UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
Commission file number
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class |
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Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
The total number of shares of the registrant’s Common Stock, $1 par value, outstanding as of April 30, 2024 was
INDEX TO TEGNA INC.
March 31,2024 FORM 10-Q
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TEGNA Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of dollars (Unaudited)
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Mar. 31, 2024 |
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Dec. 31, 2023 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable, net of allowances of $ |
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Other receivables |
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Syndicated programming rights |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment |
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Cost |
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Less accumulated depreciation |
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Net property and equipment |
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Intangible and other assets |
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Goodwill |
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Indefinite-lived and amortizable intangible assets, less accumulated amortization of $ |
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Right-of-use assets for operating leases |
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Investments and other assets |
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Total intangible and other assets |
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Total assets |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
TEGNA Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of dollars, except par value and share amounts (Unaudited)
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Mar. 31, 2024 |
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Dec. 31, 2023 |
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LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY |
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Current liabilities |
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Accounts payable |
$ |
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$ |
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Accrued liabilities |
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Compensation |
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Interest |
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Contracts payable for programming rights |
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Other |
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Income taxes payable |
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Total current liabilities |
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Noncurrent liabilities |
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Deferred income tax liability |
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Long-term debt |
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Pension liabilities |
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Operating lease liabilities |
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Other noncurrent liabilities |
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Total noncurrent liabilities |
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Total liabilities |
$ |
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$ |
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Redeemable noncontrolling interest (see Note 1) |
$ |
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$ |
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Shareholders' equity |
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Common stock of $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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) |
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( |
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Less treasury stock at cost, |
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Total equity |
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Total liabilities, redeemable noncontrolling interest and equity |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
TEGNA Inc.
CONSOLIDATED STATEMENTS OF INCOME
Unaudited, in thousands of dollars, except per share amounts
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Quarter ended Mar. 31, |
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2024 |
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2023 |
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Revenues |
$ |
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$ |
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Operating expenses: |
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Cost of revenues1 |
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Business units - Selling, general and administrative expenses |
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Corporate - General and administrative expenses |
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Depreciation |
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Amortization of intangible assets |
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Asset impairment and other |
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— |
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Total |
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Operating income |
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Non-operating (expense) income: |
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Interest expense |
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( |
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Interest income |
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Other non-operating items, net |
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( |
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Total |
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( |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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Net loss attributable to redeemable noncontrolling interest |
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Net income attributable to TEGNA Inc. |
$ |
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$ |
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Earnings per share: |
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Basic |
$ |
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$ |
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Diluted |
$ |
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$ |
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Weighted average number of common shares outstanding: |
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Basic shares |
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Diluted shares |
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1
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
TEGNA Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited, in thousands of dollars
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Quarter ended Mar. 31, |
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2024 |
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2023 |
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Net Income |
$ |
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$ |
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Recognition of previously deferred post-retirement benefit plan costs |
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Income tax effect related to components of other comprehensive income |
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( |
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( |
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Other comprehensive income, net of tax |
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Comprehensive income |
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Comprehensive loss attributable to redeemable noncontrolling interest |
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Comprehensive income attributable to TEGNA Inc. |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
TEGNA Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited, in thousands of dollars
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Three months ended Mar. 31, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net income |
$ |
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$ |
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Adjustments to reconcile net income to net cash flow from operating activities: |
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Depreciation and amortization |
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Employee stock-based compensation awards |
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Company stock 401(k) match contributions |
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Gain on investment sale |
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Equity loss in unconsolidated investments, net |
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Pension expense, net of employer contributions |
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Change in operating assets and liabilities, net of acquisitions: |
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Decrease in trade receivables |
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(Decrease) increase in accounts payable |
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( |
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Increase (decrease) in interest and taxes payable |
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( |
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(Decrease) increase in deferred revenue |
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( |
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Changes in other assets and liabilities, net |
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( |
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Net cash flow from operating activities |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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( |
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( |
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Payments for acquisitions of businesses and assets, net of cash acquired |
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( |
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( |
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Payments for investments |
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( |
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( |
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Proceeds from investments |
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Proceeds from sale of assets |
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Net cash flow provided by (used for) investing activities |
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( |
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Cash flows from financing activities: |
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Repurchase of common stock |
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( |
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Dividends paid |
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( |
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( |
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Payments for debt issuance costs |
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( |
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Other, net |
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( |
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( |
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Net cash flow used for financing activities |
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( |
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( |
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Increase in cash and cash equivalents |
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Balance of cash and cash equivalents at beginning of period |
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Balance of cash and cash equivalents at end of period |
$ |
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$ |
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Supplemental cash flow information: |
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Cash paid for income taxes, net of refunds |
$ |
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$ |
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Cash paid for interest |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
7
TEGNA Inc.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
Unaudited, in thousands of dollars, except per share data
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Quarters ended: |
Redeemable noncontrolling interest |
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Common stock |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Treasury stock |
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Total Equity |
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Balance as of Dec. 31, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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Net (loss) income |
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( |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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— |
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Total comprehensive income |
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Dividends declared: $ |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Company stock 401(k) match contributions |
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— |
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— |
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( |
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( |
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— |
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Stock-based awards activity |
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— |
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— |
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( |
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( |
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— |
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( |
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Employee stock-based compensation awards |
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— |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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— |
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— |
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— |
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— |
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( |
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( |
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Adjustment of redeemable noncontrolling interest to redemption value |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Other activity |
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— |
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— |
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— |
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— |
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— |
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Balance as of Mar. 31, 2024 |
$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Redeemable noncontrolling interest |
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Common stock |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Treasury stock |
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Total Equity |
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Balance as of Dec. 31, 2022 |
$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Net (loss) income |
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( |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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— |
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Total comprehensive income |
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Dividends declared: $ |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Company stock 401(k) match contributions |
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— |
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— |
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( |
) |
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( |
) |
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— |
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Stock-based awards activity |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
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Employee stock-based compensation awards |
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— |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Adjustment of redeemable noncontrolling interest to redemption value |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Other activity |
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— |
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— |
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— |
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— |
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— |
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Balance as of Mar. 31, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
8
TEGNA Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – Basis of presentation and accounting policies
Basis of presentation: Our (or TEGNA’s) accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. In our opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
We operate
Accounting guidance adopted in 2024: We did not adopt any new accounting guidance in 2024 that had a material impact on our condensed consolidated financial statements or disclosures.
New accounting guidance not yet adopted: In November 2023, the Financial Accounting Standards Board (FASB) issued new guidance that changes required disclosures related to segment reporting. The guidance will require entities to disclose on a quarterly and annual basis the significant segment expense items that are regularly provided to the entity’s chief operating decision maker (CODM). Entities will also be required to disclose the title and position of their CODM. The new guidance is effective for us beginning in 2024 on an annual basis and the first quarter of 2025 on a quarterly basis, and is to be applied on a retrospective basis. Early adoption of the guidance is permitted. We are currently evaluating the effect this new guidance will have on our disclosures.
In December 2023, the FASB issued new guidance that changes certain disclosures related to income taxes. The guidance requires entities to disclose additional quantitative and qualitative information about the reconciliation between their statutory and effective tax rates. Specifically, the guidance requires disaggregation of the reconciling items using standardized categories. This guidance also requires additional disclosure of income taxes paid to now include disaggregation on a federal, state and foreign basis and to specifically include the amount of income taxes paid to individual jurisdictions when they represent five percent or more of total income tax payments. The new guidance is effective for us beginning in 2025 and may be applied on either a prospective or retrospective basis. Early adoption of the guidance is permitted. We are currently evaluating the effect this new guidance will have on our disclosures.
In March 2024, the U.S. Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require companies to make disclosures about climate-related matters, specifically, it will require the disclosure of:
9
On April 4, 2024, the SEC stayed these rules due to pending legal challenges.
We are currently evaluating the final rule to determine its impact on our future disclosures.
Redeemable Noncontrolling interest: Our Premion business operates an advertising network for over-the-top (OTT) streaming and connected television platforms. In March 2020, we sold a minority interest in Premion to an affiliate of Gray Television (Gray) and entered into a commercial reselling agreement with the affiliate. During the first quarter of 2023, we entered into a multi-year extension of the reselling agreement with Gray. Gray’s investment allows it to sell its interest to Premion if there is a change in control of TEGNA or if the commercial agreement terminates. Since redemption of the minority ownership interest is outside our control, Gray’s equity interest is presented outside of the Equity section on the Condensed Consolidated Balance Sheets in the caption “Redeemable noncontrolling interest.” When the redemption or carrying value (the acquisition date fair value adjusted for the noncontrolling interest’s share of net income (loss) and dividends) is less than the recorded redemption value, we adjust the redeemable noncontrolling interest to equal the redemption value with changes recognized as an adjustment to retained earnings. Any such adjustment, when necessary, will be performed as of the applicable balance sheet date.
Treasury Stock: We account for treasury stock under the cost method. When treasury stock is re-issued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital (APIC) in our Condensed Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference is recorded as a component of APIC to the extent that there are previously recorded gains to offset the losses. If there are no accumulated gains in APIC, the losses upon re-issuance of treasury stock are recorded as a reduction of retained earnings in our Condensed Consolidated Balance Sheets.
Revenue recognition: Revenue is recognized upon the transfer of control of promised services to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Amounts received from customers in advance of providing services to our customers are recorded as deferred revenue.
The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services revenues, which include local and national non-political television advertising, digital marketing services (including Premion), advertising on the stations’ websites, tablet and mobile products, and OTT apps; 3) political advertising revenues, which are driven by even-year election cycles at the local and national level (e.g. 2022, 2024, etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals and distribution of our local news content.
Revenue earned by these sources in the first quarter of 2024 and 2023 are shown below (amounts in thousands):
|
Quarter ended Mar. 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
||
Subscription |
$ |
|
|
$ |
|
||
Advertising & Marketing Services |
|
|
|
|
|
||
Political |
|
|
|
|
|
||
Other |
|
|
|
|
|
||
Total revenues |
$ |
|
|
$ |
|
||
10
NOTE 2 – Goodwill and other intangible assets
The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of March 31, 2024 and December 31, 2023 (in thousands):
|
Mar. 31, 2024 |
|
|
Dec. 31, 2023 |
|
||||||||||
|
Gross |
|
|
Accumulated Amortization |
|
|
Gross |
|
|
Accumulated Amortization |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill |
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Indefinite-lived intangibles: |
|
|
|
|
|
|
|
|
|
|
|
||||
Television and radio station FCC broadcast licenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
||||
Retransmission agreements |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Network affiliation agreements |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total indefinite-lived and amortizable intangible assets |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Our retransmission agreements and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include distribution agreements from our multicast networks acquisition, which are also amortized on a straight-line basis over their useful lives. In the first quarter of 2024, gross intangible assets and associated accumulated amortization decreased by $
On January 31, 2024, Premion, LLC acquired substantially all the assets of Octillion Media, a next-generation demand-side platform focused on Local Connected TV(CTV)/Over-the-Top (OTT) advertising. The acquisition will expand Premion’s capabilities in the growing CTV marketplace by combining Octillion’s technology with Premion’s local CTV/OTT advertising solution.
The base purchase price of the acquisition was $
The acquisition was funded with available cash on hand.
We are accounting for the acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired was recorded as goodwill. We have commenced the appraisals necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized. Based on preliminary valuations we have recorded $
The amounts recorded for acquired assets and liabilities are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date.
NOTE 3 – Investments and other assets
Our investments and other assets consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):
|
Mar. 31, 2024 |
|
|
Dec. 31, 2023 |
|
||
|
|
|
|
|
|
||
Cash value life insurance |
$ |
|
|
$ |
|
||
Equity method investments |
|
|
|
|
|
||
Other equity investments |
|
|
|
|
|
||
Deferred debt issuance costs |
|
|
|
|
|
||
Prepaid assets |
|
|
|
|
|
||
Other long-term assets |
|
|
|
|
|
||
Total |
$ |
|
|
$ |
|
||
11
Cash value life insurance: We are the beneficiary of life insurance policies on the lives of certain employees/retirees, which are recorded at their cash surrender value as determined by the insurance carrier. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. Gains and losses on these investments are included in “Other non-operating items, net” within our Consolidated Statements of Income and were not material for all periods presented.
Equity method investments: These are investments in entities in which we have significant influence, but do not have a controlling financial interest. Our share of net earnings and losses from these ventures is included in “Other non-operating items, net” in the Consolidated Statements of Income.
Other equity investments: Represents investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control and do not exert significant influence. These investments are recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments.
In the first quarter of 2024 we received $
Deferred debt issuance costs: These costs consist of amounts paid to lenders related to our revolving credit facility. On January 25, 2024, we entered into an amendment of our credit facility which resulted in the capitalization of $
Prepaid assets: These amounts primarily consist of an asset related to a long-term services agreement for IT security.
