AWARD AGREEMENT PERFORMANCE SHARES
Exhibit 10.3
Model 2018 TSR Award Agreement
AWARD AGREEMENT
PERFORMANCE SHARES
The Gannett Board of Directors or the Executive Compensation Committee thereof (the “Committee”), as the case may be, has approved your opportunity to receive Performance Shares (referred to herein as “Performance Shares”) under the Gannett Co., Inc. 2015 Omnibus Incentive Compensation Plan, as amended, as set forth below.
This Award Agreement and the enclosed Terms and Conditions effective as of January 1, 2018, constitute the formal agreement governing this award.
Please sign both copies of this Award Agreement to evidence your agreement with the terms hereof. Keep one copy and return the other to the undersigned.
Please keep the enclosed Terms and Conditions for future reference.
| Employee: | Location: | |
| Grant Date: | 1/1/18 | |
| Performance Period Commencement Date: | 1/1/18 | |
| Performance Period End Date: | 1/1/21 | |
| Performance Share Payment Date: | On a date specified by the Committee that is within the first 70 days of 2021 | |
| Target Number of Performance Shares: | _____* |
* The actual number of Performance Shares you may receive will be higher or lower depending on the Company’s performance versus certain designated companies and your continued employment with the Company, as more fully explained in the enclosed Terms and Conditions.
| Gannett Co., Inc. | ||||
| By: | ||||
| Employee’s Signature | Xxxxx Xxxxxx | |||
| Chief People Officer | ||||
PERFORMANCE SHARES
TERMS AND CONDITIONS
Under the
2015 Omnibus Incentive Compensation Plan, as amended
These Terms and Conditions, dated January 1, 2018, govern the right of the employee (the “Employee”) designated in the Award Agreement dated coincident with these Terms and Conditions to receive Performance Shares (referred to herein as “Performance Shares”). Generally, the Employee will not receive any Performance Shares unless the specified service and performance requirements set forth herein are satisfied. The Performance Shares are granted under, and are subject to, the Gannett Co., Inc. (the “Company”) 2015 Omnibus Incentive Compensation Plan, as amended (the “Plan”). Terms used herein that are defined in the Plan shall have the meaning ascribed to them in the Plan. If there is any inconsistency between these Terms and Conditions and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms herein.
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4. Delivery of Shares. The Company shall deliver to the Employee a certificate or certificates, or at the election of the Company make an appropriate book-entry, for the number of shares of Common Stock equal to the number of Performance Shares that have been earned based on the Company’s performance during the Incentive Period as set forth in Exhibit A and satisfaction of the Terms and Conditions set forth herein, which number of shares shall be reduced by the value of all taxes which the Company is required by law to withhold by reason of such delivery. Except as provided in Sections 13 or 14, such delivery shall take place on the Performance Share Payment Date. An Employee shall have no further rights with regard to the Performance Shares once the underlying shares of Common Stock have been delivered.
5. Forfeiture and Cancellation of Right to Receive Performance Shares.
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made pursuant thereto. These Terms and Conditions shall apply to the grant of Performance Shares made to the Employee on the date hereof and shall not apply to any future grants of Performance Shares made to the Employee.
13. Change in Control Provisions.
Notwithstanding anything to the contrary in these Terms and Conditions, the following provisions shall apply to the right of an Employee to receive Performance Shares under the attached Award Agreement.
As used in Article 15 of the Plan and in these Terms and Conditions, a “Change in Control” shall mean the first to occur of the following:
(i) 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 (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-
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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: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of its affiliates, or (iv) any acquisition pursuant to a transaction that complies with Sections 13(a)(iii)(A), 13(a)(iii)(B) and 13(a)(iii)(C);
(ii) individuals who, as of the date hereof, 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;
(iii) 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, (A) 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
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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) 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, (B) 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 (C) 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
(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
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(i) In the event of the occurrence of a Change in Control in which the Performance Shares are not continued or assumed (i.e., the Performance Shares are not equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Performance Shares that have not been cancelled shall become fully vested and shall be paid out to the Employee as soon as administratively practicable on or following the effective date of the Change in Control (but in no event later than 30 days after such event), provided that 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 of the Internal Revenue Code of 1986 (the “Code”) and the regulations and guidance issued thereunder (“Section 409A”), and such payout will not result in additional taxes under Section 409A. Otherwise, in the event of the occurrence of a Change in Control in which the Performance Shares are not continued or assumed, the vested Performance Shares shall be paid out at the earlier of the Employee’s termination of employment or the Performance Share Payment Date.
(ii) In the event of the occurrence of a Change in Control in which the Performance Shares are continued or assumed (i.e., the Performance Shares are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Performance Shares shall not vest upon the Change in Control, provided that the Performance Shares that have not vested under the other provisions of this Award shall become fully vested in the event that the Employee has a “qualifying termination of employment” within two years following the date of the Change in Control. In the event of the occurrence of a Change in Control in which the Performance Shares are continued or assumed, vested Performance Shares shall be paid out to the Employee at the earlier of the Employee’s
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termination of employment or the Performance Share Payment Date.
