DEF 14A of Lee Enterprises, Inc
Filed Jan 12, 2024 · FY20230001628280-24-001242
PROPOSAL 1 - ELECTION OF DIRECTORS
PROPOSAL 1 - ELECTION OF DIRECTORS At the Annual Meeting, two directors on our nine-member Board are to be elected for three-year terms expiring at the annual meeting in 2027. Each of the individuals named below is a nominee of the full Board for election as a director at the Annual Meeting. Our Board has examined the relationship between each of our non-employee directors and the Company and has determined that Mr. Fletcher and Dr. McAlmont qualify as “independent” directors in accordance with The Nasdaq Stock Market LLC (“Nasdaq”) listing requirements (“Nasdaq rules”) and SEC rules. The current terms of the nominees, Mr. Fletcher and Dr. McAlmont, expire in 2024. Each nominee has provided a consent permitting the Company to name such nominee in this Proxy Statement and stating that such nominee consents to serve if elected as a director, and the Board has no reason to believe that any nominee will be unable to serve. However, if, before the election, any nominee is unable to serve or for good cause will not serve (a situation that we do not anticipate), the proxy holders will vote the proxies for the remaining nominees and for substitute nominees chosen by the Board (unless the Board reduces the number of directors to be elected). If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies each substitute nominee, discloses that such nominee have consented to being named in the revised proxy statement and to serve if elected, and includes certain biographical and other information about such nominee required by the rules of the SEC. The Board recommends you vote FOR ALL of the Board’s nominees for director. The following material contains information concerning the Board’s nominees, including their period of service as a director, their recent employment, other directorships, including those held during the past five years with a public company or registered investment company, and age as of the Annual Meeting.
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2027
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2027
Steven C. Fletcher, 56, Director since 2020
Steven C. Fletcher, 56, Director since 2020 Mr. Fletcher has served as the Chief Executive Officer of technology company Explorer Parent LLC, a firm that sponsors special purpose acquisition companies (SPACs), since July 2020, an advisor to Carney Technology Acquisition Corp. II (NASDAQ: CTAQ) since December 2020, an advisor to Epiphany Technology Acquisition Corp. (NASDAQ: EPHY) since January 2021, an advisor to BioPlus Acquisition Corp. (NASDAQ: BIOS) since January 2021 and an advisor to Enterprise 4.0 Technology Acquisition Corp. (NASDAQ: ENTF) since October 2021. He served from 2013 to August 2022 as an independent director of atVenu, a leading live event commerce platform, where he was a member of the Audit and Compensation Committees, and as an independent director of Life Signals, Inc. a healthcare technology company since November 2021. From 2003 to May 2018, Mr. Fletcher was a Managing Director, Co-Head of the Digital Media Group and Head of the Software Group at GCA Savvian, a global investment bank. He was also a member of the firm’s Management Committee. From 1994 until 2002, Mr. Fletcher worked at Goldman, Sachs & Co., where he held a number of leadership roles including Head of the Private Placement Group, Head of the IT Services sector and Co-Head of the Hardware, Storage, EMS, and Internet Infrastructure sectors. He began his career at Deloitte & Touche as a CPA. Mr. Fletcher received a B.A. in Economics from UCLA and an M.B.A. from the Wharton School of the University of Pennsylvania. Mr. Fletcher is the Chairman of the Audit Committee, and a member of the Nominating and Corporate Governance Committee and Executive Compensation Committee. Mr. Fletcher brings to the Board more than 20 years of experience in the investment banking industry, and he has extensive expertise with respect to debt and equity financing, strategic transactions, capital allocation, capital markets and corporate financial management, particularly in the digital media sector. He also has significant experience with corporate governance through prior service on several boards. His experience enables him to provide strong oversight of financial and disclosure responsibilities, controls, and procedures, and he serves as one of the Audit Committee’s designated financial experts.