NOTE 4 – Long-term debt
Our long-term debt is summarized below (in thousands):
|
Mar. 31, 2024 |
|
|
Dec. 31, 2023 |
|
||
|
|
|
|
|
|
||
Unsecured notes bearing fixed rate interest at |
$ |
|
|
$ |
|
||
Unsecured notes bearing fixed rate interest at |
|
|
|
|
|
||
Unsecured notes bearing fixed rate interest at |
|
|
|
|
|
||
Unsecured notes bearing fixed rate interest at |
|
|
|
|
|
||
Unsecured notes bearing fixed rate interest at |
|
|
|
|
|
||
Total principal long-term debt |
|
|
|
|
|
||
Debt issuance costs |
|
( |
) |
|
|
( |
) |
Unamortized premiums and discounts, net |
|
|
|
|
|
||
Total long-term debt |
$ |
|
|
$ |
|
||
On January 25, 2024, we entered into an amendment to our revolving credit facility (the Credit Agreement). Among other things, the amendment amends the revolving credit facility to:
Under the amended Credit Agreement, the Company’s maximum Total Leverage Ratio (as defined in the Credit Agreement) will remain unchanged at
As of March 31, 2024, cash and cash equivalents totaled $
12
NOTE 5 – Retirement plans
We have various defined benefit retirement plans. Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The total net pension obligations, including both current and non-current liabilities, as of March 31, 2024, were $
Pension costs (income), which primarily include costs for the qualified TRP and the non-qualified TEGNA Supplemental Retirement Plan (SERP), are presented in the following table (in thousands):
|
Quarter ended Mar. 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
||
Interest cost on benefit obligation |
$ |
|
|
$ |
|
||
Expected return on plan assets |
|
( |
) |
|
|
( |
) |
Amortization of prior service cost (credit) |
|
|
|
|
( |
) |
|
Amortization of actuarial loss |
|
|
|
|
|
||
Expense for company-sponsored retirement plans |
$ |
|
|
$ |
|
||
Benefits no longer accrue for TRP and SERP participants as a result of amendments to the plans in past years, and as such we no longer incur a service cost component of pension expense. All other components of our pension expense presented above are included within the “Other non-operating items, net” line item of the Consolidated Statements of Income.
During the three months ended March 31, 2024 and 2023, we did
NOTE 6 – Accumulated other comprehensive loss
The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax (in thousands):
|
Retirement |
|
|
Foreign |
|
|
Total |
|
|||
Quarters ended: |
|
|
|
|
|
|
|
|
|||
Balance as of Dec. 31, 2023 |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|||
Total other comprehensive income |
|
|
|
|
|
|
|
|
|||
Balance as of Mar. 31, 2024 |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|||
Balance as of Dec. 31, 2022 |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|||
Total other comprehensive income |
|
|
|
|
|
|
|
|
|||
Balance as of Mar. 31, 2023 |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Reclassifications from AOCL to the Consolidated Statements of Income are comprised of pension and other post-retirement components. Pension and other post-retirement reclassifications are related to the amortizations of prior service costs and actuarial losses.
|
Quarter ended Mar. 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
||
Amortization of prior service cost (credit), net |
$ |
|
|
$ |
( |
) |
|
Amortization of actuarial loss |
|
|
|
|
|
||
Total reclassifications, before tax |
|
|
|
|
|
||
Income tax effect |
|
( |
) |
|
|
( |
) |
Total reclassifications, net of tax |
$ |
|
|
$ |
|
||
13
NOTE 7 – Earnings per share
Our earnings per share (basic and diluted) are presented below (in thousands, except per share amounts):
|
Quarter ended Mar. 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
||
Net income |
$ |
|
|
$ |
|
||
Net loss attributable to the noncontrolling interest |
|
|
|
|
|
||
Adjustment of redeemable noncontrolling interest to redemption value |
|
( |
) |
|
|
( |
) |
Earnings available to common shareholders |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Weighted average number of common shares outstanding - basic |
|
|
|
|
|
||
Effect of dilutive securities: |
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
||
Performance share awards |
|
|
|
|
|
||
Weighted average number of common shares outstanding - diluted |
|
|
|
|
|
||
|
|
|
|
|
|
||
Net income per share - basic |
$ |
|
|
$ |
|
||
Net income per share - diluted |
$ |
|
|
$ |
|
||
Our calculation of diluted earnings per share includes the dilutive effects for the assumed vesting of outstanding restricted stock units and performance share awards. The diluted earnings per share amounts exclude the effects of approximately
NOTE 8 – Fair value measurement
We measure and record certain assets and liabilities at fair value in the accompanying condensed consolidated financial statements. U.S. GAAP establishes a hierarchy for those instruments measured at fair value that distinguishes between market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 – Quoted market prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 – Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use.
We also hold other financial instruments including cash and cash equivalents, receivables, accounts payable, contingent consideration and debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values. The fair value of our total debt, based on the bid and ask quotes for the related debt (Level 2), totaled $
As described in Note 2, in connection with the Octillion acquisition, the sellers may be entitled to earn additional consideration in the form of earnouts depending on the achievement of certain technological and financial milestones. The maximum value of these earnouts is $
NOTE 9 – Share repurchase program
On June 2, 2023, we entered into our first accelerated share repurchase program (the first ASR) with JPMorgan Chase Bank, National Association (JPMorgan). Under the terms of the first ASR, we repurchased $
On November 9, 2023, we entered into a second accelerated share repurchase (the second ASR) program with JPMorgan. Under the terms of the second ASR, we repurchased $
14
In December 2023, our Board of Directors authorized a new share repurchase program for up to $
During the first quarter of 2024, we returned $
Our capital allocation plan is subject to a variety of factors, including our strategic plans, market and economic conditions and the discretion of our Board of Directors.
NOTE 10 – Other matters
Litigation
Antitrust matters
In the third quarter of 2018, certain national media outlets reported the existence of a confidential investigation by the United States Department of Justice Antitrust Division (DOJ) into the local television advertising sales practices of station owners. We received a Civil Investigative Demand (CID) in connection with the DOJ’s investigation. On November 13 and December 13, 2018, the DOJ and
Since the national media reports, numerous putative class action lawsuits were filed against owners of television stations (the Advertising Cases) in different jurisdictions. Plaintiffs are a class consisting of all persons and entities in the United States who paid for all or a portion of advertisement time on local television provided by the defendants. The Advertising Cases assert antitrust and other claims and seek monetary damages, attorneys’ fees, costs and interest, as well as injunctions against the allegedly wrongful conduct.
These cases were consolidated into a single proceeding in the United States District Court for the Northern District of Illinois, captioned In re: Local TV Advertising Antitrust Litigation on October 3, 2018. At the court’s direction, plaintiffs filed an amended complaint on April 3, 2019, that superseded the original complaints. Although we were named as a defendant in
On May 26, 2023, plaintiffs moved for preliminary approval of settlements with
Discovery in the Advertising Cases is ongoing. We believe that the claims asserted in the Advertising Cases are without merit and intend to defend vigorously against them.
15
Other litigation matters
We, along with a number of our subsidiaries, also are defendants in other judicial and administrative proceedings involving matters incidental to our business. We do not believe that any material liability will be imposed as a result of any of the foregoing matters.
Related Party Transactions
We have an equity investment in MadHive, Inc. (MadHive) which is a related party of TEGNA. We also have commercial agreements with MadHive, under which MadHive supports our Premion business in acquiring over-the-top advertising inventory and delivering corresponding advertising impressions. In the first quarter 2024 and 2023, we incurred expenses of $
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Company Overview
We are an innovative media company serving the greater good of our communities. Across platforms, we tell empowering stories, conduct impactful investigations and deliver innovative marketing services. With 64 television stations and two radio stations in 51 U.S. markets, we are the largest owner of top four network affiliates in the top 25 markets among independent station groups, reaching approximately 39% of all U.S. television households. We also own leading multicast networks True Crime Network and Quest. Each television station also has a robust digital presence across online, mobile, connected television and social platforms, reaching consumers on all devices and platforms they use to consume news content. We have been consistently honored with the industry’s top awards, including Edward R. Murrow, George Polk, Alfred I. DuPont and Emmy Awards. Through TEGNA Marketing Solutions (TMS), our integrated sales and back-end fulfillment operations, we deliver results for advertisers across television, digital and over-the-top (OTT) platforms, including Premion, our OTT advertising network.
We have one operating and reportable segment. The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services (AMS) revenues, which include local and national non-political television advertising, digital marketing services (including Premion), and advertising on the stations’ websites, tablet and mobile products and OTT apps; 3) political advertising revenues, which are driven by even year election cycles at the local and national level (e.g. 2022, 2024, etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals, and distribution of our local news content.
Consolidated Results from Operations
The following discussion is a comparison of our consolidated results on a GAAP basis. The year-to-year comparison of financial results is not necessarily indicative of future results. In addition, see the section titled “Results from Operations - Non-GAAP Information” for additional tables presenting information that supplements our financial information provided on a GAAP basis.
Our consolidated results of operations on a GAAP basis were as follows (in thousands, except per share amounts):
|
Quarter ended Mar. 31, |
||||||||
|
2024 |
|
|
2023 |
|
|
Change |
||
|
|
|
|
|
|
|
|
||
Revenues |
$ |
714,252 |
|
|
$ |
740,327 |
|
|
(4%) |
|
|
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
|
|
||
Cost of revenues |
|
430,567 |
|
|
|
426,932 |
|
|
1% |
Business units - Selling, general and administrative expenses |
|
102,260 |
|
|
|
99,109 |
|
|
3% |
Corporate - General and administrative expenses |
|
14,798 |
|
|
|
12,100 |
|
|
22% |
Depreciation |
|
14,310 |
|
|
|
15,049 |
|
|
(5%) |
Amortization of intangible assets |
|
13,660 |
|
|
|
13,582 |
|
|
1% |
Asset impairment and other |
|
1,097 |
|
|
|
— |
|
|
*** |
Total |
$ |
576,692 |
|
|
$ |
566,772 |
|
|
2% |
|
|
|
|
|
|
|
|
||
Operating income |
$ |
137,560 |
|
|
$ |
173,555 |
|
|
(21%) |
|
|
|
|
|
|
|
|
||
Non-operating income (expense) |
|
112,963 |
|
|
|
(37,732 |
) |
|
*** |
Provision for income taxes |
|
61,261 |
|
|
|
31,819 |
|
|
93% |
Net income |
|
189,262 |
|
|
|
104,004 |
|
|
82% |
Net loss attributable to redeemable noncontrolling interest |
|
298 |
|
|
|
299 |
|
|
(0%) |
Net income attributable to TEGNA Inc. |
$ |
189,560 |
|
|
$ |
104,303 |
|
|
82% |
|
|
|
|
|
|
|
|
||
Net Income per share - basic |
$ |
1.06 |
|
|
$ |
0.46 |
|
|
*** |
Net Income per share - diluted |
$ |
1.06 |
|
|
$ |
0.46 |
|
|
*** |
*** Not meaningful
Revenues
Our Subscription revenue category includes revenue earned from cable, satellite and telecommunication providers for the right to carry our signals and the distribution of TEGNA stations on OTT streaming services. Our AMS category includes all sources of our traditional television advertising and digital revenues, including Premion and other digital advertising and marketing revenues across our platforms.
17
Our revenues and operating results are subject to seasonal fluctuations. Generally, our second and fourth quarter revenues and operating results are stronger than those we report for the first and third quarters. This is driven by the second quarter reflecting increased spring seasonal advertising, while the fourth quarter typically includes increased advertising related to the holiday season. In addition, our revenue and operating results are subject to significant fluctuations across yearly periods resulting from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising for the local, state and national elections. Additionally, every four years, we typically experience even greater increases in political advertising in connection with the presidential election. The strong demand for advertising from political advertisers in these even years can result in the significant use of our available inventory (leading to a “crowd out” effect), which can diminish our AMS revenue in the even year of a two-year election cycle, particularly in the fourth quarter of those years.
In recent years, our business has evolved toward generating more recurring and highly profitable revenue streams, driven by the increased contribution of political and subscription revenue streams as a percentage of our total revenue. Such revenues have been a majority of our overall revenue in the past few years and we expect this to continue.
The following table summarizes the year-over-year changes in our revenue categories (in thousands):
|
Quarter ended Mar. 31, |
||||||||
|
2024 |
|
|
2023 |
|
|
Change |
||
|
|
|
|
|
|
|
|
||
Subscription |
$ |
375,324 |
|
|
$ |
414,280 |
|
|
(9%) |
Advertising & Marketing Services |
|
298,692 |
|
|
|
307,845 |
|
|
(3%) |
Political |
|
27,828 |
|
|
|
5,291 |
|
|
*** |
Other |
|
12,408 |
|
|
|
12,911 |
|
|
(4%) |
Total revenues |
$ |
714,252 |
|
|
$ |
740,327 |
|
|
(4%) |
*** Not meaningful
Total revenues decreased $26.1 million in the first quarter of 2024 compared to the same period in 2023. The net decrease was primarily driven by a $39.0 million decline in subscription revenue primarily due to declines in subscribers and a temporary disruption of service with a distribution partner which was successfully resolved on January 13, 2024. These declines were partially offset by annual rate increases under our retransmission agreements. Also contributing to the decline was a reduction of $9.2 million in AMS revenue due to continued softness in the advertising market. Partially offsetting these decreases was a $22.5 million increase in political revenue.
Cost of revenues
Cost of revenues increased $3.6 million in the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to a $2.3 million increase in payroll costs and $1.3 million of employee retention costs.
Business units - Selling, general and administrative expenses
Business unit selling, general and administrative expenses increased $3.2 million in the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to a $1.5 million increase in workforce restructuring expense and $1.2 million of employee retention costs incurred in 2024.
Corporate - General and administrative expenses
Our corporate costs are separated from our direct business expenses and are recorded as general and administrative expenses in our Consolidated Statements of Income. This category primarily consists of corporate management and support functions including Legal, Human Resources, and Finance.
Corporate general and administrative expenses increased $2.7 million in the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to increases in employee stock-based compensation, employee retention and workforce restructuring costs.
Depreciation
Depreciation expense decreased by $0.7 million in the first quarter of 2024 compared to the same period in 2023. The decrease was primarily due to the impact of certain assets reaching the end of their assumed useful lives during 2023.
Amortization of intangible assets
Intangible asset amortization expense increased $0.1 million in the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to the amortization of intangible assets acquired in the Octillion Media acquisition, partially offset by a decrease in amortization due to certain intangible assets reaching the end of their assumed useful lives and therefore becoming fully amortized.
18
Asset impairment and other
Asset impairment and other expenses were $1.1 million in 2024 compared to no expense in 2023. The 2024 activity was due to a contract termination fee.
Operating income
Operating income decreased $36.0 million in the first quarter of 2024 compared to the same period in 2023. This decrease was primarily driven by the decline in subscription and AMS revenues described above.
