements, the option will be treated as a NQSO.
2.22 “Insider”
shall mean an individual who is, on the relevant date, an executive
officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.
2.23 “Nonqualified Stock Option”
or “
NQSO
” means an option to
purchase Shares granted under Article 6 hereof and that is not intended to be treated as an Incentive Stock Option, or that otherwise does not meet such requirements.
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2.24 “Option”
means an Incentive Stock
Option or a Nonqualified Stock Option, as described in Article 6 hereof.
2.25 “Option Price”
means the price at which a Share may be purchased by a Participant
pursuant to an Option.
2.26 “Participant”
means an Employee or Director
who has been selected to receive an Award or who has outstanding an Award granted under the Plan.
2.27 “Performance-Based Exception”
means the performance-based exception from the tax
deductibility limitations of Code Section 162(m).
2.28
“
Performance
Share
” means an Award granted to a Participant whose value is denominated in Shares and is earned by satisfaction of specified performance goals and such other terms and conditions that the Committee may specify, as described in Article 9
hereof.
2.29
“
Performance Unit
” means an Award granted to a
Participant whose value is specified by the Committee and is earned by satisfaction of specified performance goals and such other terms and conditions that the Committee may specify, as described in Article 9 hereof.
2.30
“
Period of Restriction
” means the period during which the transfer
of Shares of Restricted Stock is not permitted (e.g., based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, pursuant to the Restricted Stock Award Agreement, as provided in Article 8 hereof.
2.31
“
Person
” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
2.32
“
Predecessor Company
” means TEGNA Inc., formerly named Gannett Co.
Inc. prior to the Effective Date.
2.33
“
Predecessor Plan
”
means the Gannett Co., Inc. 2001 Omnibus Incentive Compensation Plan, as maintained by the Predecessor Company prior to the Effective Date of this Plan.
2.34
“
Restricted Stock
” means an Award granted to a Participant pursuant
to Article 8 hereof.
2.35 “Restricted Stock Units”
means an Award granted
to a Participant whose value is denominated in Shares and is earned by satisfaction of specified service requirements and such other terms and conditions that the Committee may specify, as described in Article 9 hereof.
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2.36
“
Retirement
” means a
termination of employment after attaining age 55 and completing 5 years of service or such other definition set forth in an Award Agreement.
2.37 “Section 409A”
means Code Section 409A and the regulations and other
guidance issued thereunder.
2.38 “Section 409A Award”
means an Award that
is subject to the requirements of Section 409A.
2.39
“
Shares
” means the Company’s common stock, par value $1.00 per
share.
2.40
“
Stock Appreciation Right
” or
“
SAR
” means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 hereof.
2.41 “Stock Award”
means an Award of Shares granted to a Participant pursuant to
Section 8.7 hereof.
2.42
“
Subsidiary
” means any
corporation, partnership, joint venture, or other entity in which the Company directly or indirectly has a majority voting interest.
2.43 “Substitute Awards
” means Awards granted upon assumption of, or in substitution
for, outstanding awards previously granted by a company or other entity (i) all or a portion
of the assets or equity of which is acquired by the Company or (ii) with which the Company merges or otherwise combines.
2.44
“
Tandem SAR
” means an SAR that is granted in connection with a
related Option pursuant to Article 7 hereof, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
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ARTICLE 3.
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ADMINISTRATION
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3.1 General
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Subject to the terms and conditions of the Plan, the Plan shall be administered by the Committee. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. The Committee shall
have the authority to delegate administrative duties to officers of the Company.
3.2 Authority of the Committee
. Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions herein (including, with respect to Section 409A Awards, the requirements of Section 409A), the Committee shall have full power to select Employees and Directors who
shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent
with the Plan; construe and interpret
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the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; and amend the terms and
conditions of any outstanding Award as provided in the Plan. Further, the Committee shall make all other determinations that it deems necessary or advisable for the administration of the Plan. As permitted by law and the terms of the Plan, the
Committee may delegate its authority herein. No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award granted hereunder.
3.3 Decisions Binding
. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders and resolutions of the Committee shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Directors, Employees, Participants, and their estates and
beneficiaries, unless changed by the Board.
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ARTICLE 4.
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SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS; ADJUSTED AND SUBSTITUTED AWARDS
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4.1 Number of Shares Available for Grants; Share Counting and Reacquired Shares
.
Subject to Sections 4.2 and 4.4, the number of Shares reserved for issuance to Participants under this Plan is twenty-one million (21,000,000) Shares. Shares issued under the Plan may be authorized but unissued shares or treasury
shares.
For purposes of counting the number of Shares available for Awards under the Plan, the full number of
shares of the Company’s common stock covered by Freestanding SARs shall be counted against the number of Shares available for Awards (i.e., not the net Shares issued in satisfaction of a Freestanding SAR Award); provided, however, that
Freestanding SARs that may be settled in cash only shall not be so counted. Additionally, if an Option may be settled by issuing net Shares (i.e., withholding a number of Shares equal to the exercise price), the full number of shares of the
Company’s common stock covered by the Option shall be counted against the number of Shares available for Awards, not the net Shares issued in satisfaction of an Option. If any Award (a) expires or is terminated, surrendered or canceled
without having been fully exercised or is forfeited in whole or in part, or (b) results in any Shares not being issued (including as a result of any Award that was settleable either in cash or in stock actually being settled in cash), the
unissued Shares covered by such Award shall again be available for the grant of Awards; provided, however, in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code. The following Shares shall not be
added back to the number of Shares available for the future grant of Awards: (i) shares of the Company’s common stock tendered to the Company by a Participant to (A) purchase shares of the Company’s common stock upon the exercise
of an Award, or (B) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation); and (ii) shares of the Company’s common stock repurchased by the Company on the open market using the
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proceeds from the exercise of an Award. Subject to the foregoing, the Committee shall determine the appropriate methodology for calculating the number of Shares issued pursuant to the Plan.
