Michael Ferro retired from the board of Tronc Inc. on Monday, ahead of the newspaper chain’s $500-million sale of the Los Angeles Times and other California assets and hours before sexual misconduct allegations against him were made public.
The change was announced Monday shortly before Fortune magazine published an article about two women who allege that Ferro made unwanted sexual advances in 2013 and 2016, before he became Tronc’s chairman.
“Michael Ferro has had no claims filed against him while leading Tronc as chairman,” Tronc said in a statement. “Further, we are aware of no claims filed against Mr. Ferro throughout his career. As Mr. Ferro has retired after leading a financial turnaround of Tronc, we wish him well in his private life and will have no further comment.”
Fortune said it contacted Ferro last week with details of the women’s accounts and that he declined to be interviewed.
Ferro’s retirement was effective immediately, the company said Monday morning. Justin Dearborn, chief executive officer of Tronc, was named to succeed Ferro as chairman of the company, which also owns the Chicago Tribune, New York Daily News and other major daily newspapers.
“I want to thank everyone who worked so hard over the last two years creating great journalism, strengthening the company’s financial position and delivering significant value for shareholders,” Ferro, 51, said in a news release Monday.
While Ferro is stepping down from the Tronc board, he will continue as a paid management consultant to the company, a result of a deal struck in December. Ferro received his first $5-million annual fee, which was paid in advance on Jan. 1, according to financial statements filed with the Securities and Exchange Commission.
“The agreement is in effect for two-plus more years and allows the company to leverage Mr. Ferro’s advisory services at the company’s discretion,” Tronc spokeswoman Marisa Kollias said in an email Monday. The agreement contains a covenant that restricts Ferro from running or working with certain other “daily print newspaper” businesses without Tronc’s approval.
By resigning from the company’s board, Ferro is giving up 450,000 Tronc shares worth about $7.2 million based on prices Monday. According to a filing with the SEC last year, the company promised him a grant of that many shares, but the shares do not begin to vest until August.
Two companies Ferro controls, Merrick Media and Merrick Venture Management, already own more than 9 million Tronc shares, worth $144.8 million based on Monday’s stock price of about $16. Ferro acquired most of those shares for just $8.50 apiece.
In recent weeks, Ferro has discussed with his fellow board members and the management team his desire to retire as chairman in connection with the closing of the Times transaction, the company said in the news release.
Last month, Tronc agreed to sell the Los Angeles Times, San Diego Union-Tribune and other California-based assets to Los Angeles biotech billionaire Patrick Soon-Shiong for $500 million in cash. Soon-Shiong, Tronc’s second-largest shareholder, also will assume $90 million of pension liabilities tied to the California properties.
The deal is expected to close within weeks. The Federal Trade Commission and Department of Justice cleared the transaction of anti-competitive concerns ahead of the normal 30-day waiting period earlier this month.
Ferro, a technology entrepreneur who previously led the investor group that owned the Chicago Sun-Times, became the largest shareholder and chairman of Tribune Publishing in February 2016, and the corporate name was changed to Tronc shortly thereafter.
Soon-Shiong’s Nant Capital, a Culver City technology firm, became Tronc’s second-largest shareholder in June 2016, and that investment helped Tronc fend off a hostile takeover bid from Gannett, whose last offer was $864 million for the company.
A longtime business partner to Ferro, Dearborn was appointed chief executive of Tronc in February 2016 after leading Merge Healthcare as its chief executive.
Times staff writer James Rufus Koren contributed to this report. The Associated Press was used in compiling this report.
3:35 p.m.: This article was updated with publication of the Fortune article and a statement from Tronc.
12:15 p.m.: This article was updated with details of Ferro’s exit agreement.
10:45 a.m.: This article was updated with additional financial information.
This article was originally published at 7:15 a.m.