Non-operating income (expense)
Non-operating income (expense) increased $150.7 million in the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to a $152.9 million gain recognized on the sale of our investment in Broadcast Music, Inc. in the first quarter of 2024.
Provision for income taxes
Income tax expense increased $29.4 million in the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to increases in net income before tax. Our effective income tax rate was 24.5% for the first quarter of 2024, compared to 23.4% for the first quarter of 2023. The tax rate for the first quarter of 2024 is higher than the comparable amount in 2023 primarily due to net excess tax expense recognized with respect to stock-based compensation. The effective income tax rate for 2023 was also favorably impacted by net deferred tax benefits as a result of state tax planning strategies.
Net income
Net income was $189.3 million, or $1.06 per diluted share, in the first quarter of 2024 compared to $104.0 million, or $0.46 per diluted share, during the same period in 2023. Both income and earnings per share were affected by the factors discussed above.
The weighted average number of diluted common shares outstanding as of the first quarter of 2024 and 2023 were 178.4 million and 224.8 million, respectively. The decline in the number of diluted common shares outstanding was primarily due to share repurchases of 39.5 million under our ASR programs which began in the second quarter of 2023, the receipt of 8.6 million shares to satisfy the Merger termination fee which occurred in the second quarter of 2023 and share repurchases of 7.6 million starting in the third quarter of 2023 through the first quarter of 2024 under our authorized repurchase program.
19
Results from Operations - Non-GAAP Information
Presentation of Non-GAAP information
We use non-GAAP financial performance measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the related GAAP measures, nor should they be considered superior to the related GAAP measures and should be read together with financial information presented on a GAAP basis. Also, our non-GAAP measures may not be comparable to similarly titled measures of other companies.
Management and our Board of Directors regularly use Corporate – General and administrative expenses, Operating expenses, Operating income and Income before income taxes, Provision for income taxes, Net income attributable to TEGNA Inc., and Diluted earnings per share, each presented on a non-GAAP basis, for purposes of evaluating company performance. Management and our Board of Directors also use Adjusted EBITDA and Adjusted free cash flow to evaluate performance. Furthermore, the Leadership Development and Compensation Committee of our Board of Directors uses non-GAAP measures such as Adjusted EBITDA, non-GAAP net income, non-GAAP EPS, and Adjusted free cash flow to evaluate management’s performance. Therefore, we believe that each of the non-GAAP measures presented provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. We also believe these non-GAAP measures are frequently used by investors, securities analysts and other interested parties in their evaluation of our business and other companies in the broadcast industry.
We discuss in this Form 10-Q non-GAAP financial performance measures that exclude from our reported GAAP results the impact of “special items” which are described in detail below in the section titled “Discussion of Special Charges and Credits Affecting Reported Results.” We believe that such expenses and gains are not indicative of normal, ongoing operations. While these items should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses, charges and gains in the future, we believe that removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.
We discuss Adjusted EBITDA (with and without stock-based compensation expense), a non-GAAP financial performance measure that we believe offers a useful view of the overall operation of our businesses. We define Adjusted EBITDA as net income attributable to TEGNA before (1) net (loss) attributable to redeemable noncontrolling interest, (2) income taxes, (3) interest expense, (4) interest income, (5) other non-operating items, net, (6) M&A-related costs, (7) asset impairment and other, (8) workforce restructuring, (9) employee retention costs, (10) depreciation and (11) amortization of intangible assets. We believe these adjustments facilitate company-to-company operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, and the age and book appreciation of property and equipment (and related depreciation expense). The most directly comparable GAAP financial measure to Adjusted EBITDA is Net income attributable to TEGNA. Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternate to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. In particular, Adjusted EBITDA is not intended to be a measure of cash flow available for management’s discretionary expenditures, as this measure does not consider certain cash requirements, such as working capital needs, capital expenditures, contractual commitments, interest payments, tax payments and other debt service requirements.
We also discuss Adjusted free cash flow and Adjusted free cash flow as a percentage of revenues, non-GAAP performance measures that the Board of Directors uses to review the performance of the business and compensate senior management. Adjusted free cash flow is reviewed by the Board of Directors as a percentage of revenue over a trailing two-year period (reflecting both an even and odd year reporting period given the political cyclicality of our business). The most directly comparable GAAP financial measure to Adjusted free cash flow is Net income attributable to TEGNA. Adjusted free cash flow is calculated as Adjusted EBITDA (as defined above), further adjusted by adding back (1) employee stock-based compensation awards, (2) Company stock 401(k) match contributions, (3) syndicated programming amortization, (4) dividends received from equity method investments, (5) reimbursements from spectrum repacking, (6) proceeds from company-owned life insurance policies and (7) interest income. This is further adjusted by deducting payments made for (1) syndicated programming, (2) pension, (3) interest, (4) taxes (net of refunds) and (5) purchases of property and equipment. Adjusted free cash flow is not intended to be a measure of residual cash available for management’s discretionary use since it omits significant sources and uses of cash flow including mandatory debt repayments and changes in working capital.
20
Discussion of Special Charges and Credits Affecting Reported Results
Our results included the following items we consider “special items” that, while at times recurring, are not normal and can vary significantly from period to period:
Quarter ended March 31, 2024:
Quarter ended March 31, 2023:
Reconciliations of certain line items impacted by special items to the most directly comparable financial measure calculated and presented in accordance with GAAP on our Consolidated Statements of Income follow (in thousands, except per share amounts):
|
|
|
|
|
Special Items |
|
|
|
|
|||||||||||||||||||||||
Quarter ended Mar. 31, 2024 |
|
GAAP |
|
|
Retention costs - SBC |
|
|
Retention costs - Cash |
|
|
M&A-related costs |
|
|
Workforce restructuring |
|
|
Asset impairment and other |
|
|
Other non-operating item |
|
|
Non-GAAP |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate - General and administrative expenses |
|
$ |
14,798 |
|
|
$ |
(752 |
) |
|
$ |
(221 |
) |
|
$ |
(2,290 |
) |
|
$ |
(111 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,424 |
|
Operating expenses |
|
|
576,692 |
|
|
|
(2,893 |
) |
|
|
(570 |
) |
|
|
(2,290 |
) |
|
|
(1,807 |
) |
|
|
(1,097 |
) |
|
|
— |
|
|
|
568,035 |
|
Operating income |
|
|
137,560 |
|
|
|
2,893 |
|
|
|
570 |
|
|
|
2,290 |
|
|
|
1,807 |
|
|
|
1,097 |
|
|
|
— |
|
|
|
146,217 |
|
Income before income taxes |
|
|
250,523 |
|
|
|
2,893 |
|
|
|
570 |
|
|
|
2,290 |
|
|
|
1,807 |
|
|
|
1,097 |
|
|
|
(152,867 |
) |
|
|
106,313 |
|
Provision for income taxes |
|
|
61,261 |
|
|
|
431 |
|
|
|
77 |
|
|
|
593 |
|
|
|
445 |
|
|
|
284 |
|
|
|
(36,621 |
) |
|
|
26,470 |
|
Net income attributable to TEGNA Inc. |
|
|
189,560 |
|
|
|
2,462 |
|
|
|
493 |
|
|
|
1,697 |
|
|
|
1,362 |
|
|
|
813 |
|
|
|
(116,246 |
) |
|
|
80,141 |
|
Earnings per share - diluted (a) |
|
$ |
1.06 |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
$ |
(0.65 |
) |
|
$ |
0.45 |
|
(a) Per share amounts do not sum due to rounding.
|
|
|
|
|
Special Items |
|
|
|
|
|||
Quarter ended Mar. 31, 2023 |
|
GAAP |
|
|
M&A-related costs |
|
|
Non-GAAP |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Corporate - General and administrative expenses |
|
$ |
12,100 |
|
|
$ |
(2,766 |
) |
|
$ |
9,334 |
|
Operating expenses |
|
|
566,772 |
|
|
|
(2,766 |
) |
|
|
564,006 |
|
Operating income |
|
|
173,555 |
|
|
|
2,766 |
|
|
|
176,321 |
|
Income before income taxes |
|
|
135,823 |
|
|
|
2,766 |
|
|
|
138,589 |
|
Provision for income taxes |
|
|
31,819 |
|
|
|
181 |
|
|
|
32,000 |
|
Net income attributable to TEGNA Inc. |
|
|
104,303 |
|
|
|
2,585 |
|
|
|
106,888 |
|
Earnings per share - diluted |
|
$ |
0.46 |
|
|
$ |
0.01 |
|
|
$ |
0.47 |
|
21
Adjusted EBITDA - Non-GAAP
Reconciliations of Adjusted EBITDA to net income presented in accordance with GAAP on our Consolidated Statements of Income are presented below (in thousands):
|
Quarter ended Mar. 31, |
|
|||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
|
|
|
|
|
|
|
|
|
|||
Net income attributable to TEGNA Inc. (GAAP basis) |
$ |
189,560 |
|
|
$ |
104,303 |
|
|
|
82 |
% |
Less: Net loss attributable to redeemable noncontrolling interest |
|
(298 |
) |
|
|
(299 |
) |
|
|
(0 |
%) |
Plus: Provision for income taxes |
|
61,261 |
|
|
|
31,819 |
|
|
|
93 |
% |
Plus: Interest expense |
|
42,368 |
|
|
|
42,906 |
|
|
|
(1 |
%) |
Less: Interest income |
|
(5,573 |
) |
|
|
(7,573 |
) |
|
|
(26 |
%) |
(Less) Plus: Other non-operating items, net |
|
(149,758 |
) |
|
|
2,399 |
|
|
*** |
|
|
Operating income (GAAP basis) |
|
137,560 |
|
|
|
173,555 |
|
|
|
(21 |
%) |
Plus: M&A-related costs |
|
2,290 |
|
|
|
2,766 |
|
|
|
(17 |
%) |
Plus: Asset impairment and other |
|
1,097 |
|
|
|
— |
|
|
*** |
|
|
Plus: Workforce restructuring |
|
1,807 |
|
|
|
— |
|
|
*** |
|
|
Plus: Retention costs - Employee stock-based compensation awards |
|
2,893 |
|
|
|
— |
|
|
*** |
|
|
Plus: Retention costs - Cash |
|
570 |
|
|
|
— |
|
|
*** |
|
|
Adjusted operating income (non-GAAP basis) |
|
146,217 |
|
|
|
176,321 |
|
|
|
(17 |
%) |
Plus: Depreciation |
|
14,310 |
|
|
|
15,049 |
|
|
|
(5 |
%) |
Plus: Amortization of intangible assets |
|
13,660 |
|
|
|
13,582 |
|
|
|
1 |
% |
Adjusted EBITDA |
$ |
174,187 |
|
|
$ |
204,952 |
|
|
|
(15 |
%) |
Stock-based compensation: |
|
|
|
|
|
|
|
|
|||
Employee awards |
|
8,240 |
|
|
|
3,688 |
|
|
*** |
|
|
Company stock 401(k) match contributions |
|
5,429 |
|
|
|
5,564 |
|
|
|
(2 |
%) |
Adjusted EBITDA before stock-based compensation costs |
$ |
187,856 |
|
|
$ |
214,204 |
|
|
|
(12 |
%) |
*** Not meaningful
In the first quarter of 2024 Adjusted EBITDA margin was 24% with stock-based compensation expense or 26% without those expenses. Our total Adjusted EBITDA decreased $30.8 million, or 15%, in 2024 compared to 2023. This decrease was primarily driven by the operational factors discussed above within the revenue and operating expense fluctuation explanation sections, most notably, the decrease in subscription and AMS revenues offset by an increase in political revenue.
22
Adjusted Free Cash Flow Reconciliation
Adjusted free cash flow as a percentage of revenue is computed over a trailing two-year period (reflecting both an even and odd year reporting period given the political cyclicality of our business).
Reconciliation from “Net income” to “Adjusted free cash flow” follow (in thousands):
|
Two-year period ended Mar. 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
||
Net income attributable to TEGNA Inc. (GAAP basis) |
$ |
1,162,519 |
|
|
$ |
1,099,110 |
|
Plus: Provision for income taxes |
|
349,092 |
|
|
|
334,056 |
|
Plus: Interest expense |
|
345,674 |
|
|
|
356,093 |
|
Plus: M&A-related costs |
|
32,421 |
|
|
|
27,021 |
|
Plus: Depreciation |
|
119,969 |
|
|
|
125,189 |
|
Plus: Amortization of intangible assets |
|
112,009 |
|
|
|
120,715 |
|
Plus: Employee stock-based compensation awards |
|
55,615 |
|
|
|
56,923 |
|
Plus: Company stock 401(k) match contribution |
|
37,381 |
|
|
|
36,063 |
|
Plus: Syndicated programming amortization |
|
114,427 |
|
|
|
136,964 |
|
Plus: Workforce restructuring expense |
|
1,807 |
|
|
|
— |
|
Plus: Advisory fees related to activism defense |
|
— |
|
|
|
12,012 |
|
Plus: Cash dividend from equity investments for return on capital |
|
500 |
|
|
|
4,276 |
|
Plus: Cash reimbursements from spectrum repacking |
|
265 |
|
|
|
3,842 |
|
Plus: Net income attributable to redeemable noncontrolling interest |
|
1 |
|
|
|
1,457 |
|
Plus: Reimbursement from Company-owned life insurance policies |
|
1,879 |
|
|
|
1,929 |
|
Plus: Retention costs, cash portion |
|
5,018 |
|
|
— |
|
|
Plus (Less): Asset impairment and other |
|
4,191 |
|
|
|
(1,207 |
) |
Less: Other non-operating items, net |
|
(162,922 |
) |
|
|
(5,746 |
) |
Less: Merger termination fee |
|
(136,000 |
) |
|
|
— |
|
Less: Syndicated programming payments |
|
(110,970 |
) |
|
|
(140,650 |
) |
Less: Income tax payments, net of refunds |
|
(298,525 |
) |
|
|
(351,206 |
) |
Less: Pension contributions |
|
(9,613 |
) |
|
|
(12,149 |
) |
Less: Interest payments |
|
(332,842 |
) |
|
|
(345,153 |
) |
Less: Purchases of property and equipment |
|
(105,400 |
) |
|
|
(104,069 |
) |
Adjusted free cash flow (non-GAAP basis) |
$ |
1,186,496 |
|
|
$ |
1,355,470 |
|
|
|
|
|
|
|
||
Revenue |
$ |
6,130,304 |
|
|
$ |
6,286,614 |
|
Adjusted free cash flow as a % of Revenue |
|
19.4 |
% |
|
|
21.6 |
% |
Our Adjusted free cash flow was $1.19 billion and $1.36 billion for the two-year periods ended March 31, 2024 and 2023, respectively.