Shaun McAlmont, 58, Director since May 2022
Shaun McAlmont, 58, Director since May 2022 Dr. McAlmont is a seasoned executive with deep experience overseeing successful digital transformations, change management and strategic partnerships. In early 2022, Dr. McAlmont joined a cybersecurity training company, NINJIO, LLC, as President and CEO, after serving since 2018 as the President of Career Learning at Stride, Inc. (NYSE: LRN), a $1.5 billion technology-based education company, where he led a multi-year digital transformation that doubled the size of the career learning business through the introduction of new IT, business and healthcare career training programs, three acquisitions, and strategic corporate and higher education partnerships. From 2015 to 2017, he was the President and CEO of Neumont College of Computer Science, a for-profit training institution. Dr. McAlmont also served as the President and CEO of Lincoln Educational Services (NASDAQ: LINC) from 2005 to 2015. Dr. McAlmont held senior-level manager positions at Alta Colleges, where he pioneered online learning at scale, and Heald Colleges from 1991 to 2005, after beginning his career at Stanford University. Dr. McAlmont received a Bachelor of Science degree in Psychology from Brigham Young University and multiple graduate degrees in the education field, including a Doctorate of Higher Education Management from the University of Pennsylvania. He recently completed the Board Education Program at Stanford University Directors College. Dr. McAlmont is a member of the BorgWarner (NYSE: BWA) board of directors, where he serves on its compensation committee. Dr. McAlmont is a member of the Executive Compensation Committee. Dr. McAlmont brings to the Board more than 25 years of career leading successful digital transformations at scale in online learning and workforce training and has leveraged past learnings to drive growth and generate value at several companies. He has significant executive leadership and public company board experience.
INCUMBENT DIRECTOR WITH TERM EXPIRING IN 2024
INCUMBENT DIRECTOR WITH TERM EXPIRING IN 2024
Gregory P. Schermer, 69, Director since 1999
Gregory P. Schermer, 69, Director since 1999 Mr. Schermer served as Vice President — Strategy of the Company from March 2012 until his retirement in September 2016. From 1989 to July 2006, Mr. Schermer served as Corporate Counsel of the Company, and from July 2006 until October 2012, he served as Vice President — Interactive Media of the Company. Mr. Schermer led the development of the Company’s digital media strategies and platforms, including the successful expansion of TownNews and represented the Company in several industry digital media initiatives, including The Local Media Consortium (the “Consortium”), a group of 82 companies that create digital partnerships for local media operations. Mr. Schermer served as a member of the Consortium’s executive committee. Mr. Schermer is a member of the Audit Committee and Nominating and Corporate Governance Committee. Mr. Schermer provides the Board with insight and operational perspective on the Company’s digital media strategies and his in-depth understanding of the Company’s business, strategy and operations makes him well-qualified to provide guidance to the Board in its oversight of the Company’s digital transformation. Through his former role as the Company’s corporate counsel, he also provides the Board with valuable insight on legal matters, compliance and risk assessment, and corporate governance. As a result of Mr. Schermer’s term expiring and not being renominated for a new term, the Board will be reduced to eight members, effective as of the 2024 Annual Meeting.
INCUMBENT DIRECTORS WITH TERMS EXPIRING IN 2025
INCUMBENT DIRECTORS WITH TERMS EXPIRING IN 2025
Mary E. Junck, 76, Director since 1999
Mary E. Junck, 76, Director since 1999 Mary E. Junck was elected Executive Chairman of the Company in February 2016 and elected Chairman in February 2019. She joined the Company in 1999 as Executive Vice President and Chief Operating Officer. She became president in 2000, Chief Executive Officer in 2001 and Chairman in January 2002. She previously held senior executive positions at the former Times Mirror Company, where she was responsible for the operations of Newsday, The Baltimore Sun (publisher and chief executive officer), the Hartford Courant, The Morning Call, Southern Connecticut Newspapers and St. Paul Pioneer Press (publisher and president). She also had responsibility for Times Mirror magazines and StayWell, Times Mirror’s consumer health company. She was a member of the board of directors of The Associated Press from 2004 to 2017 and was chairman from 2012 to 2017. Since October 2016, Ms. Junck has served as a director of Postmedia Network Canada Corp. (TSE: PNC.A), a public company based in Toronto, Canada, that owns numerous newspapers and associated online platforms throughout Canada. Ms. Junck is a member of the Nominating and Corporate Governance Committee and the Executive Compensation Committee. Ms. Junck’s in-depth knowledge of the Company and the publishing industry, in which she has worked in executive and senior management positions for more than 32 years, enables her to lead the Board effectively in her capacity as Chairman. Ms. Junck provides a valuable and unique perspective in Board deliberations about the Company’s business, competitive landscape, strategic relationships and opportunities, senior leadership and operational and financial performance. As Chairman, Ms. Junck serves as an advisor to the Chief Executive Officer and provides overall leadership for the Board. Her experience provides her with a thorough understanding of strategic direction and partnerships, financial matters and board management.