The maximum number of Shares which may be issued under Incentive Stock Options granted under the Plan is five million
(5,000,000).
The maximum number of Shares for which Awards may be granted under this Plan to any non-employee Director in
any calendar year shall be fifty thousand (50,000) Shares. For the avoidance of doubt, the foregoing limitation shall not apply to cash-based director fees that the non-employee Director elects to receive in the form of Shares or Share
equivalents equal in value to such cash-based Director fees pursuant to another plan or policy of the Company.
The
following rules shall apply to grants of Awards under the Plan:
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(a)
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Stock Options
: The maximum aggregate number of Shares that may be granted in the form of Stock Options,
pursuant to any Award granted in any one fiscal year to any one Participant shall be one million (1,000,000).
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(b)
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SARs
: The maximum aggregate number of Shares that may be granted in the form of Stock Appreciation
Rights, pursuant to any Award granted in any one fiscal year to any one Participant shall be one million (1,000,000).
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(c)
|
Restricted Stock/Stock Awards
: The maximum aggregate grant of Shares with respect to Awards of
Restricted Stock or Stock Awards granted in any one fiscal year to any one Participant shall be five hundred thousand (500,000).
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(d)
|
Restricted Stock Units, Performance Shares, Performance Units and Cash-Based Awards
: The maximum
aggregate grant with respect to Awards of Performance Shares or Restricted Stock Units made in
any one fiscal year to any one Participant shall be equal to five hundred thousand (500,000) Shares; and the
maximum aggregate
amount awarded with respect to Cash-Based Awards or Performance Units to any one Participant in any one fiscal year may not exceed ten million dollars ($10,000,000).
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4.2 Adjustments in Authorized Shares
. Upon a change in corporate capitalization,
such as a stock split, stock dividend or a corporate transaction, such as any merger, consolidation, combination, exchange of shares or the like, separation, including a spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, the Committee shall make an appropriate adjustment in the number and class
of Shares that may be delivered under Section 4.1, in the number and class of and/or price of Shares subject
to outstanding Awards granted under the Plan, and in the Award limits set forth in Section 4.1, as may be determined
to be equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights.
9
4.3 Adjustment of Awards Upon the
Occurrence of Certain Unusual or Nonrecurring Events
. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the
events described in Section 4.2 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that, with respect to Awards that are intended to comply with the requirements of the
Performance-Based Exception, no such adjustment shall be authorized
to the extent that such adjustment would be inconsistent with the Award’s satisfaction of the Performance-Based Exception.
4.4 Adjusted and Substitute Awards
.
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(a)
|
Notwithstanding any terms or conditions of the Plan to the contrary, (i) Substitute Awards may have
substantially the same terms and conditions, including without limitation provisions relating to vesting, exercise periods, expiration, payment, forfeiture, and the consequences of termination of service, as the awards that they replace, as
determined by the Committee in its sole discretion, and (ii) Adjusted Awards shall have terms consistent with those set forth in the Employee Matters Agreement, which generally provide the Adjusted Awards will have substantially the same terms and
conditions, including without limitation provisions relating to vesting, exercise periods, expiration, payment, forfeiture, and the consequences of termination of Service, as the awards that they replace which were granted under the Predecessor
Plan.
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(b)
|
The recipient or holder of a Substitute Award or an Adjusted Award shall be an eligible Participant hereunder
even if not an Employee or Director with respect to the Company or an Affiliate.
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(c)
|
In the case of a Substitute Award, the date of grant may be treated as the effective date of the grant of such
Award under the original plan under which the award was authorized, and in the case of an Adjusted Award, the date of grant shall be the effective date of the grant under the Predecessor Plan.
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(d)
|
The per share exercise price of an Option that is a Substitute Award or Adjusted Award may be less than 100%
of the Fair Market Value of a Share on the date of grant, provided that such substitution or adjustment complies with applicable laws and regulations, including the listing requirements of the New York Stock Exchange and Section 409A or
Section 424 of the Code, as applicable. The per share exercise price of a Freestanding SAR that is a Substitute Award or an Adjusted Award may be less than 100% of the Fair Market Value of a Share on the date of grant, provided that such
substitution
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10
|
|
or adjustment complies with applicable laws and regulations, including the listing requirements of the New York Stock Exchange and Section 409A, as applicable.
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(e)
|
Anything to the contrary in this Plan notwithstanding, any Shares underlying Substitute Awards or Adjusted
Awards shall not be counted against the limits set forth in Section 4.1(a)-(d). Anything to the contrary in this Plan notwithstanding, any Shares underlying Substitute Awards shall not be counted against the number of Shares authorized for
issuance or the maximum number of Shares which may be issued under Incentive Stock Options, and the lapse, expiration, termination, forfeiture or cancellation of any Substitute Award without the issuance of Shares or payment of cash thereunder shall
not result in an increase the number of Shares available for issuance under the Plan. For the avoidance of doubt, Adjusted Awards shall be treated as Awards generally (and not as Substitute Awards) for purposes of the preceding sentence.
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|
ARTICLE 5.
|
ELIGIBILITY AND PARTICIPATION
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5.1 Eligibility
. Persons eligible to participate in this Plan include all Employees
and Directors.
