By: Mark Fitzgerald
With the price of Sun-Times Media Group (STMG) stock and its earnings falling precipitously in 2007, President and CEO Cyrus Freidheim was awarded no cash bonus for the year but did receive 150,000 shares, an amended annual report filed with the Securities and Exchange Commission (SEC) shows.
Freidheim, a corporate turnaround expert hired by the troubled parent company of the Chicago Sun-Times in late 2006, earned a base salary of $680,000 in 2007, but failed to qualify for a bonus that could go as high as 200% of that salary, and would be paid half in cash and half in stock. To receive the bonus, STMG had to achieve a certain level of EBITDA (earnings before interest, taxes, depreciation, and amortization).
“In December 2007, the Compensation Committee determined that, while the EBITDA targets for payment of the 2007 annual bonus … were not met, bonus awards are an important part of overall compensation and therefore important to the Company’s ability to retain key management employees,” the annual report says. “Accordingly, the Committee awarded a bonus to Mr. Freidheim consisting of 150,000 shares of restricted stock, which vest one year from the date of grant, subject to his continued employment on such date.”
They also granted Freidheim 386,364 deferred stock units (DSUs), which vest gradually over three years. Each DSU can be converted to one share of Class A common stock on the vesting date.
The annual report indicates how far Freidheim was from receiving another bonus, this one a “stock opportunity award” under which he would receive 50,000 shares if the average daily closing price over any consecutive four-month period exceeded $7 a share. Under terms of the compensation agreement, he was also eligible for another 50,000 shares each time the stock averaged closing prices of $8, $9, or $10.
On Jan. 3, 2007, the first trading day of the year, STMG (NYSE: SVN) closed at $4.92 a share. On the last day of 2007, it closed at $2.20. In February, the stock began to trade consistently below $1. Floor trading of the stock has been halted and the New York Stock Exchange has warned the company the stock is in danger of being de-listed.
STMG has also announced that it is exploring strategic options including the sale of all or some of the approximately 100 papers it publishes in the Chicago area.
Just before the 4 p.m. close of trading Wednesday, STMG shares were at 70 cents, up 6 cents, or 9.38% from the opening.