Los Angeles Times wants to make a public statement about why its journalists shouldn't unionize

Your Questions Answered

Newsroom employees have asked a number of questions about unionization and other matters through an anonymous Q & A link. Some questions were asked multiple times and, in those cases, we have provided one answer below. We will provide answers to the additional questions we received early next week. This site will be updated with answers as additional questions are submitted.

Q: Why is Tronc CEO Justin Dearborn’s compensation $3 million more than that of New York Times CEO Mark Thompson, whose company has revenues similar to ours but a market value many multiples of Tronc’s?

A: Quoting a number out of context doesn’t tell an accurate, fact-based story. Like most public company executives, the vast majority of the compensation is awarded in the form of stock ($6.9 million of the $8.1 million).  The $6.9 million represents a theoretical value at some time in the future, and is tied directly to how our stock performs. 

Our senior executives are compensated similarly to others at comparable companies. In fact, we work closely with external compensation consultants to ensure we fit within basic guidelines for our industry.  Justin, like similar executives here and throughout the industry, has a base salary, a bonus and is granted equity.  Both the bonus and equity are closely tied to overall company performance.

Justin’s equity compensation was granted to cover a three-year period and is not an annual equity grant.  The equity vests equally over a three-year period.

So how does equity work?  Let’s start with stock options.  A stock option is simply the right to buy tronc stock at today’s price (the “option price”) sometime in the future.  Justin received the 225,000 stock options at $14.87 per share.  That means that at some point in the next seven years, Justin has the opportunity to purchase 225,000 shares of tronc stock for $14.87 per share, should he remain employed during the vesting period.  In order for the stock option to have any real value, the stock price has to be above $14.87 per share– otherwise it has no value… or it’s “under water.” Thus, if the stock were trading at $17 per share, and he had vested in all 225,000 shares, the total profit of those shares would be $2.23 per share x 225,000 shares or a little over $500,000.  Not 225,000 shares x $17 (or nearly $4 million as the post would have you believe).

As for the other stock awards, those are in the form of Restricted Stock Units (RSUs).  You will see that Justin was granted 375,000 RSUs.  RSUs are typically given to senior executives to retain them with an organization and also ensure that a CEO has ownership in the company.  In order for Justin to receive any value, he has to stay with the company through a series of vesting dates.  In his case, one third of the award vests equally over the three-year period.

Terry Jimenez’s compensation package works the same way.  As does Ross Levinsohn’s.

Comparing the past three years of equity grants with the two executives identified in the Guild post, as reported in their companies’ proxies, shows that Justin makes far less annually than either Mark Thompson (at $5.406 million) or Robert Dickey (at $6.656 million).

Additionally, the two executives mentioned above both receive a much higher annual cash compensation (base & bonus) package than Justin.

​

Again, keep in mind that Justin’s stock compensation is meant to cover a three-year period, whereas these other executives receive grants every year.

Like many public companies, executive payouts tied to company performance have proven key to overall company growth.  Since the appointment of Justin, tronc’s stock price has increased 240% to today’s $17.31 per share.  We pay our executives well and in line with others in comparable positions within the industry, because we know that growing the company is critical to our ability to serve our customers.

Since Justin’s current compensation package reflects both his annual cash compensation and three-year equity compensation, his 2017 reported compensation in next year’s proxy statement will be more than 80% less than his 2016 reported compensation.

Justin received a one-time taxable moving package that sought to cover moving, selling and temporary housing costs. Again, misleading and factually inaccurate information undermines the mission we all seek to uphold.

For additional questions and answers visit Los Angeles Times Facts