Why, oh why, did Trib parent pay Ferro $15 million?
There are excessive executive compensation packages, and then there are outright giveaways. Put Tronc's recent payment of $15 million to former Chairman Michael Ferro in the latter category.
The publisher of the Chicago Tribune and other newspapers disclosed last week that it accelerated payment of $15 million in fees under a three-year consulting agreement with Ferro and his private company, handing over the entire amount in the first quarter. Ferro retired from Tronc in March, shortly before Fortune magazine reported that two women had accused him of making unwanted sexual advances. A month later, he announced plans to sell his controlling stake in Tronc to a group including a distant relative of the McCormick family that once ran the Tribune.
Ferro must work fast to earn three years' pay in three months. Under the consulting agreement inked in late December, his Merrick Ventures was to provide various services over a three-year period. In return, Tronc agreed to pay a total of $15 million in equal annual installments on Jan. 1 of each year. Last week, Tronc's first-quarter financial report revealed that the company had expensed the entire $15 million.
The company's explanation was murky at best: "As Mr. Ferro is no longer actively engaged in the business and the company remains contractually committed for the future payments due under the consulting agreement, the company recognized expense for the full $15.0 million due under the consulting agreement in outside services in the first quarter of 2018," Tronc's first-quarter report said.
Read more: http://www.chicagobusiness.com/article/20180516/BLOGS10/180519919/tronc-pays-ferro-15-million-for-unfulfilled-consulting-work