5.2 Actual Participation
. Subject to the provisions of
the Plan, the Committee may, from time to time, select from all eligible Employees and Directors, those to whom Awards shall be granted and shall determine the nature and amount of each Award.
5.3 Newly Eligible Employees
. The Committee shall be entitled to make such rules,
regulations, determinations and awards as it deems appropriate in respect of any Employee who becomes eligible to participate in the Plan after the commencement of an award or incentive period.
5.4 Leaves of Absence
. The Committee shall be entitled to make such rules,
regulations, and determinations as it deems appropriate under the Plan in respect of any leave of absence taken by the recipient of any award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine:
(a) whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan;
and (b) the impact, if any, of such leave of absence on awards under the Plan theretofore made to any
recipient who takes such leave of absence. Notwithstanding the foregoing, with respect to any Section 409A Award, all leaves of absences and determinations of terminations of employment must be construed and interpreted consistent with the
requirements of Section 409A and the definition of “separation from service” thereunder.
11
6.1 Grant of
Options
. Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. Notwithstanding the foregoing,
Incentive Stock Options may only be granted to Employees of Gannett Co., Inc. or its Affiliates or Subsidiaries; provided that the Affiliate or Subsidiary is a type of entity whose employees can receive such options under Code Sections 422 and
424.
6.2 Award Agreement
. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the
Plan.
6.3 Option Price
. The Option Price for each grant of an Option
under this Plan shall be as determined by the Committee; provided, however, the per-share exercise price shall not be less than 100 percent of the Fair Market Value of the Shares on the date the Option is granted.
6.4 Duration of Options
. Each Option granted to a Participant shall expire at such
time as the Committee shall determine at the time of grant; provided that the Option must expire on or before the date that is the tenth anniversary of the date of grant.
6.5 Exercise of Options
. Options granted under this Article 6 shall be exercisable
at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6 Payment
. Options granted under this Article 6 shall be exercised by the delivery
of a written, electronic or telephonic notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its
equivalent; or (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price; or (c) by a combination of (a) and (b); or (d) any other method approved by
the Committee in its sole discretion. The tendering of previously acquired shares may be done through attestation. No fractional shares may be tendered or accepted in payment of the Option Price.
Cashless exercises are permitted pursuant to Federal Reserve Board’s Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law.
12
Subject to any governing rules or regulations, as soon as practicable after
receipt of notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant’s name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United
States dollars.
6.7 Restrictions on Share Transferability
. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements
of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.
6.8 Nontransferability of Options
.
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(a)
|
Incentive Stock Options
. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.
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(b)
|
Nonqualified Stock Options
. Except as otherwise provided in a Participant’s Award Agreement, no
NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award
Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant or such Participant’s legal representative.
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6.9 Restriction on Cash Buyouts of Underwater Options
.
The Company may not
purchase, cancel or buy out an underwater Option in exchange for cash without first obtaining Shareholder approval.
6.10 Service Requirement for Options that Vest Solely Based on Service
.
Options granted
to Employees that vest solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one
year: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the Option is not continued or
assumed (e.g., the Option is not equitably converted or substituted for an option of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in substitution for pre-existing
awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.
13
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ARTICLE 7.
|
STOCK APPRECIATION RIGHTS
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7.1 Grant of SARs
. Subject to the terms and conditions of the Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.
Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of
SARs granted to each Participant and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
The grant price of a Freestanding SAR shall not be less than the Fair Market Value of a Share on the date of grant of the SAR.
The grant price of Tandem SARs shall equal the Option Price of the related Option.
7.2 SAR Agreement
. Each SAR grant shall be evidenced by an Award Agreement that
shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.
7.3 Term of SARs
. The term of an SAR granted under the Plan shall be determined by
the Committee, in its sole discretion; provided that the SAR must expire on or before the date that is the tenth anniversary of the date of grant.
7.4 Exercise of Freestanding SARs
. Freestanding SARs may be exercised upon whatever
terms and conditions the Committee, in its sole discretion, imposes upon them.
7.5 Exercise of Tandem SARs
. Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.
7.6 Payment of SAR Amount
. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by multiplying:
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(a)
|
The excess of the Fair Market Value of a Share on the date of exercise over the grant price; by
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(b)
|
The number of Shares with respect to which the SAR is exercised.
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In the sole discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, in some
combination thereof, or in any other manner approved by the Committee. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
14
7.7 Nontransferability of SARs
. Except
as otherwise provided in a Participant’s Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further,
except as otherwise provided in a Participant’s Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or such Participant’s legal representative.
7.8 Restriction on Cash Buyouts of Underwater SARs
. The Company may not purchase,
cancel or buy out an underwater SAR in exchange for cash without first obtaining Shareholder approval.
7.9 Service Requirement for SARs that Vest Solely Based on Service.
SARs granted to
Employees that vest solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter vesting periods or provide for accelerated vesting after less than one
year: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the SAR is not
continued or assumed (e.g., the SAR is not equitably converted or substituted for a stock appreciation right of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in
substitution for pre-existing awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.
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ARTICLE 8.
|
RESTRICTED STOCK/STOCK AWARDS
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8.1 Grant of Restricted Stock
. Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in such amounts, as the Committee shall determine.
8.2 Restricted Stock Agreement
. Each Restricted Stock grant shall be evidenced by a
Restricted Stock Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine.
8.3 Transferability
. The Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any
other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Award Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant or such Participant’s legal representative.
15
8.4 Other Restrictions
. The Committee
shall impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated
purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under
applicable federal or state securities laws.
To the extent deemed appropriate by the Committee, the Company may retain
the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in the Award Agreement, Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction.
8.5 Voting Rights
. If the Committee so determines, Participants holding Shares of
Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction.
