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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Effective August 6, 2018, as authorized by the Executive Compensation Committee (the "ECC") of the Board of Directors of Lee Enterprises, Incorporated (the "Company"), the Company entered into a change of control employment agreement (the "Agreement") with Timothy R. Millage, the Company's Vice President, Chief Financial Officer and Treasurer. The Agreement contains terms and conditions and is in the form of the Employment Agreement between the Company and certain of its Senior Executive Officers.
The Agreement entitles Mr. Millage to severance and other benefits upon termination without cause or for good reason that becomes effective only upon a change of control. A change of control is defined to include certain mergers and acquisitions, liquidation or dissolution of the Company, changes in the membership of the Company's Board of Directors or acquisition of 15% of the outstanding stock of the Company for the purpose of changing the control of the Company.
The Agreement extends for two years from the date of signature. On each annual anniversary date of the Agreement (each a "Renewal Date"), the change of control period will be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company gives notice to Mr. Millage that the change of control period will not be extended.
The Agreement is subject to the following triggers: (a) it becomes effective and the protective features vest upon a change of control or if Mr. Millage's employment is terminated as a consequence of such event; and (b) it provides that Mr. Millage is to remain an employee for a two-year period following a change of control of the Company unless he resigns for good reason or is terminated for cause, each as defined in the Agreement.
Under the Agreement, a termination pursuant to the terms of the Agreement triggers the following compensation and benefits for Mr. Millage: (a) during the two-year employment period, he is entitled to: (i) an annual base salary, payable monthly in an amount at least equal to his highest monthly base salary during the year prior to the change of control; (ii) an annual bonus, payable in a lump sum within 75 days following each fiscal year in an amount at least equal to his highest annual bonus in the three years prior to the change of control; (iii) continued participation in the Company's incentive, savings, retirement and welfare benefit plans; and (iv) payment of expenses and fringe benefits (including office and support staff, tax and financial planning services, applicable club dues and use of an auto and related expenses) to the extent paid or provided to him immediately prior to the change of control or to other peer executives of the Company.
If Mr. Millage's employment is terminated during the two-year employment period other than for cause, death or disability or he terminates employment for good reason, he will be entitled to the following benefits: (a) all accrued and unpaid annual base salary and annual bonus for the prior fiscal year payable in a lump sum within 30 days of termination; (b) a lump sum severance payment equal to times 1.0 his annual base salary and his highest recent annual bonus; (c) payment equal to times 1.0 the Company's average annual contributions on behalf of Mr. Millage under all defined contribution plans maintained by the Company during the three-year period immediately preceding the termination; (d) any legal fees and expenses incurred by him in asserting legal rights in connection with the Agreement; and (e) continued welfare benefits for the period equal to times 1.0 his base salary payable plus certain outplacement services.
To reduce the impact of any excise tax imposed on Mr. Millage related to the change of control, his Agreement also requires the Company to cap the overall value of payments if such reduction results in a larger net after-tax payment than would result if such payments were not capped and subject to an excise tax.
The following summarizes information as of August 6, 2018 related to estimated potential cash payments upon a change of control to Mr. Millage. The amount in the table does not reflect income tax benefits that may be realized by the Company.
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(Dollars)
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Estimated Net Present Value of Change of Control Severance and Benefits
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Timothy R. Millage
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$829,230
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The foregoing description of the Agreement is qualified in its entirety by reference to the text of the Agreement, referenced as
Exhibit 10.1
to this report and incorporated herein by reference.
9.01.
Financial Statements and Exhibits
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