A “qualifying termination of employment” shall occur if the Company involuntarily terminates the Employee without “Cause” or the Employee voluntarily terminates for “Good Reason”. For this purpose, “Cause” shall mean:
| ● | any material misappropriation of funds or property of the Company or its affiliate by the Employee; |
| ● | unreasonable and persistent neglect or refusal by the Employee to perform his or her duties which is demonstrably willful and deliberate on the Employee’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach; |
| ● | conviction of the Employee of a securities law violation or a felony involving moral turpitude; or |
| ● | the Employee being found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law. |
For this purpose, “Good Reason” means the occurrence after a Change in Control of any of the following circumstances without the Employee’s express written consent, unless such circumstances are fully corrected within 90 days of the Notice of Termination described below:
| ● | the material diminution of the Employee’s duties, authorities or responsibilities from those in effect immediately prior to the Change in Control; |
| ● | a material reduction in the Employee’s base salary or target bonus opportunity as in effect on the date immediately prior to the Change in Control; |
| ● | the relocation of the Employee’s office from the location at which the Employee is principally employed immediately prior to the date of the Change in Control to a location 35 or more miles farther from the Employee’s residence immediately prior to the Change in Control, and recognizing that the Employee shall be expected to travel on the Company’s business to an extent substantially consistent with the Employee’s business travel obligations prior to the Change in Control; or |
| ● | the failure by the Company or its affiliate to pay any material compensation or benefits due to the Employee. |
Any termination by the Employee for Good Reason shall be communicated by a Notice
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of Termination that (x) indicates the specific termination provision in the Award Agreement relied upon, and (y) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated. Such notice must be provided to the Company within ninety (90) days after the event that created the “Good Reason”.
(iii) If in connection with a Change in Control, the Performance Shares are assumed (i.e., the Performance Shares are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Performance Shares shall refer to the right to receive such cash and/or equity. An assumption of this Performance Share award must satisfy the following requirements:
| ● | The converted or substituted award must be a right to receive an amount of cash and/or equity that has a value, measured at the time of such conversion or substitution, that is equal to the value of this Award as of the date of the Change in Control; |
| ● | Any equity payable in connection with a converted or substituted award must be publicly traded equity securities of the Company, a successor company or their direct or indirect parent company, and such equity issuable with respect to a converted or substituted award must be covered by a registration statement filed with the Securities and Exchange Commission that permits the immediate sale of such shares on a national exchange; |
| ● | The vesting terms of any converted or substituted award must be substantially identical to the terms of this Award; and |
| ● | The other terms and conditions of any converted or substituted award must be no less favorable to the Employee than the terms of this Award are as of the date of the Change in Control (including the provisions that would apply in the event of a subsequent Change in Control). |
The determination of whether the conditions of this Section 13(b)(iii) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
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(c) Legal Fees. The Company shall pay all legal fees, court costs, fees of experts and other costs and expenses when incurred by Employee in connection with any actual, threatened or contemplated litigation or legal, administrative or other proceedings involving the provisions of this Section 13, whether or not initiated by the Employee. The Company agrees to pay such amounts within 10 days following the Company’s receipt of an invoice from the Employee, provided that the Employee shall have submitted an invoice for such amounts at least 30 days before the end of the calendar year next following the calendar year in which such fees and disbursements were incurred.
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16. Applicable Laws and Consent to Jurisdiction. The validity, construction, interpretation and enforceability of this Agreement shall be determined and governed by the laws of the State of Delaware without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Virginia and agree that such litigation shall be conducted in the courts of Fairfax County, Virginia or the federal courts of the United States for the Eastern District of Virginia.
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Exhibit A
Performance Share Calculation
The number of Performance Shares that the Employee will be entitled to receive if the Employee satisfies the applicable service requirements will be calculated based on how the Company’s Total Shareholder Return compares to the Total Shareholder Return of the Comparator Companies during the Incentive Period (i.e., the Company’s Total Shareholder Return will be ranked against the Total Shareholder Return of the Comparator Companies). Specifically, the Committee shall calculate the number of Performance Shares that may be paid to the Employee by multiplying the Employee’s Target Number of Performance Shares by the applicable percentage determined as follows:
| 1. | Calculate the Total Shareholder Return for the Company and each of the Comparator Companies from the first day of the Incentive Period to the applicable measurement date. |
| 2. | Calculate the percentile ranking of each Comparator Company (excluding the Company) based on its Total Shareholder Return during the applicable measurement period; |
| 3. | Determine the Company’s percentile ranking based on its Total Shareholder Return and the percentile rankings of the Comparator Companies with Total Shareholder Returns immediately above and below the Company using straight line interpolation; and |
| 4. | Calculate the Resulting Shares Earned percentage based on the Company’s percentile ranking and the below chart using straight line interpolation. The Resulting Shares Earned percentage is the applicable percentage used to determine the number of Performance Shares that have been earned. |
| Company’s Percentile in 3-Year TSR vs. Comparator Companies | Resulting Shares Earned (% of Target) |
Value of Each Share Earned |
| 90th or above | 200% | Each share earned is also impacted by share price change during the cycle |
| 70th | 150% | |
| 50th | 100% | |
| 25th | 50% | |
| <25th | 0% | |
| Straight-line interpolation between points | ||
For purposes of calculating the payout, the Company’s performance versus the Comparator Companies will be based on the average payout that would be made based on the Company’s cumulative Total Shareholder Return relative to the Comparator Companies at the end of each of the last 4 quarters of the Incentive Period.