8.6 Dividends and Other Distributions
. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may, if the Committee so determines, be credited with dividends paid with respect to the underlying Shares while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Shares granted to a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Restricted Shares, such that the dividends and/or the Restricted Shares maintain eligibility for the
Performance-Based Exception.
8.7 Stock Award
. The Committee may grant
and award Shares to a Participant that are not subject to Periods of Restrictions and which may be subject to such conditions or provisions as the Committee determines.
8.8 Service Requirement for Restricted Stock that Vests Solely Based on Service.
Restricted Stock granted to Employees that vests and is paid solely based on service will be subject to a minimum vesting period requiring at least one year of service; provided that the Committee may adopt shorter vesting periods or provide for
accelerated vesting after less than one year: (i) in connection with terminations of employment due to death, disability, retirement or other circumstances that the Committee determines to be appropriate; (ii) in connection with a Change
in Control in which the Restricted Stock is not continued or assumed (e.g., the Restricted Stock
16
is not equitably converted or substituted for restricted stock of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or
Affiliates in substitution for pre-existing awards; (iv) for new hire inducement awards or off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.
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ARTICLE 9.
|
RESTRICTED STOCK UNITS, PERFORMANCE UNITS, PERFORMANCE SHARES, AND CASH-BASED AWARDS
|
9.1 Grant of Restricted Stock Units, Performance Units, Performance Shares and
Cash-Based Awards
. Subject to the terms of the Plan, Restricted Stock Units, Performance Shares, Performance Units, and/or Cash-Based Awards may be granted to Participants in such amounts and upon such terms, and at any time and from time to
time, as shall be determined by the Committee.
9.2 Award Agreement
. At the
Committee’s discretion, each grant of Restricted Stock Units, Performance Shares, Performance Units and Cash-Based Awards may be evidenced by an Award Agreement that shall specify the initial value, the duration of the Award, the performance
measures and/or service requirements, if any, applicable to the Award, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan.
9.3 Value of Performance Units/Shares and Cash-Based Awards
. Each Performance Unit
shall have an initial value that is established by the Committee at the time of grant. Each Restricted Stock Unit and Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. Each Cash-Based Award
shall have a value as may be determined by the Committee. The Committee shall set performance goals and/or service requirements in its discretion which, depending on the extent to which they are met, will determine the number and/or value of
Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards that will be paid out to the Participant. Generally, a Participant’s right to receive amounts under a Restricted Stock Unit award shall be based on the
Participant’s satisfaction of a service requirement and such other terms and conditions that the Committee may specify. Generally, a Participant’s right to receive amounts under a Performance Unit, Performance Share or Cash-Based Award
shall be based on the satisfaction of a performance requirement and such other terms and conditions that the Committee may specify. The Committee has full discretionary authority to establish performance goals and/or service requirements, and a
performance goal may include a service requirement. For purposes of this Article 9, the time period during which the performance goals and/or service requirements must be met shall be called a “Performance Period.”
9.4 Earning of Restricted Stock Units, Performance Units, Performance Shares and
Cash-Based Awards
. Subject to the terms of this Plan and the Award Agreement (if any), after the applicable
Performance Period has ended, the holder of Restricted Stock Units, Performance Units, Performance Shares or Cash-Based
17
Awards shall be entitled to receive payout on the number and value of Restricted Stock Units, Performance Units, Performance Shares or Cash-Based Awards earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the corresponding performance goals and/or service requirements have been achieved. Unless otherwise determined by the Committee, notwithstanding any other provision of the
Plan, payment of Cash-Based Awards shall only be made for those Participants who are Directors or in the employ of the Company at the end of the Performance Period or, if none has been specified, the end of the applicable award year.
9.5 Form and Timing of Payment of Restricted Stock Units, Performance Units, Performance
Shares and Cash-Based Awards
. Payment of earned Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards shall be as determined by the Committee and, if applicable, as evidenced in the related Award Agreement. Subject
to the terms of the Plan, the Committee, in its sole discretion, may pay earned Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards in the form of cash or in Shares (or in a combination thereof) that have an aggregate
Fair Market Value equal to the value of the earned Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee. No fractional shares will be issued. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.
Unless otherwise provided by the Committee, Participants holding Restricted Stock Units, Performance Units, or Performance
Shares may be entitled to receive dividend units with respect to dividends declared with respect to the Shares underlying such Awards; provided that no dividend units may be paid on Performance Units or Performance Shares that are not earned. Such
dividends may be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares of Restricted Stock, as set forth in Section 8.6 hereof, as determined by the Committee.
9.6 Nontransferability
. Except as otherwise provided in a Participant’s Award
Agreement, Restricted Stock Units, Performance Units, Performance Shares and Cash-Based Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in a Participant’s Award Agreement, a Participant’s rights under the such Awards shall be exercisable during the Participant’s lifetime only by such Participant or such Participant’s legal
representative.
9.7 Service Requirement for Restricted Stock Units that Vest Solely
Based on Service.
Restricted Stock Units granted to Employees that vest and are paid solely based on service will be subject to a minimum vesting period requiring at least one
18
year of service; provided that the Committee may adopt shorter or accelerated vesting periods: (i) in connection with terminations of employment due to death, disability, retirement or other
circumstances that the Committee determines to be appropriate; (ii) in connection with a Change in Control in which the Restricted Stock Unit is not continued or assumed (e.g., the Restricted Stock Unit is not equitably converted or substituted
for a restricted stock unit of the successor company); (iii) for grants made in connection with an acquisition by the Company or its Subsidiaries or Affiliates in substitution for pre-existing awards; (iv) for new hire inducement awards or
off-cycle awards; or (v) to comply with contractual rights in effect on the Effective Date.