THE BOARD RECOMMENDS A VOTE “FOR ALL” OF THE NOMINEES RECOMMENDED BY OUR BOARD
THE BOARD RECOMMENDS A VOTE “FOR ALL” OF THE NOMINEES RECOMMENDED BY OUR BOARD
COMPENSATION OF NON-EMPLOYEE DIRECTORS
COMPENSATION OF NON-EMPLOYEE DIRECTORS We desire to compensate our directors in a manner that is comparable to compensation levels at companies of similar size and in our industry The Executive Compensation Committee reviews proxy statements and other information from such companies and makes a recommendation for compensation of non-employee directors to the full Board for its approval. In 2019, the Executive Compensation Committee also requested a comprehensive report on director compensation from Korn Ferry, its independent consultant (the “Korn Ferry report”). In December 2019, upon the recommendation of the Executive Compensation Committee after review and analysis of industry peers’ board compensation practices and the Korn Ferry report, as part of the Board's ongoing review of the Company's governance practices, the Board approved the following Board compensation program: •Annual cash retainer to $100,000 in lieu of such fees; •Implementation of an annual cash retainer for the following committee chairs and Lead Director: •Lead Director $20,000 •Audit and ECC $15,000 •NCGC $10,000 •Implementation of non-employee director stock ownership guidelines, as reflected in the Company Corporate Governance Guidelines; and •Annual restricted stock awards under the 2020 Long-Term Incentive Plan (“2020 Plan”) to non-employee directors, with the 2020 stock award to be shares of our Common Stock with a fair market value of $50,000 on June 1, 2020, subject to shareholder approval of the 2020 Plan. At the 2020 Annual Meeting, the shareholders approved the 2020 Plan, and the 2020 Plan was implemented in March 2020 and remains in effect in 2023. In 2022, the annual restricted stock award to non-employee directors was increased to $60,000. Directors engaged to provide consultative services are normally compensated at the rate of $1,500 per day. None of our non-employee directors received compensation for consultative services in 2023. The following table summarizes non-employee director compensation for calendar year 2023:
COMPENSATION OF NON-EMPLOYEE DIRECTORS
| (Dollars) | Fees Earned or Paid in Cash(1) | Value of Stock Awards(2) | Total | | Steven C. Fletcher | 112,500 | 60,000 | 172,500 | | Margaret R. Liberman | 100,000 | 60,000 | 160,000 | | Brent M. Magid | 112,500 | 60,000 | 172,500 | | Shaun E. McAlmont | 100,000 | 60,000 | 160,000 | | Herbert W. Moloney lll | 135,000 | 60,000 | 195,000 | | David T. Pearson | 100,000 | 60,000 | 160,000 | | Gregory P. Schermer | 100,000 | 60,000 | 160,000 | | Mary E. Junck | 250,000 | 180,000 | 430,000 |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
(1) Cash compensation in excess of the 2023 annual retainer represents payment for directors as a committee chair or, in the case of Mr. Moloney, for his service as Lead Director. (2) All restricted stock awards are fully vested on the first anniversary of the grant date. Restricted Stock awards are granted at a price equal to the fair market value of the date of the grant. The Board has authorized non-employee directors, prior to the beginning of any calendar year, to elect to defer receipt of all or any part of the cash compensation a director might earn during such year under our Outside Directors Deferral Plan (Amended and Restated as of January 1, 2008). Amounts so deferred will be paid to the director upon his or her separation from service, death, or disability, adjusted for any investment gains (or losses) thereon. Alternatively, directors may elect to have deferred compensation credited to a “rabbi trust” established by us with an independent trustee, which administers the investment of amounts so credited for the benefit and at the direction of the trust beneficiaries until their accounts are distributed under the deferred compensation plan. Amounts so credited for the benefit of non-employee directors are invested in investment alternatives selected by the director. None of our employees receives any compensation for serving as a director.
Equity Compensation Plan Information
Equity Compensation Plan Information Information as of September 24, 2023, with respect to equity compensation plans is as follows:
Equity Compensation Plan Information
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (A) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (Dollars) (B) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares in column A) | | | (1) | | (2) (3) | | Equity compensations plans approved by shareholders | — | — | 196,359 |
Equity Compensation Plan Information
(1) LTIP. (2) Includes the number of securities remaining available for future issuance under our LTIP (3) Those securities not issued as a result of cancellation, forfeiture or surrender of previously outstanding options or adjustment of target restricted stock awards remain available for issuance, at the discretion of the Executive Compensation Committee, under the LTIP. Such shares are excluded from the total presented as the amount cannot be ascertained. Unvested restricted stock awards are not included in the number of shares presented as they are no longer available for future issuance once granted. Additional information is set forth under the captions “Grants of Plan-Based Awards,” “Outstanding Equity Awards at September 24, 2023,” and “Option Exercises and Stock Vested”.