Our share of net earnings and losses from investments that we have significant influence over, but do not have control, were previously included in “Equity loss in unconsolidated investments, net” in the Consolidated Statements of Income. However, beginning in the first quarter of 2024 such amounts are now included in “Other non-operating items, net”. Prior year amounts have been reclassified to conform to the new presentation.
Starting in the fourth quarter of 2023, TEGNA began presenting interest income as a separate line item on its Statements of Income as a result of its increasing size. Prior to this, interest income was included in Other non-operating items, net. Prior year amounts have been reclassified to conform to the new presentation. Interest income is included in Adjusted free cash flow while Other non-operating items, net is not, consistent with past presentations.
Liquidity, Capital Resources and Cash Flows
Our operations have historically generated positive cash flow that, along with availability under our existing revolving credit facility and cash and cash equivalents on hand, has been sufficient to fund our capital expenditures, interest payments, dividends, share repurchases, investments in strategic initiatives and other operating requirements.
We paid dividends totaling $19.9 million and $21.4 million in the three months ended March 31, 2024 and 2023, respectively. On May 8, 2024 we announced that our Board of Directors further increased the dividend by 10%, from 11.375 to 12.5 cents per share. This increase builds on a 20 percent increase to TEGNA’s dividend in 2023. The increased dividend will be in effect for quarterly dividend payments, beginning with the July 1, 2024 payment, to stockholders of record as of the close of business on June 7, 2024.
23
On June 2, 2023, we entered into our first accelerated share repurchase program (the first ASR) with JPMorgan Chase Bank, National Association (JPMorgan). Under the terms of the first ASR, we repurchased $300 million in TEGNA common stock from JPMorgan, with an initial delivery of approximately 15.2 million shares received on June 6, 2023, representing 80% ($240 million) of the value of the first ASR contract. The first ASR program was completed during the third quarter of 2023 at which time JPMorgan delivered an additional 3.1 million shares to us. The final share settlement was based on the average daily volume-weighted average price of TEGNA shares during the term of the first ASR program, less a discount, less the previously delivered 15.2 million shares.
On November 9, 2023, we entered into a second accelerated share repurchase (the second ASR) program with JPMorgan. Under the terms of the second ASR, we repurchased $325 million in TEGNA common stock from JPMorgan, with an initial delivery of approximately 17.3 million shares received on November 13, 2023, representing 80% ($260 million) of the value of the second ASR contract. The second ASR program was completed on February 22, 2024, shortly after which JPMorgan delivered an additional 4.0 million shares to us. The final share settlement was based on the average daily volume-weighted average price of TEGNA shares during the term of the second ASR program, less a discount, less the previously delivered 17.3 million shares.
In December 2023, our Board of Directors authorized a new share repurchase program for up to $650.0 million of our common stock, which was in addition to the second ASR program. This new share repurchase program expires on December 31, 2025. In the first quarter of 2024, 5.8 million shares were repurchased under this program at an average share price of $14.50 for an aggregate cost of $84.5 million, of which $2.1 million had not yet been paid as of the end of the first quarter.
Our comprehensive capital allocation framework supports shareholder value creation through a predictable and sustained distribution of free cash flow to shareholders. We are on track and reaffirm our expectation to return 40-60 percent of Adjusted free cash flow generated in 2024-2025 to shareholders through share repurchases and dividends, with the remaining Adjusted free cash flow expected to be used for organic investments and/or bolt-on acquisitions and to prepare for future debt retirement. We will continue to analyze all uses of capital, including regular evaluation of the dividend, with a goal of maximizing long-term shareholder value creation.
Consistent with this framework, we are on track to return approximately $350 million of capital to shareholders in 2024 through dividends and opportunistic share repurchases from time to time on the open market at prevailing prices or in negotiated transactions.
Our Adjusted free cash flow guidance free cash flow guidance includes the impact of transformation initiatives to streamline operations, pursue innovation-driven opportunities, and achieve cost reductions. We expect to complete these transformation initiatives by the end of 2025, with initial benefits expected to occur in the second half of 2024. We expect to realize annualized cost savings of $90-$100 million exiting 2025.
During the first quarter of 2024, we returned $102.3 million of capital to shareholders with $82.4 million of share repurchases, representing 5.7 million shares, and paid $19.9 million in dividends. Excluded from this commitment are share repurchases under our previously announced accelerated share repurchase program, which were completed during the quarter on February 27, 2024, including final settlement of approximately 4.0 million shares.
Our capital allocation plan is subject to a variety of factors, including our strategic plans, market and economic conditions and the discretion of our Board of Directors.
In addition to the above share repurchase initiatives, during 2024 we deployed surplus cash in time deposit and money market investments with several financial institutions.
On January 25, 2024, we entered into an amendment to our revolving credit facility. Among other things, the amendment amends the revolving credit facility to:
Under the amended Credit Agreement, the Company’s maximum Total Leverage Ratio (as defined in the Credit Agreement) will remain unchanged at 4.50x. None of the available capacity on the revolving credit facility was drawn on the amendment date.
24
As of March 31, 2024, we were in compliance with all covenants contained in our debt agreements and credit facility. Our leverage ratio, calculated in accordance with our revolving Credit Agreement, was 2.79x, below the maximum permitted leverage ratio of 4.50x. The leverage ratio is calculated using annualized adjusted EBITDA (as defined in the Credit Agreement) for the trailing eight quarters. We expect to remain compliant with all covenants for the foreseeable future.
As of March 31, 2024, our total debt was $3.07 billion, cash and cash equivalents totaled $430.8 million, and we had unused borrowing capacity of $737.3 million under our revolving credit facility. Our debt consists of unsecured notes which have fixed interest rates.
Our financial and operating performance, as well as our ability to generate sufficient cash flow to maintain compliance with credit facility covenants, are subject to certain risk factors. See Item 1A. “Risk Factors,” in our 2023 Annual Report on Form 10-K for further discussion. We expect our existing cash and cash equivalents, expected future cash flow from our operations, and borrowing capacity under the revolving credit facility will be more than sufficient to satisfy our recurring contractual commitments, debt service obligations, capital expenditure requirements, and other working capital needs for the next twelve months and beyond.
Cash Flows
The following table provides a summary of our cash flow information followed by a discussion of the key elements of our cash flow (in thousands):
|
Three months ended Mar. 31, |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of the period |
$ |
361,036 |
|
|
$ |
551,681 |
|
|
|
|
|
|
|
||
Operating activities: |
|
|
|
|
|
||
Net income |
|
189,262 |
|
|
|
104,004 |
|
Gain on investment sale |
|
(152,867 |
) |
|
|
— |
|
Depreciation, amortization and other non-cash adjustments |
|
44,765 |
|
|
|
38,120 |
|
Pension expense, net of contributions |
|
742 |
|
|
|
1,416 |
|
Decrease in trade receivables |
|
22,153 |
|
|
|
20,615 |
|
(Decrease) increase in accounts payable |
|
(34,950 |
) |
|
|
12,100 |
|
Increase (decrease) in interest and taxes payable |
|
26,958 |
|
|
|
(1,627 |
) |
All other operating activities |
|
4,317 |
|
|
|
(4,241 |
) |
Net cash flow from operating activities |
|
100,380 |
|
|
|
170,387 |
|
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
||
Purchase of property and equipment |
|
(4,911 |
) |
|
|
(2,845 |
) |
Payments for acquisitions of businesses and assets, net of cash acquired |
|
(52,799 |
) |
|
|
(1,150 |
) |
Proceeds from investments |
|
152,867 |
|
|
|
23 |
|
All other investing activities |
|
(8,933 |
) |
|
|
(150 |
) |
Net cash flow provided by (used for) investing activities |
|
86,224 |
|
|
|
(4,122 |
) |
|
|
|
|
|
|
||
Financing activities: |
|
|
|
|
|
||
Repurchase of common stock |
|
(82,394 |
) |
|
|
— |
|
Dividends paid |
|
(19,898 |
) |
|
|
(21,360 |
) |
Payment of debt issuance costs |
|
(6,448 |
) |
|
|
— |
|
All other financing activities |
|
(8,136 |
) |
|
|
(13,407 |
) |
Net cash flow used for financing activities |
|
(116,876 |
) |
|
|
(34,767 |
) |
Net change in cash and cash equivalents |
|
69,728 |
|
|
|
131,498 |
|
Cash and cash equivalents at end of the period |
$ |
430,764 |
|
|
$ |
683,179 |
|
Operating activities - Cash flow from operating activities was $100.4 million for the three months ended March 31, 2024, compared to $170.4 million for the same period in 2023. The decrease of $70.0 million was primarily driven by changes in working capital, primarily accounts payable, due to the timing of payments. Also contributing to the decrease was the impact of the December 2023 temporary service disruption with one of our distribution partners which negatively impacted collections in the first quarter of 2024. These declines were partially offset by the timing of payments to one of our network affiliation partners.
Investing activities - Cash flow from investing activities was a net cash inflow of $86.2 million for the three months ended March 31, 2024, compared to a net cash outflow of $4.1 million for the same period in 2023. The increase in net cash flows of $90.3 million from investing activities was primarily driven by proceeds of $152.9 million from the sale of our investment in BMI in the first quarter of 2024. This was partially offset by cash outflows of $52.8 million for the acquisition of Octillion Media.
25
Financing activities - Cash flow used for financing activities was $116.9 million for the three months ended March 31, 2024, compared to $34.8 million for the same period in 2023. The increase was primarily due to our repurchase of common stock. In the first quarter of 2024 we repurchased approximately $82.4 million of shares under our authorized share repurchase program. Additionally, we paid $6.4 million in fees in conjunction with the amendment of our credit revolver in the first quarter of 2024.
Certain Factors Affecting Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q that do not describe historical facts may constitute forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in the communication, the words “believes,” “estimates,” “plans,” “expects,” “should,” “could,” “outlook,” and “anticipates” and similar expressions as they relate to the Company, or its financial results are intended to identify forward-looking statements. Forward-looking statements in this communication may include, without limitation, statements regarding anticipated growth rates, the Company’s capital allocation framework, the Company’s business transformation initiatives, and the Company’s other plans, objectives and expectations. Forward-looking statements are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs, projections and estimates expressed in such statements, many of which are outside the Company’s control. These risks, uncertainties and other factors include, but are not limited to, risks and uncertainties related to: changes in the market price of the Company’s shares, general market conditions; constraints, volatility, or disruptions in the capital markets; the possibility that Company’s share repurchases, including through ASR programs, and the execution of the capital allocation framework may not enhance long-term stockholder value; the Company’s ability to realize cost savings and execute its business transformation initiatives; the possibility that share repurchases could increase the volatility of the price of the Company’s common stock; legal proceedings, judgments or settlements; the Company’s ability to re-price or renew subscribers; potential regulatory actions; changes in consumer behaviors and impacts on and modifications to the Company’s operations and business relating thereto; and economic, competitive, governmental, technological and other factors and risks that may affect the Company’s operations or financial results, which are discussed in our Annual Report on Form 10-K.
Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of the Company. Each such statement speaks only as of the day it was made. We undertake no obligation to update or to revise any forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, refer to the following section of our 2023 Annual Report on Form 10-K: “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” Our exposures to market risk have not changed materially since December 31, 2023.
As of March 31, 2024, we did not have any floating interest obligations outstanding under our $750 million revolving credit facility, which expires in January 2029. Any amounts borrowed under the revolving credit facility in the future are subject to a variable rate. Refer to Note 8 to the condensed consolidated financial statements for information regarding the fair value of our long-term debt.
Item 4. Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2024. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective, as of March 31, 2024, to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There have been no material changes in our internal controls or in other factors during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 10 to the condensed consolidated financial statements for information regarding our legal proceedings.
26
Item 1A. Risk Factors
While we attempt to identify, manage and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. “Item 1A. Risk Factors” of our 2023 Annual Report on Form 10-K describes the risks and uncertainties that we believe may have the potential to materially affect our business, results of operations, financial condition, cash flows, projected results and future prospects. We do not believe that there have been any material changes from the risk factors previously disclosed in our 2023 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table presents stock repurchases by the Company during the three months ended March 31, 2024 (in thousands, except per share amounts):
Period Ended |
|
Total |
|
|
Average |
|
|
Total Number |
|
|
Approximate |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
January 1, 2024 - January 31, 2024 |
|
— |
|
|
$ |
— |
|
|
— |
|
|
|
715,000 |
|
(1) |
||
February 1, 2024 - February 29, 2024 |
|
|
3,999 |
|
|
|
14.51 |
|
|
|
3,999 |
|
|
|
650,000 |
|
(2) |
March 1, 2024 - March 31, 2024 |
|
|
5,828 |
|
|
$ |
14.50 |
|
|
|
5,828 |
|
|
|
565,505 |
|
(3) |
Total First Quarter 2024 |
|
|
9,827 |
|
|
|
|
|
|
9,827 |
|
|
|
|
|
||
(1) Represents as of the beginning of the first quarter of 2024 (i) the remaining value of the $650 million share repurchase program authorized by our Board of Directors in December 2023 and (ii) the remaining $65 million (20% of the total value) under the second ASR program described in footnote 2 below.