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ARTICLE 10.
|
PERFORMANCE MEASURES
|
Unless and until the Committee proposes for shareholder
vote and shareholders approve a change in the general performance measures set forth in this Article 10, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Covered Employees that are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants shall be chosen from among:
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|
(a)
|
Earnings per share (basic or diluted);
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|
|
(b)
|
Income before income taxes;
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|
(c)
|
Income from continuing operations;
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|
(d)
|
Net income or net income attributable to Gannett Co., Inc.;
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(f)
|
Cash flow from operating activities, operating cash flow (defined as operating income plus non-cash charges
for depreciation, amortization and impairment of operating assets) or free cash flow;
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(g)
|
EBITDA, or net income attributable to Gannett Co., Inc., before interest, taxes, depreciation/amortization;
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|
(h)
|
Return measures (including, but not limited to, return on assets, equity, capital or investment);
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|
(i)
|
Cash flow return on investments, which equals net cash flows divided by owner’s equity;
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(j)
|
Internal rate of return or increase in net present value;
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19
|
|
(n)
|
Operating measures such as trends in digital metrics, circulation, television ratings and advertising
measures;
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(o)
|
Internal measures such as achieving a diverse workforce;
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(p)
|
Share price (including, but not limited to, growth measures and total shareholder return) and market value;
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(q)
|
Debt (including, but not limited to, measures such as debt (book value or face value) outstanding and debt to
earnings before interest, taxes, depreciation and amortization); and
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(r)
|
Any of the above measures compared to peer or other companies.
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Performance measures may be set either at the consolidated level, segment level, division level, group level, or the business unit level.
Additionally, performance measures may be measured either annually or cumulatively over a period of years, on an absolute basis or relative to pre-established targets, to a previous year’s results or to a designated comparison group, in each
case as specified by the Committee.
Unless the Committee specifies otherwise at the time the performance goals are established (and the
Committee may at such time decide to limit the “Extraordinary Items” for which it will make adjustments, or decide to not make adjustments for any “Extraordinary Items”), the Committee shall adjust a performance goal established
under a performance measure set forth above to take into account the effects of “Extraordinary Items.” “Extraordinary Items” means (1) items presented as such (or other comparable terms) on the Company’s audited
financial statements, (2) unusual, special or nonrecurring charges, costs, credits or items of gain or loss (including, without limitation, an unbudgeted material expense incurred by or at the direction of the Board of Directors or a committee
of the Board or a material litigation judgment or settlement), (3) changes in tax or accounting laws or rules, and/or (4) the effects of mergers, acquisitions, divestitures, spin-offs or significant transactions (including, without
limitation, a corporate merger, consolidation, acquisition of property or stock, reorganization, restructuring charge, or joint venture), each of which are identified in the quarterly and/or annual audited financial statements and notes thereto or
in the “management’s discussion and analysis” of the financial statements in a period report filed with the Securities and Exchange Commission under the Exchange Act. The Committee shall make such adjustments to the performance goals
as shall be equitable and appropriate in order to make the goal, as nearly as practicable, equivalent to the goal immediately prior to such transaction or event.
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ARTICLE 11.
|
BENEFICIARY DESIGNATION
|
The Committee may permit Participants under the Plan to name,
from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when
20
filed by the Participant in writing with the Company during the Participant’s lifetime. If a beneficiary designation has not been made, or the beneficiary was not properly designated (in the
sole discretion of the Committee), has died or cannot be found, all payments after death shall be paid to the Participant’s estate. In case of disputes over the proper beneficiary, the Company reserves the right to make any or all payments to
the Participant’s estate.
Subject to the requirements of Section 409A, the Committee may permit
or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the lapse or waiver of restrictions with respect to Restricted Stock,
payment of a Stock Award or the satisfaction of any requirements or goals with respect to Restricted Stock Units, Performance Units/Shares and Cash-Based Awards. If any such deferral election is required or permitted, the Committee shall, in its
sole discretion, establish rules and procedures for such payment deferrals provided that such rules must comply with the requirements of Section 409A.
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ARTICLE 13.
|
RIGHTS OF EMPLOYEES/DIRECTORS
|
13.1 Employment
. Nothing in the Plan shall confer upon any Participant any right to
continue in the Company’s employ, or as a Director, or interfere with or limit in any way the right of the Company to terminate any Participant’s employment or directorship at any time.
13.2 Participation
. No Employee or Director shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
13.3 Rights as a Stockholder
. Except as provided in Sections 8.5, 8.6 and 9.5, a
Participant shall have none of the rights of a shareholder with respect to shares of Common Stock covered by any Award until the Participant becomes the record holder of such shares.
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ARTICLE 14.
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TERMINATION OF EMPLOYMENT/DIRECTORSHIP
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Each Participant’s Award Agreement shall
set forth the extent to which the Participant shall have the right to such Participant’s outstanding Award(s) following termination of the Participant’s employment or directorship with the Company. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreements entered into with each Participant, need not be uniform among all Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
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ARTICLE 15.