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1. In the event that the price of a share of the Company’s Common Stock on the Performance Share Payment Date is more than 300% of the price of a share of the Company’s Common Stock on the Performance Period Commencement Date, the number of shares delivered under the Award will be reduced so the value of the Award does not exceed 300% of the price of a share of the Company’s Common Stock on the Performance Period Commencement Date multiplied by the number of Performance Shares earned. For example, if (i) the Company’s share price is $10 on the Performance Period Commencement Date, (ii) the Employee’s Target Number of Shares is 100, (iii) the Employee earns 100% of the Target Number of Shares (or 100 shares), and (iv) the value of such shares on the Performance Share Payment Date is $50, the number of the shares will be reduced because the value of the shares on the Performance Share Payment Date exceeds 300% of the value of the shares on the Performance Period Commencement Date. Specifically, the award to the Employee would be reduced to 60 shares (i.e., (100 shares x (300% x $10)/$50)).
2. Comparator 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 -100% Total Shareholder Return.
3. The following rules shall apply to Comparator Companies during the Incentive Period:
(a) If a Comparator Company enters into or becomes subject to a definitive agreement to be acquired (whether by acquisition, merger, tender offer or otherwise) on or before the last day of the second year of the Incentive Period, the Comparator Company will be eliminated from the Total Shareholder Return calculations for the entire period. If, however, such an agreement is rescinded, revoked or abandoned by the end of the second year of the Incentive Period and no new agreement is entered into by the end of the second year, the Comparator Company will be taken into account unless it is subject to another rule set forth below.
(b) If a Comparator Company is subject to a public announcement of a takeover attempt or enters into or is subject to a definitive agreement to be acquired in the third year of the Incentive Period, the Comparator Company will be fixed above or below Gannett using 30-trading day average prices for both companies up to the day before the announcement of the takeover attempt or definitive agreement. If fixed above Gannett, such Comparator Company will be placed at the top of the rankings of Comparator Companies, and if fixed below Gannett, such Comparator Company will be placed at the bottom of the rankings of Comparator Companies.
(c) If a Comparator Company enters into or is subject to a definitive agreement to be acquired by Gannett or one of its subsidiaries, it will be eliminated from the Total Shareholder Return calculations for the entire measurement period.
“Total Shareholder Return” means a fraction whose numerator is the stock price change plus dividends paid on such stock (which are assumed to be reinvested in the stock) and whose
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denominator is the stock price on the Performance Period Commencement Date.
“Comparator Companies” means:
| A.H. Belo Corp. | Entercom Communications Corp. | Xxxxxx Holdings Co. |
| Xxxxx Xxxxx, Inc. | IAC/Interactivecorp | Xxx Enterprises, Inc. |
| McClatchy Co. – XX X | Xxxxxxxx Corp. | New Media Investment Group |
| New York Times Co. – CL A | News Corp. | Nexstar Media Group |
| Pandora Media, Inc. | TEGNA Inc. | Time, Inc. |
| Townsquare Media, Inc. | Tronc, Inc. | Wiley (Xxxx) & Sons – CL A |
| Yelp, Inc. |
The Committee, in its sole discretion, is responsible for making the above calculations.
In the event of a Change in Control to the Company and provided that the Employee’s right to receive Performance Shares has not previously been cancelled, the number of Performance Shares an Employee may be paid will be calculated based on the Company’s relative Total Shareholder Return positioning on the date of the Change in Control and there will be no four quarter averaging. Notwithstanding the foregoing, if the Change in Control occurs in the first twelve (12) months of the Incentive Period, the Employee will, instead, receive the Target Number of Performance Shares as set forth in the Employee’s Award Agreement; provided that the Employee’s right to receive Performance Shares has not previously been cancelled.
Code Section 162(m)
This Award is intended to comply with the requirements of Internal Revenue Code Section 162(m) and the provisions of this Award shall be interpreted and administered consistently with that intent. In that light, the following rules shall apply to the award:
| (a) | To the extent permitted by Code Section 162(m) and the Plan, the Committee shall have the authority to adjust the number of Performance Shares that are payable under the Award Agreement, adjust the Total Shareholder Return calculations or alter the methodology for calculating the number of Performance Shares to take into account the effects of a stock split, reverse stock split, stock dividend, spin-off, reorganization, recapitalization or similar transaction. |
| (b) | The aggregate grant with respect to awards of Performance Shares or Restricted Stock Units made in any one fiscal year to any one participant under the Plan may not exceed the value of five hundred thousand (500,000) Shares. |
| (c) | Before any Performance Shares are paid to the Employee, the Committee will certify, in writing, the Company’s satisfaction of the pre-established performance target and the number of Performance Shares payable to the Employee. |
Jan. 2018