(2) In the fourth quarter of 2023, we entered into a second ASR agreement with JPMorgan to repurchase TEGNA common stock with an aggregate value of $325 million. Under the terms of the ASR, we paid JPMorgan $325 million and received an initial delivery of approximately 17.3 million shares in November of 2023, representing approximately 80% ($260 million) of the value of the second ASR. The second ASR program was completed on February 22, 2024, shortly after which date JPMorgan delivered an additional 4.0 million shares to us. The second ASR program was separately authorized by our Board of Directors and therefore did not impact the $650 million share repurchase program authorized by our Board of Directors in December 2023 described in Note 3 below.
(3) In December 2023, our Board of Directors authorized the renewal of our share repurchase program for up to $650 million of our common stock over two years. The shares may be repurchased at management’s discretion, either on the open market or in privately negotiated block transactions. Management’s decision to repurchase shares will depend on price, blackout periods and other corporate developments. Purchases may occur from time to time and no maximum purchase price has been set. In March of 2024, we repurchased 5.8 million shares under this program at an aggregate cost of $84.5 million, of which $2.1 million had not yet been paid as of the end of the first quarter.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
On March 7, 2024,
27
The adoption of this trading plan occurred during an open insider trading window and is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended.
Item 6. Exhibits
Exhibit Number |
|
Description |
|
|
|
|
|
|
3-1 |
|
|
|
|
|
3-2 |
|
|
|
|
|
10-1 |
|
Form of Executive Officer Restricted Stock Unit Award Agreement. * |
|
|
|
10-2 |
|
|
|
|
|
10-3 |
|
Form of Executive Officer Performance Share Award Agreement. * |
|
|
|
10-4 |
|
|
|
|
|
10-5 |
|
|
|
|
|
10-6 |
|
|
|
|
|
10-7 |
|
|
|
|
|
31-1 |
|
|
|
|
|
31-2 |
|
|
|
|
|
32-1 |
|
|
|
|
|
32-2 |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
|
|
|
* Asterisks identify management contracts and compensatory plans and arrangements.
28
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 8, 2024 |
TEGNA INC. |
|
|
|
/s/ Clifton A. McClelland III |
|
Clifton A. McClelland III |
|
Senior Vice President and Controller |
|
(on behalf of Registrant and as Principal Accounting Officer) |
29
EXHIBIT 10-1
AWARD AGREEMENT
STOCK UNITS
The Leadership Development and Compensation Committee of the TEGNA Inc. Board of Directors has approved an award of Restricted Stock Units (referred to herein as “Stock Units”) to you under the TEGNA Inc. 2020 Omnibus Incentive Compensation Plan (the “Plan”), as set forth below.
This Award Agreement and the enclosed Terms and Conditions effective as of #GrantDate#, 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: |
#ParticipantName# |
|
|
Grant Date: |
#GrantDate# |
|
|
Stock Unit Commencement Date: |
3/1/24 |
|
|
Stock Unit Expiration Date: |
2/29/28 |
|
|
Stock Unit Vesting Schedule: |
25% of the Stock Units shall vest on 2/28/25* 25% of the Stock Units shall vest on 2/28/26* |
|
25% of the Stock Units shall vest on 2/28/27* |
|
25% of the Stock Units shall vest on 2/29/28* |
|
|
Payment Date: |
25% of the Stock Units shall vest on 3/1/25* |
|
25% of the Stock Units shall vest on 3/1/26* |
|
25% of the Stock Units shall vest on 3/1/27* |
|
25% of the Stock Units shall vest on 3/1/28* |
* Provided the Employee is continuously employed until such vesting dates and has not terminated employment on or before such vesting dates. Such dates are hereinafter referred to as the “Vesting Date” or “Payment Date” for the Stock Units that vest or are paid on such dates.
Number of Stock Units: #QuantityGranted#
|
|
|
|
|
TEGNA Inc. |
|
By: |
|
Employee's Signature or Acceptance by |
|
Jeffrey Newman |
Electronic Signature |
|
Senior Vice President/Human Resources |
-1-
STOCK UNITS
TERMS AND CONDITIONS
Under the
TEGNA Inc.
2020 Omnibus Incentive Compensation Plan
These Terms and Conditions, dated #GrantDate#, govern the grant of Restricted Stock Units (referred to herein as “Stock Units”) to the employee (the “Employee”) designated in the Award Agreement dated coincident with these Terms and Conditions. The Stock Units are granted under, and are subject to, the TEGNA Inc. (the “Company”) 2020 Omnibus Incentive Compensation Plan (the “Plan”). Terms used herein that are defined in the Plan shall have the meanings 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.
1. Grant of Stock Units. Pursuant to the provisions of (i) the Plan, (ii) the individual Award Agreement governing the grant, and (iii) these Terms and Conditions, the Company has granted to the Employee the number of Stock Units set forth on the applicable Award Agreement. Each vested Stock Unit shall entitle the Employee to receive from the Company one share of the Company's common stock (“Common Stock”) upon the earliest of the Employee’s termination of employment, a Change in Control (but only to the extent provided in Section 14) or the Payment Date, as defined below. The Employee shall not be entitled to receive any shares of Common Stock with respect to unvested Stock Units, and the Employee shall have no further rights with regard to a Stock Unit once the underlying share of Common Stock has been delivered with respect to that Stock Unit.
-2-
2. Payment Date. The Payment Date shall be the dates specified in the Award Agreement with respect to the Stock Units that are vested on such date under the schedule set forth in the Award Agreement.
3. Vesting Schedule. Subject to the special vesting rules set forth in Sections 7 and 14, the Stock Units shall vest in accordance with the Vesting Schedule specified in the Award Agreement to the extent that the Employee is continuously employed by the Company or its Subsidiaries until the Vesting Dates specified in the Vesting Schedule and has not terminated employment on or before such dates. An Employee will not be treated as remaining in continuous employment if the Employee’s employer ceases to be a Subsidiary of the Company.
4. No Dividend Equivalents. No dividend equivalents shall be paid to the Employee with regard to the Stock Units.
5. 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 vested Stock Units as soon as administratively practicable (but always by the 30th day) after the earliest of the Employee’s termination of employment, a Change in Control (but only to the extent provided in Section 14) or the Payment Date. The number of shares delivered shall be reduced by the value of all taxes withheld by reason of such delivery; provided that the amount that is withheld cannot exceed the amount of the taxes owed by the Employee using the maximum statutory tax rate in the Employee’s applicable jurisdiction(s). The Employee shall not be entitled to receive any shares of Common Stock with respect to unvested Stock Units, and the Employee shall have no further rights with regard to a Stock Unit once the underlying share of Common Stock has been delivered with respect to that Stock Unit.
-3-
6. Cancellation of Stock Units.
(a) Termination of Employment. Subject to Sections 7 and 14, all Stock Units granted to the Employee that have not vested as of the date of the Employee’s termination of employment shall automatically be cancelled upon the Employee’s termination of employment. Unvested Stock Units shall also be cancelled in connection with an event that results in the Employee’s employer ceasing to be a Subsidiary of the Company.
(b) Forfeiture of Stock Units/Recovery of Common Stock. Stock Units granted under this Award Agreement are subject to the Company’s Recoupment Policy, dated as of February 26, 2013, as amended as of December 7, 2018, and which may be further amended from time-to-time with retroactive effect. In addition, the Company may assert any other remedies that may be available to the Company under applicable law, including, without limitation, those available under Section 304 of the Sarbanes-Oxley Act of 2002.
7. Death, Disability, Retirement. In the event that the Employee’s employment terminates on or prior to the Stock Unit Expiration Date by reason of death, permanent disability (as determined under the Company’s Long Term Disability Plan), termination of employment after attaining age 65 (other than for “Cause”), or termination of employment after both attaining age 55 and completing at least 5 years of service (other than for “Cause”), the Employee (or in the case of the Employee's death, the Employee's estate or designated beneficiary) shall become vested in a number of Stock Units equal to the product of (i) the total number of Stock Units in which the Employee would have become vested upon the Stock Unit Expiration Date had the Employee's employment not terminated, and (ii) a fraction, the numerator of which shall be the number of full calendar months between the Stock Unit Commencement Date and the date that employment terminated, and the denominator of which shall be the number of full calendar months from the
-4-
Stock Unit Commencement Date to the Stock Unit Expiration Date; provided such number of Stock Units so vested shall be reduced by the number of Stock Units that had previously become vested. In the event the Employee is terminated for “Cause” all unpaid awards shall be forfeited. “Cause” shall mean a termination of the Employee’s employment following the occurrence of any of the following events, each of which shall constitute a “Cause” for such termination:
The Committee, in its sole discretion, shall be responsible for making the determination whether an Employee’s termination is for “Cause”, and its decision shall be binding on all parties.
8. Non-Assignability. Stock Units may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Stock Units be made subject to execution, attachment or similar process.
-5-
9. Rights as a Shareholder. The Employee shall have no rights as a shareholder by reason of the Stock Units.
10. Discretionary Plan; Employment. The Plan is discretionary in nature and may be suspended or terminated by the Company at any time. With respect to the Plan, (a) each grant of Stock Units is a one-time benefit which does not create any contractual or other right to receive future grants of Stock Units, or benefits in lieu of Stock Units; (b) all determinations with respect to any such future grants, including, but not limited to, the times when the Stock Units shall be granted, the number of Stock Units, the Vesting Dates and the Payment Dates, will be at the sole discretion of the Company; (c) the Employee’s participation in the Plan shall not create a right to further employment with the Employee’s employer and shall not interfere with the ability of the Employee’s employer to terminate the Employee’s employment relationship at any time with or without cause; (d) the Employee’s participation in the Plan is voluntary; (e) the Stock Units are not part of normal and expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payment, bonuses, long-service awards, pension or retirement benefits, or similar payments; and (f) the future value of the Stock Units is unknown and cannot be predicted with certainty.
11. Effect of Plan and these Terms and Conditions. The Plan is hereby incorporated by reference into these Terms and Conditions, and these Terms and Conditions are subject in all respects to the provisions of the Plan, including without limitation the authority of the Leadership Development and Compensation Committee of the Board of Directors of the Company (the “Committee”) in its sole discretion to adjust awards and to make interpretations and other determinations with respect to all matters relating to the applicable Award Agreements, these Terms and Conditions, the Plan and awards made pursuant thereto. These Terms and Conditions
-6-
shall apply to the grant of Stock Units made to the Employee on the date hereof and shall not apply to any future grants of Stock Units made to the Employee.
12. Notices. Notices hereunder shall be in writing and if to the Company shall be addressed to the Secretary of the Company at 8350 Broad Street, Suite 2000, Tysons, Virginia 22102, and, if to the Employee, shall be addressed to the Employee at his or her address as it appears on the Company's records.
13. Successors and Assigns. The applicable Award Agreement and these Terms and Conditions shall be binding upon and inure to the benefit of the successors and assigns of the Company and, to the extent provided in Section 7 hereof, to the estate or designated beneficiary of the Employee.
14. Change in Control Provisions.
Notwithstanding anything to the contrary in these Terms and Conditions, the following provisions shall apply to all Stock Units granted under the attached Award Agreement.
(a) Definitions.
As used in Articles 2 and 14 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-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
-7-
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 14(a)(iii)(A), 14(a)(iii)(B) and 14(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 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
-8-
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.
(b) Acceleration Provisions. (i) In the event of the occurrence of a Change in Control in which the Stock Units are not continued or assumed (i.e., the Stock Units are not equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units that have not been cancelled or paid out shall become fully vested. The vested Stock Units 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
-9-
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, the vested Stock Units shall be paid out as soon as administratively practicable after the earlier of the Employee’s termination of employment or the applicable Payment Date for such Stock Units (but in no event later than 30 days after such events).
(ii) In the event of the occurrence of a Change in Control in which the Stock Units are continued or assumed (i.e., the Stock Units are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units shall not vest upon the Change in Control, provided that the Stock Units that are not subsequently vested and paid 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 Stock Units are continued or assumed, vested Stock Units shall be paid out as soon as administratively practicable after the earlier of the Employee’s termination of employment or the applicable Payment Date for such Stock Units (but in no event later than 10 days after such events).
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:
-10-
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:
Any termination by the Employee for Good Reason shall be communicated by a Notice 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
-11-
that created the “Good Reason”.
(iii) If in connection with a Change in Control, the Stock Units are assumed (i.e., the Stock Units are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units shall refer to the right to receive such cash and/or equity. An assumption of this Stock Unit award must satisfy the following requirements:
The determination of whether the conditions of this Section 14(b)(iii) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
(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 14, whether or not initiated by the Employee. The Company agrees to pay such
-12-
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.
15. Employment or Similar Agreements. The provisions of Sections 1, 3, 5, 6, 7 and 14 of these Terms and Conditions shall not be applied to or interpreted in a manner which would decrease the rights held by, or the payments owing to, an Employee under an employment agreement, termination benefits agreement or similar agreement with the Company that pre-exists the Grant Date and contains specific provisions applying to Plan awards in the case of any change in control or similar event or termination of employment, and if there is any conflict between the terms of such employment agreement, termination benefits agreement or similar agreement and the terms of Sections 1, 3, 5, 6, 7 and 14, the employment agreement, termination benefits agreement or similar agreement shall control.
16. Grant Subject to Applicable Regulatory Approvals. Any grant of Stock Units under the Plan is specifically conditioned on, and subject to, any regulatory approvals required in the Employee’s country. These approvals cannot be assured. If necessary approvals for grant or payment are not obtained, the Stock Units may be cancelled or rescinded, or they may expire, as determined by the Company in its sole and absolute discretion.
17. 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
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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.