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CHANGE IN CONTROL
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15.1 Treatment of
Outstanding Awards Other than Cash-Based Awards
. In the event of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national
securities exchanges, or unless the Committee specifies otherwise in the Award Agreement:
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(a)
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Awards to Employees will fully vest if: (i) the Awards are not continued or assumed (e.g., the Awards are
not equitably converted or substituted for awards of a successor entity) in connection with the Change in Control; or (ii) the Employee has a qualifying termination of employment (as defined in the Award Agreement) within two years following
the date of the Change in Control. Additionally, in the event that the Awards are not so continued or assumed in connection with the Change in Control or in the event of a qualifying termination of employment (as defined in the Award Agreement)
within two years following the date of the Change in Control, then upon such Change in Control or such qualifying termination (as the case may be):
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(i)
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Any and all Options and SARs granted hereunder shall become fully exercisable during their remaining term; and
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(ii)
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Any restriction periods and restrictions imposed on Restricted Stock that are not performance-based shall
lapse; and
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(iii)
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The target payout opportunities attainable under all outstanding Awards of performance-based Restricted Stock,
Performance Units and Performance Shares shall be deemed to have been fully earned for the entire Performance Period (s) as of the effective date of the Change in Control or such qualifying termination. The vesting of all such Awards
denominated in Shares shall be accelerated as of the effective date of the Change in Control or such qualifying termination and shall be paid out to Participants within thirty (30) days following the effective date of the Change in Control or
such qualifying termination based upon an assumed achievement of all relevant target performance goals (such payment shall be in full satisfaction of the Award). Such Awards denominated in cash shall be paid to Participants in cash within thirty
(30) days following the effective date of the Change in Control or such qualifying termination based on an assumed achievement of all relevant target performance goals (such payment shall be in full satisfaction of the Award). Restricted Stock
Units shall be fully vested as of the effective date of the Change in Control or such qualifying termination, and the full value of such an Award shall be paid out to Participants within thirty (30) days following the effective date of the
Change in Control or such qualifying termination. Notwithstanding the foregoing, in the event that the Award is not so continued or assumed in connection with a Change in Control, the payment of a Section 409A
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Award will only be accelerated if the Change in Control also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the
assets of the Company within the meaning of Section 409A and will not result in additional taxes under Section 409A.
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15.2 Treatment of Cash-Based Awards
. In the event of a Change in Control, unless otherwise
specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless the Committee shall provide otherwise in the Award Agreement or resolutions adopted by
the Committee, Cash-Based Awards to Employees will fully vest if: (i) the Awards are not continued or assumed (e.g., the Awards are not equitably converted or substituted for awards of a successor entity) in connection
with the
Change in Control; or (ii) the Employee has a qualifying termination of employment (as defined in the Award Agreement) within two years following the date of the Change in Control. In the event that the Cash-Based Awards are not so continued or
assumed or in the event
of a qualifying termination of employment (as defined in the Award Agreement) within two years following the date of the Change in Control, the vesting of all outstanding Cash-Based Awards shall be accelerated
as of the date of such event (and, in the case of performance-based Cash-Based Awards, based on an assumed achievement of all relevant target performance goals), and all Cash-Based Awards shall be paid to Participants in cash within thirty
(30) days following the effective date of such event (such payment
shall be in full satisfaction of the Award). Notwithstanding the foregoing, in the event that the Cash-
Based Awards is not so continued or assumed in
connection with a Change in Control, the payment of a Cash-Based Section 409A Award will only be accelerated if the Change in Control also constitutes a change in ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company within the meaning of Section 409A and will not result in additional taxes under Section 409A.
15.3 Limitation.
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(a)
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Intention of Section 15.3
: The acceleration or payment of Awards could, in certain
circumstances, subject the Participant to the excise tax provided under Section 4999 of the Code. It is the object of this Section 15.3 to enable each Participant to retain in full the benefits of the Plan and to provide for the maximum
after-tax income to each Participant. Accordingly, the Company will determine, before any payments are made on Awards governed by Section 15.1, which of two alternative forms of acceleration will maximize the Participant’s after-tax
proceeds, and must notify the Participant in writing of its determination. The first alternative is the payment in full of all Awards governed by Section 15.1 and any other payments or benefits potentially subject to the excise tax under
Section 4999. The second alternative is the payment of only a part of the Participant’s Awards (but
taking into account
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any other payments or benefits potentially subject to the excise tax under Section 4999) so that the Participant receives the largest payment and benefits possible without causing an excise
tax to be payable by the Participant under Section 4999 of the Code. This second alternative is referred to in this Section as “Limited Vesting”.
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(b)
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Limitation on Participant’s Rights
: The Participant’s Awards shall be paid only to the extent
permitted under the alternative determined by the Company to maximize the Participant’s after-tax proceeds, and the Participant shall have no rights to any greater payments on his or her Awards. For purposes of this determination, the Company
shall take into account any rights or benefits the Participant has under another plan or agreement.
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(c)
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Determination to be Conclusive
: The determination of whether Limited Vesting is required and the
application of the rules in Section 15.4 shall initially be made by the Company in its sole discretion and any such determination shall be conclusive and binding on the Participant unless the Participant proves that it is clearly erroneous. In
the latter event, such determination shall be made by the Company in its sole discretion.
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(d)
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Section 409A Awards:
This Section 15.3 and Section 15.4 shall not apply to or affect a
Section 409A Award, including without limitation the payment, vesting or timing of payment of a Section 409A Award. Notwithstanding the foregoing, if the only remaining Awards that are subject to the excise tax under Section 4999 that
could be reduced to accomplish Limited Vesting are Section 409A Awards, then performance-based Section 409A Awards may be reduced followed by non-performance, service-based Section 409A Awards.
