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Tribune CEO is expected to resign
Tribune Co. Chairman and Chief Executive Dennis J. FitzSimons is expected to announce his resignation as early as today, a person close to the company said Tuesday. The resignation would be the first departure of a top Tribune executive as the company prepares to go private under the leadership of Chicago businessman Sam Zell.
FitzSimons, 57, a 25-year veteran of Tribune, is in line to walk away with as much as $40 million, depending on the date on which he chooses to depart, according to corporate disclosure statements.
Zell is expected to complete his takeover of Chicago-based Tribune, the parent of The Times, Thursday or Friday. The company will then be owned by an employee stock ownership plan created for the purpose, with Zell installed as chairman.
It was unclear Tuesday when FitzSimons' resignation would become effective or whether other members of his management team were also preparing to announce their departures. A Tribune spokesman declined to comment.
FitzSimons' resignation is not surprising, given the differences in his and Zell's management styles. Under FitzSimons, Tribune has had a highly centralized management structure; Zell is known for an entrepreneurial approach. Zell is expected to reduce corporate overhead by delegating more operational decisions to executives at individual business units.
The contrast is likely to be felt promptly at Tribune, which, in addition to The Times, owns the Chicago Tribune, the Chicago Cubs baseball team, cable TV network Superstation WGN, and newspapers and television stations in New York, Connecticut, Pennsylvania and Florida. The company is planning to sell the Cubs and associated properties sometime next year.
FitzSimons' potential payout could include severance of $10.7 million, stock options and restricted stock worth $6.9 million and a $4-million "gross-up," an additional payment designed to cover his taxes on the rest of the package. FitzSimons also owned 498,202 shares as of March 31, according to company documents. Those are worth $16.9 million at the price of $34 a share under the Zell buyout.
FitzSimons' tenure as head of Tribune has been a troubled one. After joining the company in 1982 as sales director of WGN-TV in Chicago, he rose through the ranks of Tribune's television operations. He became CEO in 2003, three years after Tribune's acquisition of Times Mirror Co., the owner of The Times, and was named chairman in 2004.
That eventually put him in direct conflict with the Los Angeles-based Chandler family, which had controlled Times Mirror for more than a century. By mid-2006, the Chandler heirs, who were Tribune's largest shareholders, were openly disaffected with FitzSimons' management. They contended that he had failed to exploit the promise of the Times Mirror acquisition, which had been predicated on the advertising and news-gathering synergies of owning newspapers and broadcasting in the same cities. The Chandlers contended that Tribune management had failed to respond to the challenges of declining newspaper circulation, broadcast audience share and advertising revenue afflicting both its major businesses.
FitzSimons had been instituting expense reductions across the company. But those actions created turmoil, especially at the newspapers. At The Times, two publishers and two editors resigned, the latter in opposition to staff and budget cuts ordered from Chicago headquarters. Similar turnover occurred at other newspapers in the chain.
In June 2006, the Chandler family accused management of not moving decisively enough. In an open letter, it complained that FitzSimons had "failed to generate a viable strategic response" to changes in the industry and had allowed "value to deteriorate." Tribune's stock price had fallen to about $30 from above $50 since FitzSimons took over, the letter claimed.
The family demanded that the Tribune board consider a breakup, a sale or a leveraged buyout of the company, which it contended would yield more than $35 a share. FitzSimons led a search for potential suitors lasting nearly a year. After a troubled auction, Zell emerged the winner with a $34-a-share bid to be financed by debt. The Chandlers sold all their Tribune shares in the first phase of the transaction in the summer.