18. Compliance with Section 409A. This Award is intended to comply with the requirements of Section 409A so that no taxes under Section 409A are triggered, and shall be interpreted and administered in accordance with that intent (e.g., the definition of “termination of employment” (or similar term used herein) shall have the meaning ascribed to “separation from service” under Section 409A). If any provision of these Terms and Conditions would otherwise conflict with or frustrate this intent, the provision shall not apply. Notwithstanding any provision in this Award Agreement to the contrary and solely to the extent required by Section 409A, if the Employee is a “specified employee” within the meaning of Code Section 409A and if delivery of shares is being made in connection with the Employee’s separation from service other than by reason of the Employee’s death, delivery of the shares shall be delayed until six months and one day after the Employee’s separation from service with the Company (or, if earlier than the end of the six-month period, the date of the Employee’s death). The Company shall not be responsible or liable for the consequences of any failure of the Award to avoid taxation under Section 409A.
2024
US employees
EXHIBIT 10-2
AWARD AGREEMENT
STOCK UNITS
The Leadership Development and Compensation Committee of the TEGNA Inc. Board of Directors has approved an award of Restricted Stock Units (referred to herein as “Stock Units”) to you under the TEGNA Inc. 2020 Omnibus Incentive Compensation Plan (the “Plan”), as set forth below.
This Award Agreement and the enclosed Terms and Conditions effective as of #GrantDate#, 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: |
#ParticipantName# |
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Grant Date: |
#GrantDate# |
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Stock Unit Commencement Date: |
3/1/24 |
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Stock Unit Expiration Date: |
2/29/28 |
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Stock Unit Vesting Schedule: |
25% of the Stock Units shall vest on 2/28/25* |
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25% of the Stock Units shall vest on 2/28/26* |
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25% of the Stock Units shall vest on 2/28/27* |
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25% of the Stock Units shall vest on 2/29/28* |
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Payment Date: |
25% of the Stock Units shall be paid on 3/1/25* |
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25% of the Stock Units shall be paid on 3/1/26* |
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25% of the Stock Units shall be paid on 3/1/27* |
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25% of the Stock Units shall be paid on 3/1/28* |
* Provided the Employee is continuously employed until such vesting dates and has not terminated employment on or before such vesting dates. Such dates are hereinafter referred to as the “Vesting Date” or “Payment Date” for the Stock Units that vest or are paid on such dates.
Number of Stock Units: #QuantityGranted#
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TEGNA Inc. |
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By: |
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Employee Signature or Acceptance by |
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Jeffery Newman |
Electronic Signature |
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Senior Vice President/Human Resources |
STOCK UNITS
TERMS AND CONDITIONS
Under the
TEGNA Inc.
2020 Omnibus Incentive Compensation Plan
These Terms and Conditions, dated #GrantDate#, govern the grant of Restricted Stock Units (referred to herein as “Stock Units”) to the employee (the “Employee”) designated in the Award Agreement dated coincident with these Terms and Conditions. The Stock Units are granted under, and are subject to, the TEGNA Inc. (the “Company”) 2020 Omnibus Incentive Compensation Plan (the “Plan”). Terms used herein that are defined in the Plan shall have the meanings 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.
1. Grant of Stock Units. Pursuant to the provisions of (i) the Plan, (ii) the individual Award Agreement governing the grant, and (iii) these Terms and Conditions, the Company has granted to the Employee the number of Stock Units set forth on the applicable Award Agreement. Each vested Stock Unit shall entitle the Employee to receive from the Company one share of the Company's common stock (“Common Stock”) upon the earliest of the Employee’s termination of employment, a Change in Control (but only to the extent provided in Section 14) or the Payment Date, as defined below. The Employee shall not be entitled to receive any shares of Common Stock with respect to unvested Stock Units, and the Employee shall have no further rights with regard to a Stock Unit once the underlying share of Common Stock has been delivered with respect to that Stock Unit.
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2. Payment Date. The Payment Date shall be the dates specified in the Award Agreement with respect to the Stock Units that are vested on such date under the schedule set forth in the Award Agreement.
3. Vesting Schedule. Subject to the special vesting rules set forth in Sections 7 and 14, the Stock Units shall vest in accordance with the Vesting Schedule specified in the Award Agreement to the extent that the Employee is continuously employed by the Company or its Subsidiaries until the Vesting Dates specified in the Vesting Schedule and has not terminated employment on or before such dates. An Employee will not be treated as remaining in continuous employment if the Employee’s employer ceases to be a Subsidiary of the Company.
4. No Dividend Equivalents. No dividend equivalents shall be paid to the Employee with regard to the Stock Units.
5. 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 vested Stock Units as soon as administratively practicable (but always by the 30th day) after the earliest of the Employee’s termination of employment, a Change in Control (but only to the extent provided in Section 14) or the Payment Date. The number of shares delivered shall be reduced by the value of all taxes withheld by reason of such delivery; provided that the amount that is withheld, or may be withheld at the Employee’s discretion, cannot exceed the amount of the taxes owed by the Employee using the maximum statutory tax rate in the Employee’s applicable jurisdiction(s). The Employee shall not be entitled to receive any shares of Common Stock with respect to unvested Stock Units, and the Employee shall have no further rights with regard to a Stock Unit once the underlying share of Common Stock has been delivered with respect to that Stock Unit.
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6. Cancellation of Stock Units.
(a) Termination of Employment. Subject to Sections 7 and 14, all Stock Units granted to the Employee that have not vested as of the date of the Employee’s termination of employment shall automatically be cancelled upon the Employee’s termination of employment. Unvested Stock Units shall also be cancelled in connection with an event that results in the Employee’s employer ceasing to be a Subsidiary of the Company.
(b) Forfeiture of Stock Units/Recovery of Common Stock. Stock Units granted under this Award Agreement are subject to the Company’s Recoupment Policy, dated as of February 26, 2013, as amended as of December 7, 2018, and which may be further amended from time-to-time with retroactive effect. In addition, the Company may assert any other remedies that may be available to the Company under applicable law, including, without limitation, those available under Section 304 of the Sarbanes-Oxley Act of 2002.
7. Death, Disability, Retirement. In the event that the Employee’s employment terminates on or prior to the Stock Unit Expiration Date by reason of death, permanent disability (as determined under the Company’s Long Term Disability Plan), termination of employment after attaining age 65 (other than for “Cause”), or termination of employment after both attaining age 55 and completing at least 5 years of service (other than for “Cause”), the Employee (or in the case of the Employee's death, the Employee's estate or designated beneficiary) shall become vested in a number of Stock Units equal to the product of (i) the total number of Stock Units in which the Employee would have become vested upon the Stock Unit Expiration Date had the Employee's employment not terminated, and (ii) a fraction, the numerator of which shall be the number of full calendar months between the Stock Unit Commencement Date and the date that employment terminated, and the denominator of which shall be the number of full calendar months from the
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Stock Unit Commencement Date to the Stock Unit Expiration Date; provided such number of Stock Units so vested shall be reduced by the number of Stock Units that had previously become vested. In the event the Employee is terminated for “Cause” all unpaid awards shall be forfeited. “Cause” shall mean a termination of the Employee’s employment following the occurrence of any of the following events, each of which shall constitute a “Cause” for such termination:
The Committee, in its sole discretion, shall be responsible for making the determination whether an Employee’s termination is for “Cause”, and its decision shall be binding on all parties.
8. Non-Assignability. Stock Units may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Stock Units be made subject to execution, attachment or similar process.
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9. Rights as a Shareholder. The Employee shall have no rights as a shareholder by reason of the Stock Units.
10. Discretionary Plan; Employment. The Plan is discretionary in nature and may be suspended or terminated by the Company at any time. With respect to the Plan, (a) each grant of Stock Units is a one-time benefit which does not create any contractual or other right to receive future grants of Stock Units, or benefits in lieu of Stock Units; (b) all determinations with respect to any such future grants, including, but not limited to, the times when the Stock Units shall be granted, the number of Stock Units, the Vesting Dates and the Payment Dates, will be at the sole discretion of the Company; (c) the Employee’s participation in the Plan shall not create a right to further employment with the Employee’s employer and shall not interfere with the ability of the Employee’s employer to terminate the Employee’s employment relationship at any time with or without cause; (d) the Employee’s participation in the Plan is voluntary; (e) the Stock Units are not part of normal and expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payment, bonuses, long-service awards, pension or retirement benefits, or similar payments; and (f) the future value of the Stock Units is unknown and cannot be predicted with certainty.
11. Effect of Plan and these Terms and Conditions. The Plan is hereby incorporated by reference into these Terms and Conditions, and these Terms and Conditions are subject in all respects to the provisions of the Plan, including without limitation the authority of the Leadership Development and Compensation Committee of the Board of Directors of the Company (the “Committee”) in its sole discretion to adjust awards and to make interpretations and other determinations with respect to all matters relating to the applicable Award Agreements, these Terms and Conditions, the Plan and awards made pursuant thereto. These Terms and Conditions
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shall apply to the grant of Stock Units made to the Employee on the date hereof and shall not apply to any future grants of Stock Units made to the Employee.
12. Notices. Notices hereunder shall be in writing and if to the Company shall be addressed to the Secretary of the Company at 8350 Broad Street, Suite 2000, Tysons, Virginia 22102, and, if to the Employee, shall be addressed to the Employee at his or her address as it appears on the Company's records.
13. Successors and Assigns. The applicable Award Agreement and these Terms and Conditions shall be binding upon and inure to the benefit of the successors and assigns of the Company and, to the extent provided in Section 7 hereof, to the estate or designated beneficiary of the Employee.
14. Change in Control Provisions.
Notwithstanding anything to the contrary in these Terms and Conditions, the following provisions shall apply to all Stock Units granted under the attached Award Agreement.
(a) Definitions.
As used in Articles 2 and 14 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-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
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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 14(a)(iii)(A), 14(a)(iii)(B) and 14(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 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
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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.
(b) Acceleration Provisions. (i) In the event of the occurrence of a Change in Control in which the Stock Units are not continued or assumed (i.e., the Stock Units are not equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units that have not been cancelled or paid out shall become fully vested. The vested Stock Units 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
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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, the vested Stock Units shall be paid out as soon as administratively practicable after the earlier of the Employee’s termination of employment or the applicable Payment Date for such Stock Units (but in no event later than 30 days after such events).
(ii) In the event of the occurrence of a Change in Control in which the Stock Units are continued or assumed (i.e., the Stock Units are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units shall not vest upon the Change in Control, provided that the Stock Units that are not subsequently vested and paid 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 Stock Units are continued or assumed, vested Stock Units shall be paid out as soon as administratively practicable after the earlier of the Employee’s termination of employment or the applicable Payment Date for such Stock Units (but in no event later than 10 days after such events).
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:
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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:
Any termination by the Employee for Good Reason shall be communicated by a Notice 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
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that created the “Good Reason”.
(iii) If in connection with a Change in Control, the Stock Units are assumed (i.e., the Stock Units are equitably converted into, or substituted for, a right to receive cash and/or equity of a successor entity or its affiliate), the Stock Units shall refer to the right to receive such cash and/or equity. An assumption of this Stock Unit award must satisfy the following requirements:
The determination of whether the conditions of this Section 14(b)(iii) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
(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 14, whether or not initiated by the Employee. The Company agrees to pay such
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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.
15. Employment or Similar Agreements. The provisions of Sections 1, 3, 5, 6, 7 and 14 of these Terms and Conditions shall not be applied to or interpreted in a manner which would decrease the rights held by, or the payments owing to, an Employee under an employment agreement, termination benefits agreement or similar agreement with the Company that pre-exists the Grant Date and contains specific provisions applying to Plan awards in the case of any change in control or similar event or termination of employment, and if there is any conflict between the terms of such employment agreement, termination benefits agreement or similar agreement and the terms of Sections 1, 3, 5, 6, 7 and 14, the employment agreement, termination benefits agreement or similar agreement shall control.
16. Grant Subject to Applicable Regulatory Approvals. Any grant of Stock Units under the Plan is specifically conditioned on, and subject to, any regulatory approvals required in the Employee’s country. These approvals cannot be assured. If necessary approvals for grant or payment are not obtained, the Stock Units may be cancelled or rescinded, or they may expire, as determined by the Company in its sole and absolute discretion.
17. 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
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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.
18. Compliance with Section 409A. This Award is intended to comply with the requirements of Section 409A so that no taxes under Section 409A are triggered, and shall be interpreted and administered in accordance with that intent (e.g., the definition of “termination of employment” (or similar term used herein) shall have the meaning ascribed to “separation from service” under Section 409A). If any provision of these Terms and Conditions would otherwise conflict with or frustrate this intent, the provision shall not apply. Notwithstanding any provision in this Award Agreement to the contrary and solely to the extent required by Section 409A, if the Employee is a “specified employee” within the meaning of Code Section 409A and if delivery of shares is being made in connection with the Employee’s separation from service other than by reason of the Employee’s death, delivery of the shares shall be delayed until six months and one day after the Employee’s separation from service with the Company (or, if earlier than the end of the six-month period, the date of the Employee’s death). The Company shall not be responsible or liable for the consequences of any failure of the Award to avoid taxation under Section 409A.
2024
US employees
EXHIBIT 10-3
AWARD AGREEMENT
PERFORMANCE SHARES
The Leadership Development and Compensation Committee of the TEGNA Inc. Board of Directors has approved your opportunity to receive Performance Shares (referred to herein as “Performance Shares”) under the TEGNA Inc. 2020 Omnibus Incentive Compensation Plan (the “Plan”), as set forth below.