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15.4 Limitation on Payment
. Notwithstanding Section 15.1, if Limited Vesting applies then
the amount paid on exercise or payment of an Award shall not exceed the largest amount that can be paid without causing an excise tax to be payable by the Participant under Section 4999 of the Code. If payments are so limited, awards shall be
deemed paid in the following order:
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(a)
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all Options or SARs that were accelerated pursuant to Section 15.1(a) shall be deemed paid first;
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(b)
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all awards of Restricted Stock and Restricted Stock Units that are not performance-based shall be deemed paid;
and
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(c)
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finally, all awards of Performance Units, Performance Shares and performance-based Restricted Stock and Cash
Awards shall then be deemed paid.
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As among awards or portions of awards of the same type, those vesting
at the most distant time in the future (absent a Change in Control) shall be deemed paid last.
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15.5 Expenses
. The Company shall
pay all legal fees, court costs, fees of experts and other costs and expenses when incurred by a Participant in connection with any actual, threatened or contemplated litigation or legal, administrative or other proceeding involving the provisions
of Section 15.4, whether or not initiated by the Participant.
The reimbursements of such expenses and costs
shall comply with the requirements of Section 409A, which generally require (i) that the amount of expenses and costs eligible for reimbursement during a calendar year may not affect the expenses and costs eligible for reimbursement in any
other taxable year; (ii) the reimbursement of an eligible expense or cost is made on or before the last day of the calendar year following the calendar year in which the expense or cost was incurred; and (iii) the right to reimbursement is
not subject to liquidation or exchange for another benefit.
15.6 Termination,
Amendment, and Modifications of Change-in-Control Provisions
. Notwithstanding any other provision of this Plan or any Award Agreement provision, the provisions of this Article 15 may not be terminated, amended, or modified on or after the
date of a Change in Control to affect adversely any Award theretofore granted under the Plan and any rights or benefits provided to a
Participant this Article 15 without the prior written consent of the Participant with respect to said
Participant’s outstanding Awards; provided, however, the Committee may terminate, amend, or modify this Article 15 at any time and from time to time prior to the date of a Change in Control.
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ARTICLE 16.
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AMENDMENT, MODIFICATION, TERMINATION AND TAX COMPLIANCE.
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16.1 Amendment, Modification, and Termination
. Subject to the terms of the Plan, the
Committee or the Board may at any time and from time to time, alter, amend, suspend, or terminate the Plan in whole or in part.
16.2 Awards Previously Granted
. Notwithstanding any other provision of the Plan to the
contrary, no termination, amendment, or modification of the Plan shall adversely affect
in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award; provided that no
consent is required for any amendment the Committee deems necessary or appropriate to comply with applicable legal or tax requirements.
16.3 Shareholder Approval Required for Certain Amendments
. Shareholder approval will be
required for any amendment of the Plan that does any of the following: (a) permits the grant of any Option with an Option Price less than the Fair Market Value of the Shares on the date of grant; (b) reduces the Option Price of an
outstanding Option, either by lowering the Option Price or by canceling an outstanding Option and granting a replacement Option with a lower exercise price; (c) permits the grant of any SAR with a grant price that is less than the Fair
Market
25
Value of the Shares on the date of grant; or (d) reduces the grant price of an outstanding SAR, either by lowering the grant price or by canceling an outstanding SAR and granting a
replacement SAR with a lower exercise price.
16.4 Compliance with Code
Section 162(m)
. At all times when Code Section 162(m) is applicable, if and to the extent the Committee so determines, Awards granted under this Plan to Employees who are or could reasonably become Covered Employees as determined by
the Committee shall comply with the requirements of the Performance-Based Exception. Generally, this requires that the amount paid under such an Award be determined based on the attainment of written, objective performance goals approved by the
Committee for a performance period established by the Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the
performance goal relates or, if less, the number of days which is equal to
25 percent of the relevant performance period. The Committee shall determine whether, with respect to a performance period, the applicable performance goals have
been met with respect to a given Participant and, if they have, shall so certify and ascertain the amount of the applicable Award. No amount will be paid for such performance period until such certification is made by the Committee. The amount
actually paid to a given Participant may be less than (but not more than) the amount determined under the applicable performance formula, at the discretion of the Committee.
16.5 Compliance with Section 409A
. It is intended that Awards under this Plan are
either exempt from Section 409A or are structured to comply with the requirements of Section 409A. The Plan shall be administered and interpreted in accordance with that intent. By way of example, the following rules shall apply:
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•
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Any provision of the Plan that would conflict with the requirements of a Section 409A Award shall not
apply to a Section 409A Award.
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•
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Any adjustment or modification to an Award shall be made in compliance with Section 409A (e.g., any
adjustment to an Option or SAR under Section 4.2 shall be made in accordance with the requirements of Section 409A).
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•
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For Section 409A Awards, all rights to amend, terminate or modify the Plan or any Award are subject to
the requirements and limitations of Section 409A.
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•
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For Section 409A Awards, any payment or distribution that is triggered upon termination or cessation of
employment or a comparable event shall be interpreted consistent with the definition of “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h).
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•
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With respect to amounts payable under a Section 409A Award, in the event that a Participant is a
“specified employee” as defined in Section 409A, any amount that is payable in connection with the Participant’s separation from service
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shall not be paid prior to the date which is six months after the date the Participant separates from service (or, if earlier, the date the Participant dies). A Participant who is subject to the
restriction described in the previous sentence shall be paid on the first day of the seventh month after the Participant’s separation from service an amount equal to the benefit that the Participant would have received during such six month
period absent the restriction.
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While the Company intends for Awards to either be exempt from or in
compliance with Section 409A, neither the Company nor the Committee shall be liable to any person for the tax consequences of any failure to comply with the requirements of Section 409A or any other tax consequences relating to Awards
under this Plan.