Valuation of Equity Awards
Valuation of Equity Awards The accounting value of equity awards is charged to expense over the vesting period of the equity award. The accounting value of equity awards to NEOs is summarized below:
Valuation of Equity Awards
| (Dollars) | Total Accounting Value of 2023 Grants | Accounting Charge Recorded in 2023 for 2023 Grants | Accounting Charge Recorded in 2023 for 2022, 2021 and 2020 Grants | Accounting Charge to be Recorded in 2024-2026 for 2023 Grants | | Kevin D. Mowbray | 268,050 | 70,735 | 211,834 | 197,315 | | Timothy R. Millage | 130,000 | 34,307 | 108,079 | 95,698 | | Nathan E. Bekke | 125,000 | 32,986 | 100,214 | 92,014 |
Summary Compensation Table
Summary Compensation Table The following table summarizes the 2023 and 2022 compensation of the NEOs:
Summary Compensation Table
| (Dollars) | Year | Salary | Stock Awards (1) | Option Awards (1) | Non-Equity Incentive Plan Compensation (2) | All Other Compensation (3) (4) | Total | | Kevin D. Mowbray | 2023 | 813,462 | 268,050 | — | 213,570 | 30,369 | 1,325,451 | | President and Chief Executive Officer | 2022 | 900,000 | 400,000 | — | 1,008,056 | 23,779 | 2,331,835 | | Timothy R. Millage | 2023 | 474,519 | 130,000 | — | 62,291 | 15,161 | 681,971 | | Vice President, Chief Financial Officer, and Treasurer | 2022 | 506,250 | 250,000 | — | 283,516 | 11,570 | 1,051,336 | | Nathan E. Bekke | 2023 | 460,962 | 125,000 | — | 60,512 | 16,329 | 662,803 | | Operating Vice President; Vice President - Audience Strategy | 2022 | 500,833 | 250,000 | — | 355,484 | 11,301 | 1,117,618 |
Summary Compensation Table
(1) Stock and option awards are granted at a price equal to the fair market value on the date of grant. Information with respect to stock awards granted to the NEOs is reflected in “Outstanding Equity Awards at September 24, 2023” below. (2) Includes discretionary amounts paid under the annual cash incentive plan. (3) Includes matching contributions made to the Company's Retirement Account Plan and Non-Qualified Plan during the year. To the extent qualifying compensation was not received during the year, such as certain non-equity incentive plan compensation, the related matching contribution may be reported in a subsequent year. (4) The Lee Foundation, an affiliate of the Company, matches on a dollar-for-dollar basis up to $5,000 annually, charitable contributions made by NEOs to qualifying organizations. Such matching contributions are not considered compensation of the NEO.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table summarizes information related to 2023 grants of equity compensation under the LTIP and the Incentive Compensation Program for the CEO, and under the LTIP for the other NEOs.
Grants of Plan-Based Awards
| (Dollars) | 2023 Grant Date | All Other Stock Awards: Number of Shares of Stock | 2023 Grant Date Fair Value of Stock Awards | | Kevin D. Mowbray | 12/9/2022 | 15,000 | 268,050 | | Timothy R. Millage | 12/9/2022 | 7,275 | 130,000 | | Nathan E. Bekke | 12/9/2022 | 6,995 | 125,000 |
Outstanding Equity Awards at September 24, 2023
Outstanding Equity Awards at September 24, 2023 The following table summarizes outstanding equity awards to the NEOs as of September 24, 2023:
Outstanding Equity Awards at September 24, 2023
| (Dollars, Except Share Data) | Restricted Common Stock Awards | | | | Number of Shares of Stock That Have Not Vested | Market Value of Shares of Stock That Have Not Vested (1) | | Kevin D. Mowbray | | | | 2023 Stock Award | 15,000 | 164,850 | | 2022 Stock Award | 13,329 | 146,486 | | 2021 Stock Award | 15,000 | 164,850 | | Timothy R. Millage | | | | 2023 Stock Award | 7,275 | 79,952 | | 2022 Stock Award | 8,331 | 91,558 | | 2021 Stock Award | 5,000 | 54,950 | | Nathan E. Bekke | | | | 2023 Stock Award | 6,995 | 76,875 | | 2022 Stock Award | 8,331 | 91,558 | | 2021 Stock Award | 3,556 | 39,080 |
Outstanding Equity Awards at September 24, 2023
(1) Based on closing market price of $10.99 on September 22, 2023.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table summarizes information related to vesting of restricted Common Stock of the NEOs in 2023:
Option Exercises and Stock Vested
| Restricted Common Stock | | | | (Dollars, Except Share Date) | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Kevin D. Mowbray | 20,000 | 334,800 | | Timothy R. Millage | 5,400 | 90,396 | | Nathan E. Bekke | 3,200 | 53,568 |
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation The following table summarizes information related to 2023 activity in the Non-Qualified Plan for the NEOs.