This Award Agreement and the enclosed Terms and Conditions effective as of #GrantDate#, 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: |
#ParticipantName# |
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Grant Date: |
#GrantDate# |
Performance Period Commencement Date: |
March 1, 2024 |
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Performance Period End Date: |
February 28, 2027 |
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Performance Share Payment Date: |
March 1, 2027, or soon as administratively practicable thereafter but in all instances within the first two weeks of March 2027 |
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Target Number of Performance Shares: |
#QuantityGranted#* |
* The actual number of Performance Shares you may receive will be higher or lower depending on the Company’s actual performance versus targeted performance and your continued employment with the Company, as more fully explained in the enclosed Terms and Conditions.
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TEGNA Inc. |
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By: |
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Employee's Signature or Acceptance by |
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Jeffery Newman |
Electronic Signature |
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Senior Vice President/Human Resources |
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PERFORMANCE SHARES
TERMS AND CONDITIONS
Under the
TEGNA Inc.
2020 Omnibus Incentive Compensation Plan
These Terms and Conditions, dated #GrantDate#, 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 TEGNA Inc. (the “Company”) 2020 Omnibus Incentive Compensation Plan (the “Plan”). Terms used herein that are defined in the Plan shall have the meanings 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.
1. Grant of Performance Shares. Pursuant to the provisions of (i) the Plan, (ii) the individual Award Agreement governing the grant, and (iii) these Terms and Conditions, the Employee may be entitled to receive Performance Shares. Each Performance Share that becomes payable shall entitle the Employee to receive from the Company one share of the Company's common stock (“Common Stock”) upon the expiration of the Incentive Period, as defined in Section 2, except as provided in Section 13. The actual number of Performance Shares an Employee will receive will be calculated in the manner described in these Terms and Conditions, including Exhibit A, and may be different than the Target Number of Performance Shares set forth in the Award Agreement.
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2. Incentive Period. Except as otherwise provided in Section 13 below, the Incentive Period in respect of the Performance Shares shall commence on the Performance Period Commencement Date specified in the Award Agreement and end on the Performance Period End Date specified in the Award Agreement.
3. No Dividend Equivalents. No dividend equivalents shall be paid to the Employee with regard to the Performance Shares.
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 withheld by reason of such delivery; provided that the amount that is withheld cannot exceed the amount of the taxes owed by the Employee using the maximum statutory tax rate in the Employee’s applicable jurisdiction(s). 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.
(a) Termination of Employment. Except as provided in Sections 6, 13, and 14, an Employee’s right to receive Performance Shares shall automatically be cancelled upon the Employee’s termination of employment (as well as an event that results in the Employee’s employer ceasing to be a subsidiary of the Company) prior to the Performance Period End Date,
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and in such event the Employee shall not be entitled to receive any shares of Common Stock in respect thereof.
(b) Forfeiture of Performance Shares/Recovery of Common Stock. Performance Shares granted under this Award Agreement are subject to the Company’s Recoupment Policy, dated as of February 26, 2013, as amended as of December 7, 2018, and which may be further amended from time-to-time with retroactive effect. In addition, the Company may assert any other remedies that may be available to the Company under applicable law, including, without limitation, those available under Section 304 of the Sarbanes-Oxley Act of 2002.
6. Death, Disability, Retirement. Except as provided in Sections 13 or 14 below, in the event that the Employee’s employment terminates on or prior to the Performance Period End Date by reason of death, permanent disability (as determined under the Company’s Long Term Disability Plan), termination of employment after attaining age 65 (other than for “Cause”), or termination of employment after both attaining age 55 and completing at least 5 years of service (other than for “Cause”), the Employee (or in the case of the Employee's death, the Employee's estate or designated beneficiary) shall be entitled to receive at the Performance Share Payment Date the number of shares of Common Stock equal to the product of (i) the total number of shares in respect of such Performance Shares which the Employee would have been entitled to receive upon the expiration of the Incentive Period had the Employee's employment not terminated, and (ii) a fraction, the numerator of which shall be the number of full calendar months between the Performance Period Commencement Date and the date that employment terminated, and the denominator of which shall be the number of full calendar months from the Performance Period
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Commencement Date to the Performance Period End Date. In the event the Employee is terminated for “Cause” all unpaid awards shall be forfeited. “Cause” shall mean a termination of the Employee’s employment following the occurrence of any of the following events, each of which shall constitute a “Cause” for such termination:
The Committee, in its sole discretion, shall be responsible for making the determination whether an Employee’s termination is for “Cause”, and its decision shall be binding on all parties.
7. Non-Assignability. Performance Shares may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Performance Shares be made subject to execution, attachment or similar process.
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8. Rights as a Shareholder. The Employee shall have no rights as a shareholder by reason of the Performance Shares.
9. Discretionary Plan; Employment. The Plan is discretionary in nature and may be suspended or terminated by the Company at any time. With respect to the Plan, (a) each grant of Performance Shares is a one-time benefit which does not create any contractual or other right to receive future grants of Performance Shares, or benefits in lieu of Performance Shares; (b) all determinations with respect to any such future grants, including, but not limited to, the times when the Performance Shares shall be granted, the number of Performance Shares, and the Incentive Period, will be at the sole discretion of the Company; (c) the Employee’s participation in the Plan shall not create a right to further employment with the Employee’s employer and shall not interfere with the ability of the Employee’s employer to terminate the Employee’s employment relationship at any time with or without cause; (d) the Employee’s participation in the Plan is voluntary; (e) the Performance Shares are not part of normal and expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payment, bonuses, long-service awards, pension or retirement benefits, or similar payments; and (f) the future value of the Performance Shares is unknown and cannot be predicted with certainty.
10. Effect of Plan and these Terms and Conditions. The Plan is hereby incorporated by reference into these Terms and Conditions, and these Terms and Conditions are subject in all respects to the provisions of the Plan, including without limitation the authority of the Leadership Development and Compensation Committee of the Board of Directors of the Company (the “Committee”) in its sole discretion to adjust awards and to make interpretations
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and other determinations with respect to all matters relating to the applicable Award Agreements, these Terms and Conditions, the Plan and awards 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.
11. Notices. Notices hereunder shall be in writing and, if to the Company, shall be addressed to the Secretary of the Company at 8350 Broad Street, Suite 2000, Tysons, Virginia 22102, and, if to the Employee, shall be addressed to the Employee at his or her address as it appears on the Company's records.
12. Successors and Assigns. The applicable Award Agreement and these Terms and Conditions shall be binding upon and inure to the benefit of the successors and assigns of the Company and, to the extent provided in Section 6 hereof, to the estate or designated beneficiary of 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.
(a) Definitions.
As used in Articles 2 and 14 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
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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-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
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(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 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
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(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
(b) Acceleration Provisions. In the event of a Change in Control, the number of Performance Shares payable to an Employee shall be calculated in accordance with the Change in Control rules set forth in Exhibit A, subject to the vesting rules set forth below.
(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
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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 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:
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:
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Any termination by the Employee for Good Reason shall be communicated by a Notice 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:
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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.
(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.
14. Employment or Similar Agreements. The provisions of Sections 1, 4, 5, 6 and 13 of these Terms and Conditions shall not be applied to or interpreted in a manner which would decrease the rights held by, or the payments owing to, an Employee under an employment agreement, termination benefits agreement or similar agreement with the Company that
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pre-exists the Grant Date and contains specific provisions applying to Plan awards in the case of any change in control or similar event or termination of employment, and if there is any conflict between the terms of such employment agreement, termination benefits agreement or similar agreement and the terms of Sections 1, 4, 5, 6 or 13, the employment agreement or termination benefits agreement shall control.
15. Grant Subject to Applicable Regulatory Approvals. Any grant of Performance Shares under the Plan is specifically conditioned on, and subject to, any regulatory approvals required in the Employee’s country. These approvals cannot be assured. If necessary approvals for grant or payment are not obtained, the Performance Shares may be cancelled or rescinded, or they may expire, as determined by the Company in its sole and absolute discretion.
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.
17. Compliance with Section 409A. This Award is intended to comply with the requirements of Section 409A so that no taxes under Section 409A are triggered, and shall be interpreted and administered in accordance with that intent (e.g., the definition of “termination of employment” (or similar term used herein) shall have the meaning ascribed to “separation from service” under Section 409A). If any provision of these Terms and Conditions would otherwise
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conflict with or frustrate this intent, the provision shall not apply. Notwithstanding any provision in this Award Agreement to the contrary and solely to the extent required by Section 409A, if the Employee is a “specified employee” within the meaning of Code Section 409A and if delivery of shares is being made in connection with the Employee’s separation from service other than by reason of the Employee’s death, delivery of the shares shall be delayed until six months and one day after the Employee’s separation from service with the Company (or, if earlier than the end of the six-month period, the date of the Employee’s death). The Company shall not be responsible or liable for the consequences of any failure of the Award to avoid taxation under Section 409A.
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Exhibit A
Performance Share Calculation
Subject to the Employee’s satisfaction of the applicable service requirements, the potential number of Performance Shares that the Employee may be awarded is the sum of the following:
Applicable Percentage Chart |
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Actual Versus Target |
Applicable Percentage |
Below Threshold |
Below 80% |
0% - No Award |
Threshold |
80% |
65%* |
Target |
100% |
100%* |
Maximum |
110% |
200%* |
Above Maximum |
More than 110% |
200% |
* The Applicable Percentage is calculated using straight line interpolation between points.
Definitions:
“2024 Target Compensation Adjusted EBITDA” means the target Compensation Adjusted EBITDA amount set by the Committee at its February [__], 2024 Committee meeting.
“2025 Target Compensation Adjusted EBITDA” means such amount set by the Committee, in its sole discretion, in the first 60 days of 2025.
“2024-2025 Target Compensation Adjusted EBITDA” means the sum of the 2024 Target Compensation Adjusted EBITDA and the 2025 Target Compensation Adjusted EBITDA.
“2024 Target Compensation Free Cash Flow as a Percentage of Target Revenue” means the target 2024 Compensation Free Cash Flow as a percentage of target revenue set by the Committee at its February [__], 2024 Committee meeting.
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“2025 Target Compensation Free Cash Flow as a Percentage of Target Revenue” means the target 2025 Compensation Free Cash Flow as a percentage of target revenue set by the Committee, in its sole discretion, in the first 60 days of 2025.
“2024-2025 Target FCF as a Percentage of Target Revenue” means the average, weighted on the basis of the respective 2024 and 2025 target revenue amounts set by the Committee, of the 2024 Target Compensation Free Cash Flow as a Percentage of Target Revenue and the 2025 Target Compensation Free Cash Flow as a Percentage of Target Revenue.
“Actual 2024-2025 Compensation Adjusted EBITDA” means the Company’s aggregate Compensation Adjusted EBITDA for its 2024 and 2025 fiscal years.
“Actual 2024-2025 Compensation Free Cash Flow” means the Company’s aggregate Compensation Free Cash Flow for its 2024 and 2025 fiscal years.
“Actual 2024-2025 Compensation Total Revenue” means the Company’s aggregate Compensation Total Revenue for its 2024 and 2025 fiscal years.
“Actual 2024-2025 FCF as a Percentage of Total Revenue” means the Actual 2024-2025 Compensation Free Cash Flow divided by the Actual 2024-2025 Compensation Total Revenue.
“Compensation Adjusted EBITDA” means net income from continuing operations before (1) interest expense, (2) income taxes, (3) equity income (losses) in unconsolidated investments, net, (4) other non-operating items, (5) severance expense, (6) facility consolidation charges, (7) impairment charges, (8) depreciation, (9) amortization, and (10) expense related to performance share long-term incentive awards and further adjusted to exclude unusual or non-recurring charges or credits to the extent and in the amount such items are separately reported or discussed in the audited financial statements and notes thereto or in management’s discussion and analysis of the financial statements in a period report filed with the Securities and Exchange Commission under the Exchange Act.
“Compensation Free Cash Flow” means “net cash flow from operating activities” less “purchase of property and equipment” as reported in the Consolidated Statements of Cash Flows and adjusted to exclude (1) voluntary pension contributions, (2) capital expenditures required either by government regulators or due to natural disasters offset by any reimbursements of such expenditures (e.g., from US Government or insurance company), and (3) the same adjustments made to Compensation Adjusted EBITDA other than income taxes and interest to the extent of their impact on Compensation Free Cash Flow. When calculating Compensation Free Cash Flow actual changes in working capital for the year will be disregarded to the extent that are greater than or less than the collars specified by the Committee from the target change in working capital.
“Compensation Total Revenue” means “Total Operating Revenues” as reported in the Consolidated Statements of Income.
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In its sole discretion, the Committee may make such modifications to the Company’s Compensation Adjusted EBITDA, Compensation Free Cash Flow and/or Compensation Total Revenue for any year as it deems appropriate to adjust for impacts so as to reflect the performance metric and not distort the calculation of the performance metric.
The Committee has the sole discretionary authority to make the above calculations and its decisions are binding on all parties.
Change In Control
In the event of a Change in Control, subject to the satisfaction of the applicable service requirements and rules set forth in Section 13 and provided that the Employee’s right to receive Performance Shares has not previously been cancelled or forfeited, the number of Performance Shares that may be awarded to an Employee is calculated, as follows:
Feb. 2024
EXHIBIT 10-4
AWARD AGREEMENT
PERFORMANCE SHARES
The Leadership Development and Compensation Committee of the TEGNA Inc. Board of Directors has approved your opportunity to receive Performance Shares (referred to herein as “Performance Shares”) under the TEGNA Inc. 2020 Omnibus Incentive Compensation Plan (the “Plan”), as set forth below.
This Award Agreement and the enclosed Terms and Conditions effective as of #GrantDate#, 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.
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Employee: |
#ParticipantName# |
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Grant Date: |
#GrantDate# |
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Performance Period Commencement Date: |
March 1, 2024 |
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Performance Period End Date: |
February 28, 2027 |
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Performance Share Payment Date: |
March 1, 2027, or soon as administratively practicable thereafter but in all instances within the first two weeks of March 2027 |
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Target Number of Performance Shares: |
#QuantityGranted#* |
* The actual number of Performance Shares you may receive will be higher or lower depending on the Company’s actual performance versus targeted performance and your continued employment with the Company, as more fully explained in the enclosed Terms and Conditions.