The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy the Federal statutory minimum, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a
result of this Plan. The Participant may satisfy, totally or in part, his obligations pursuant to this Article by electing to have Shares withheld, to redeliver Shares acquired under an Award, or to deliver previously owned Shares, provided that the
election is made in writing on or prior to (i) the date of exercise, in the case of Options and SAR’s (ii) the date of payment, in respect of Stock Awards, Restricted Stock Units, Performance Units, Performance Shares, or Cash-Based
Awards, and (iii) the expiration of the Period of Restriction, in respect of Restricted Stock. Any election made under this Article shall be irrevocable by the Participant and may be disapproved by the Committee at any time in its sole
discretion. If an election is disapproved by the Committee, the Participant must satisfy his obligations pursuant to this paragraph in cash.
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business, stock
and/or assets of the Company.
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ARTICLE 19.
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GENERAL PROVISIONS
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19.1 Gender and
Number
. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
19.2 Severability
. If any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
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19.3 Requirements of Law
. The granting of
Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
19.4 Securities Law Compliance
. With respect to Insiders, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act, unless determined otherwise by the Board. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the Board.
19.5 Listing
. The Company may use reasonable endeavors to register Shares allotted
pursuant to the exercise of an Option with the United States Securities and Exchange Commission or to effect compliance with the registration, qualification, and listing requirements of any national securities laws, stock exchange, or automated
quotation system.
19.6 Inability to Obtain Authority
. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
19.7 No Additional Rights
. Neither the Award nor any benefits arising under this Plan
shall constitute part of an employment contract between the Participant and the Company or any Subsidiary or Affiliate, and accordingly, subject to Section 16.2, this Plan and the benefits hereunder may be terminated at any time in the sole and
exclusive discretion of the Committee without giving rise to liability on the part of the Company or any Affiliate for severance payments.
19.8 Employees Based Outside of the United States
. Notwithstanding any provision of the
Plan to the contrary, to comply with provisions of laws in other countries in which the Company, its Affiliates, and its Subsidiaries operate or have Employees, the Committee, in its sole discretion, shall have the power and authority to:
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(a)
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Determine which Affiliates and Subsidiaries will be covered by the Plan or relevant subplans;
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(b)
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Determine which Employees employed outside the United States are eligible to become Participants in the Plan;
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(c)
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Modify the terms and conditions of any Award granted to Participants who are employed outside the United
States;
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(d)
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Establish subplans, modified exercise procedures, and other terms and procedures to the extent such actions
may be necessary, advisable or convenient, or to the extent appropriate to provide maximum flexibility for the Participant’s financial planning. Any subplans and modifications to the Plan terms or procedures established under this
Section 19.8 by the Committee shall be filed with the Plan document as Appendices; and
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(e)
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Take any action, before or after an Award is made, which the Committee deems advisable to obtain, comply with,
or otherwise reflect any necessary governmental regulatory procedures, exemptions or approvals, as they may affect this Plan, any subplan, or any Participant.
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19.9 Uncertificated Shares
. To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
19.10 Governing Law
. The Plan and each Award Agreement shall be governed by the laws of
the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement,
recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts located in the Commonwealth of Virginia, County of Fairfax, to resolve any and all issues that may arise out of or
relate to the Plan or any related Award Agreement.
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Dated: June 26, 2015
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GANNETT SPINCO, INC.
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By:
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/s/ Todd A. Mayman
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Name: Todd A. Mayman
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Title: Vice President
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29
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Shareowner Services
P.O. Box 64945
St. Paul, MN 55164-0945
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Address Change? Mark box, sign, and indicate changes below: ☐
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TO VOTE BY INTERNET OR
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TELEPHONE, SEE REVERSE SIDE
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OF THIS PROXY CARD.
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THE BOARD RECOMMENDS A VOTE “FOR” ALL THE NOMINEES LISTED AND “FOR” PROPOSALS 2, 3 AND
4.
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1.
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ELECTION OF DIRECTORS: Nominees are:
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FOR
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AGAINST
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ABSTAIN
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FOR
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AGAINST
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ABSTAIN
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1a. John E. Cody
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☐
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☐
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☐
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1f. Lawrence S. Kramer
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☐
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☐
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☐
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1b. Stephen W. Coll
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☐
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☐
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☐
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1g. John Jeffry Louis
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☐
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☐
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☐
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1c. Robert J. Dickey
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☐
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☐
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☐
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1h. Tony A. Prophet
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☐
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☐
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☐
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Please fold here – Do not separate
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1d. Donald E. Felsinger
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☐
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☐
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☐
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1i. Debra A. Sandler
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☐
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☐
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☐
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1e. Lila Ibrahim
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☐
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☐
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☐
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1j. Chloe R. Sladden
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☐
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☐
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☐
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2.
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COMPANY PROPOSAL TO RATIFY the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2017 fiscal year.
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☐
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For
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☐
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Against
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☐
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Abstain
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3.
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COMPANY PROPOSAL TO APPROVE an amendment to the Company’s 2015 Omnibus Incentive Compensation Plan.
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☐
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For
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☐
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Against
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☐
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Abstain
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4.
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COMPANY PROPOSAL TO APPROVE, ON AN ADVISORY BASIS, the compensation of the Company’s named executive officers.
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☐
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For
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☐
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Against
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☐
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Abstain
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THE PROXIES are authorized to vote in their discretion upon such other business, if any, as may properly come before the Annual Meeting or any adjournment thereof.
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Signature(s) in Box
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Please sign EXACTLY as name appears at the left. Joint owners each should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full related title.
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GANNETT CO., INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 10, 2017
10:00 a.m.
Gannett Co.,
Inc.
7950 Jones Branch Drive
McLean, VA 22107
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proxy
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