Non-Qualified Deferred Compensation
| (Dollars) | NEO Contributions | Company Contributions | Aggregate Earnings | Distributions | Aggregate Balance at September 25, 2022 | | | (1) | (2) | (3) | | (4) | | Kevin D. Mowbray | 74,574 | 23,769 | 28,690 | — | 676,756 | | Timothy R. Millage | 21,401 | 8,561 | 9,985 | — | 102,291 | | Nathan E. Bekke | 24,149 | 9,660 | 9,120 | — | 118,077 |
Non-Qualified Deferred Compensation
(1) Amounts included in total compensation in the Summary Compensation Table under “Salary.” (2) Amounts included in total compensation in the Summary Compensation Table under “All Other Compensation”. (3) Earnings are based on the performance of investments selected by the NEO. (4) Amounts include compensation to the NEO in the form of Company contributions prior to 2022. For those NEOs continuing to participate in the Non-Qualified Plan in 2020 and thereafter, withdrawals are permitted following termination of employment. Employee contributions are limited to 45% of salary and bonus compensation. See “Primary Benefits” above for additional information with regard to the Non-Qualified Plan.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control The following summarizes information as of September 24, 2023, related to estimated potential cash payments upon a change of control to the NEOs. Amounts in the table do not reflect income tax benefits that may be realized by the Company. The estimated payments also make assumptions as to whether certain discretionary bonus payments made to NEOs are qualifying annual incentive plan payments under the agreements.
Potential Payments Upon Termination or Change of Control
| (Dollars) | Estimated Net Present Value of Change of Control Severance and Benefits | | Kevin D. Mowbray | 7,653,183 | | Timothy R. Millage | 1,383,059 | | Nathan E. Bekke | 1,341,318 |
Pay Versus Performance
Pay Versus Performance Under newly-adopted rules of the Securities and Exchange Commission, the following tabular disclosure is required to disclose the relationship between executive compensation registrants actually paid and the financial performance of the Company. The following tables and graphs show the relationship between the compensation actually paid to our NEOs and our financial performance.
Pay Versus Performance
| Year | Summary Compensation Table Total For CEO (1) | Compensation Actually Paid to CEO (1)(2) | Average Summary Compensation Table Total for Non-CEO NEOs(3) | Average Compensation Actually Paid to Non-CEO NEOs(2)(3) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (“TSR”) | Net Income (loss) (4) | | 2023 | 1,325,451 | 778,260 | 672,387 | 401,532 | 46.30 | (2,733,000) | | 2022 | 2,331,835 | 1,547,983 | 1,084,477 | 644,257 | 71.70 | 97,000 |
Pay Versus Performance
(1) The CEO in 2023 and 2022 was Mr. Mowbray. (2) See the table immediately following these footnotes for a reconciliation of the Summary Compensation Table compensation and the Compensation Actually Paid to the CEO and Non-CEO NEO’s. (3) Non-CEO NEOs in 2023 were Messrs. Millage and Bekke. (4) The amounts reported in this column represent net income (loss) reflected in the Company’s audited financial statements for the applicable year. The following table reconciles the Summary Compensation Table compensation to the Compensation Actually Paid in the above table.
Pay Versus Performance
| | CEO | | Non-CEO NEOs | | | | 2023 | 2022 | 2023 | 2022 | | Total Compensation as reported in the Summary Compensation Table (“SCT”) | 1,325,451 | 2,331,835 | 672,387 | 1,084,477 | | Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | (268,050) | (400,000) | (127,500) | (250,000) | | Increase (decrease) for Fair Value of Awards Granted during year that Remain Unvested as of Year End | (103,200) | (173,277) | (49,089) | (108,303) | | Increase (decrease) for Change in Fair Value from Prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | (170,541) | (235,550) | (93,105) | (84,859) | | Increase (decrease) for Change in Fair Value from Prior-year to Vesting Date of Awards Granted Prior to year that Vested during year | (5,400) | 24,975 | (1,161) | 2,942 | | Compensation Actually Paid (“CAP”) | 778,260 | 1,547,983 | 401,532 | 644,257 |