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TEGNA Inc. |
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By: |
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Employee's Signature or Acceptance by |
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Jeffery Newman |
Electronic Signature |
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Senior Vice President/Human Resources |
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PERFORMANCE SHARES
TERMS AND CONDITIONS
Under the
TEGNA Inc.
2020 Omnibus Incentive Compensation Plan
These Terms and Conditions, dated #GrantDate#, 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 TEGNA Inc. (the “Company”) 2020 Omnibus Incentive Compensation Plan (the “Plan”). Terms used herein that are defined in the Plan shall have the meanings 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.
1. Grant of Performance Shares. Pursuant to the provisions of (i) the Plan, (ii) the individual Award Agreement governing the grant, and (iii) these Terms and Conditions, the Employee may be entitled to receive Performance Shares. Each Performance Share that becomes payable shall entitle the Employee to receive from the Company one share of the Company's common stock (“Common Stock”) upon the expiration of the Incentive Period, as defined in Section 2, except as provided in Section 13. The actual number of Performance Shares an Employee will receive will be calculated in the manner described in these Terms and Conditions, including Exhibit A, and may be different than the Target Number of Performance Shares set forth in the Award Agreement.
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2. Incentive Period. Except as otherwise provided in Section 13 below, the Incentive Period in respect of the Performance Shares shall commence on the Performance Period Commencement Date specified in the Award Agreement and end on the Performance Period End Date specified in the Award Agreement.
3. No Dividend Equivalents. No dividend equivalents shall be paid to the Employee with regard to the Performance Shares.
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 withheld by reason of such delivery; provided that the amount that is withheld, or may be withheld at the Employee’s discretion, cannot exceed the amount of the taxes owed by the Employee using the maximum statutory tax rate in the Employee’s applicable jurisdiction(s). 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.
(a) Termination of Employment. Except as provided in Sections 6, 13, and 14, an Employee’s right to receive Performance Shares shall automatically be cancelled upon the Employee’s termination of employment (as well as an event that results in the Employee’s employer ceasing to be a subsidiary of the Company) prior to the Performance Period End Date,
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and in such event the Employee shall not be entitled to receive any shares of Common Stock in respect thereof.
(b) Forfeiture of Performance Shares/Recovery of Common Stock. Performance Shares granted under this Award Agreement are subject to the Company’s Recoupment Policy, dated as of February 26, 2013, as amended as of December 7, 2018, and which may be further amended from time-to-time with retroactive effect. In addition, the Company may assert any other remedies that may be available to the Company under applicable law, including, without limitation, those available under Section 304 of the Sarbanes-Oxley Act of 2002.
6. Death, Disability, Retirement. Except as provided in Sections 13 or 14 below, in the event that the Employee’s employment terminates on or prior to the Performance Period End Date by reason of death, permanent disability (as determined under the Company’s Long Term Disability Plan), termination of employment after attaining age 65 (other than for “Cause”), or termination of employment after both attaining age 55 and completing at least 5 years of service (other than for “Cause”), the Employee (or in the case of the Employee's death, the Employee's estate or designated beneficiary) shall be entitled to receive at the Performance Share Payment Date the number of shares of Common Stock equal to the product of (i) the total number of shares in respect of such Performance Shares which the Employee would have been entitled to receive upon the expiration of the Incentive Period had the Employee's employment not terminated, and (ii) a fraction, the numerator of which shall be the number of full calendar months between the Performance Period Commencement Date and the date that employment terminated, and the denominator of which shall be the number of full calendar months from the Performance Period
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Commencement Date to the Performance Period End Date. In the event the Employee is terminated for “Cause” all unpaid awards shall be forfeited. “Cause” shall mean a termination of the Employee’s employment following the occurrence of any of the following events, each of which shall constitute a “Cause” for such termination:
The Committee, in its sole discretion, shall be responsible for making the determination whether an Employee’s termination is for “Cause”, and its decision shall be binding on all parties.
7. Non-Assignability. Performance Shares may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Performance Shares be made subject to execution, attachment or similar process.
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8. Rights as a Shareholder. The Employee shall have no rights as a shareholder by reason of the Performance Shares.
9. Discretionary Plan; Employment. The Plan is discretionary in nature and may be suspended or terminated by the Company at any time. With respect to the Plan, (a) each grant of Performance Shares is a one-time benefit which does not create any contractual or other right to receive future grants of Performance Shares, or benefits in lieu of Performance Shares; (b) all determinations with respect to any such future grants, including, but not limited to, the times when the Performance Shares shall be granted, the number of Performance Shares, and the Incentive Period, will be at the sole discretion of the Company; (c) the Employee’s participation in the Plan shall not create a right to further employment with the Employee’s employer and shall not interfere with the ability of the Employee’s employer to terminate the Employee’s employment relationship at any time with or without cause; (d) the Employee’s participation in the Plan is voluntary; (e) the Performance Shares are not part of normal and expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payment, bonuses, long-service awards, pension or retirement benefits, or similar payments; and (f) the future value of the Performance Shares is unknown and cannot be predicted with certainty.
10. Effect of Plan and these Terms and Conditions. The Plan is hereby incorporated by reference into these Terms and Conditions, and these Terms and Conditions are subject in all respects to the provisions of the Plan, including without limitation the authority of the Leadership Development and Compensation Committee of the Board of Directors of the Company (the “Committee”) in its sole discretion to adjust awards and to make interpretations
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and other determinations with respect to all matters relating to the applicable Award Agreements, these Terms and Conditions, the Plan and awards 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.
11. Notices. Notices hereunder shall be in writing and, if to the Company, shall be addressed to the Secretary of the Company at 8350 Broad Street, Suite 2000, Tysons, Virginia 22102, and, if to the Employee, shall be addressed to the Employee at his or her address as it appears on the Company's records.
12. Successors and Assigns. The applicable Award Agreement and these Terms and Conditions shall be binding upon and inure to the benefit of the successors and assigns of the Company and, to the extent provided in Section 6 hereof, to the estate or designated beneficiary of 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.
(a) Definitions.
As used in Articles 2 and 14 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
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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-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
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(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 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
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(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
(b) Acceleration Provisions. In the event of a Change in Control, the number of Performance Shares payable to an Employee shall be calculated in accordance with the Change in Control rules set forth in Exhibit A, subject to the vesting rules set forth below.
(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
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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 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:
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:
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Any termination by the Employee for Good Reason shall be communicated by a Notice 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:
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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.
(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.
14. Employment or Similar Agreements. The provisions of Sections 1, 4, 5, 6 and 13 of these Terms and Conditions shall not be applied to or interpreted in a manner which would decrease the rights held by, or the payments owing to, an Employee under an employment agreement, termination benefits agreement or similar agreement with the Company that
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pre-exists the Grant Date and contains specific provisions applying to Plan awards in the case of any change in control or similar event or termination of employment, and if there is any conflict between the terms of such employment agreement, termination benefits agreement or similar agreement and the terms of Sections 1, 4, 5, 6 or 13, the employment agreement or termination benefits agreement shall control.
15. Grant Subject to Applicable Regulatory Approvals. Any grant of Performance Shares under the Plan is specifically conditioned on, and subject to, any regulatory approvals required in the Employee’s country. These approvals cannot be assured. If necessary approvals for grant or payment are not obtained, the Performance Shares may be cancelled or rescinded, or they may expire, as determined by the Company in its sole and absolute discretion.
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.
17. Compliance with Section 409A. This Award is intended to comply with the requirements of Section 409A so that no taxes under Section 409A are triggered, and shall be interpreted and administered in accordance with that intent (e.g., the definition of “termination of employment” (or similar term used herein) shall have the meaning ascribed to “separation from service” under Section 409A). If any provision of these Terms and Conditions would otherwise
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conflict with or frustrate this intent, the provision shall not apply. Notwithstanding any provision in this Award Agreement to the contrary and solely to the extent required by Section 409A, if the Employee is a “specified employee” within the meaning of Code Section 409A and if delivery of shares is being made in connection with the Employee’s separation from service other than by reason of the Employee’s death, delivery of the shares shall be delayed until six months and one day after the Employee’s separation from service with the Company (or, if earlier than the end of the six-month period, the date of the Employee’s death). The Company shall not be responsible or liable for the consequences of any failure of the Award to avoid taxation under Section 409A.
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Exhibit A
Performance Share Calculation
Subject to the Employee’s satisfaction of the applicable service requirements, the potential number of Performance Shares that the Employee may be awarded is the sum of the following:
Applicable Percentage Chart |
||
|
Actual Versus Target |
Applicable Percentage |
Below Threshold |
Below 80% |
0% - No Award |
Threshold |
80% |
65%* |
Target |
100% |
100%* |
Maximum |
110% |
200%* |
Above Maximum |
More than 110% |
200% |
* The Applicable Percentage is calculated using straight line interpolation between points.
Definitions:
“2024 Target Compensation Adjusted EBITDA” means the target Compensation Adjusted EBITDA amount set by the Committee at its February [__], 2024 Committee meeting.
“2025 Target Compensation Adjusted EBITDA” means such amount set by the Committee, in its sole discretion, in the first 60 days of 2025.
“2024-2025 Target Compensation Adjusted EBITDA” means the sum of the 2024 Target Compensation Adjusted EBITDA and the 2025 Target Compensation Adjusted EBITDA.
“2024 Target Compensation Free Cash Flow as a Percentage of Target Revenue” means the target 2024 Compensation Free Cash Flow as a percentage of target revenue set by the Committee at its February [__], 2024 Committee meeting.
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“2025 Target Compensation Free Cash Flow as a Percentage of Target Revenue” means the target 2025 Compensation Free Cash Flow as a percentage of target revenue set by the Committee, in its sole discretion, in the first 60 days of 2025.
“2024-2025 Target FCF as a Percentage of Target Revenue” means the average, weighted on the basis of the respective 2024 and 2025 target revenue amounts set by the Committee, of the 2024 Target Compensation Free Cash Flow as a Percentage of Target Revenue and the 2025 Target Compensation Free Cash Flow as a Percentage of Target Revenue.
“Actual 2024-2025 Compensation Adjusted EBITDA” means the Company’s aggregate Compensation Adjusted EBITDA for its 2024 and 2025 fiscal years.
“Actual 2024-2025 Compensation Free Cash Flow” means the Company’s aggregate Compensation Free Cash Flow for its 2024 and 2025 fiscal years.
“Actual 2024-2025 Compensation Total Revenue” means the Company’s aggregate Compensation Total Revenue for its 2024 and 2025 fiscal years.
“Actual 2024-2025 FCF as a Percentage of Total Revenue” means the Actual 2024-2025 Compensation Free Cash Flow divided by the Actual 2024-2025 Compensation Total Revenue.
“Compensation Adjusted EBITDA” means net income from continuing operations before (1) interest expense, (2) income taxes, (3) equity income (losses) in unconsolidated investments, net, (4) other non-operating items, (5) severance expense, (6) facility consolidation charges, (7) impairment charges, (8) depreciation, (9) amortization, and (10) expense related to performance share long-term incentive awards and further adjusted to exclude unusual or non-recurring charges or credits to the extent and in the amount such items are separately reported or discussed in the audited financial statements and notes thereto or in management’s discussion and analysis of the financial statements in a period report filed with the Securities and Exchange Commission under the Exchange Act.
“Compensation Free Cash Flow” means “net cash flow from operating activities” less “purchase of property and equipment” as reported in the Consolidated Statements of Cash Flows and adjusted to exclude (1) voluntary pension contributions, (2) capital expenditures required either by government regulators or due to natural disasters offset by any reimbursements of such expenditures (e.g., from US Government or insurance company), and (3) the same adjustments made to Compensation Adjusted EBITDA other than income taxes and interest to the extent of their impact on Compensation Free Cash Flow. When calculating Compensation Free Cash Flow actual changes in working capital for the year will be disregarded to the extent that are greater than or less than the collars specified by the Committee from the target change in working capital.
“Compensation Total Revenue” means “Total Operating Revenues” as reported in the Consolidated Statements of Income.
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In its sole discretion, the Committee may make such modifications to the Company’s Compensation Adjusted EBITDA, Compensation Free Cash Flow and/or Compensation Total Revenue for any year as it deems appropriate to adjust for impacts so as to reflect the performance metric and not distort the calculation of the performance metric.
The Committee has the sole discretionary authority to make the above calculations and its decisions are binding on all parties.
Change In Control
In the event of a Change in Control, subject to the satisfaction of the applicable service requirements and rules set forth in Section 13 and provided that the Employee’s right to receive Performance Shares has not previously been cancelled or forfeited, the number of Performance Shares that may be awarded to an Employee is calculated, as follows:
Feb. 2024
EXHIBIT 31-1
CERTIFICATIONS
I, David T. Lougee, certify that:
/s/ David T. Lougee |
|
David T. Lougee President and Chief Executive Officer (principal executive officer) |
|
Date: May 8, 2024
EXHIBIT 31-2
CERTIFICATIONS
I, Julie A. Heskett, certify that:
/s/ Julie A. Heskett |
|
Julie A. Heskett Senior Vice President and Chief Financial Officer (principal financial officer) |
|
Date: May 8, 2024
EXHIBIT 32-1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of TEGNA Inc. (“TEGNA”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David T. Lougee, president and chief executive officer of TEGNA, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ David T. Lougee |
|
David T. Lougee President and Chief Executive Officer (principal executive officer) |
|
May 8, 2024
EXHIBIT 32-2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of TEGNA Inc. (“TEGNA”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Julie A. Heskett, senior vice president and chief financial officer of TEGNA, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TEGNA.
/s/ Julie A. Heskett |
|
Julie A. Heskett Senior Vice President and Chief Financial Officer (principal financial officer) |
|
May 8, 2024