Supplemental equity information

12 Months Ended

Dec. 31, 2019

Shareholders' Equity and Share-based Payments [Abstract]

NOTE 11 — Supplemental equity information

Earnings (loss) per share

The following table sets forth the computation of basic and diluted earnings (loss) per share:



	Year Ended
in thousands, except share data	December 31, 2019			December 30, 2018		December 31, 2017
Net income (loss) attributable to Gannett	$	(119,842	)	$	18,196	$	(915	)

Basic weighted average shares outstanding	67,671,398			58,013,617		53,010,421
Effect of dilutive securities:
Stock options and restricted stock grants	—			384,530		—
Diluted weighted average shares outstanding	67,671,398			58,398,147		53,010,421

Basic net income (loss) per share attributable to Gannett	$	(1.77	)	$	0.31	$	(0.02	)
Diluted net income (loss) per share attributable to Gannett	$	(1.77	)	$	0.31	$	(0.02	)

The Company excluded the following securities from the computation of diluted income per share because their effect would have been antidilutive:



	Year Ended
in thousands, except share data	December 31, 2019	December 30, 2018	December 31, 2017
Stock warrants	1,362,479	1,362,479	1,362,479
Stock options	2,904,811	700,000	2,214,811
Restricted stock grants	9,494,161	—	342,264

Equity activity

In connection with the consummation of the acquisition of Legacy Gannett on November 19, 2019, each share of Legacy Gannett common stock issued and outstanding immediately prior to the acquisition date was converted automatically into 0.5427 of a fully paid and non-assessable share of parent common stock. As a result, approximately 62.4 million shares of parent common stock were issued to former holders of Legacy Gannett common stock at the acquisition date, including shares issued to satisfy outstanding equity-based awards that were accelerated and converted into the acquisition consideration.

During April 2018, the Company completed the sale of 6.9 million shares of the Company's common stock, including 25,000 shares of the Company's common stock sold to an officer of the Company. The estimated net proceeds of the sale were approximately $110.7 million. For the purpose of compensating the Manager for its successful efforts in raising capital for the Company, in connection with this offering, the Company granted options to the Manager to purchase 0.7 million shares of the Company’s common stock at a price of $16.45, which had an aggregate fair value of approximately $1.4 million as of the grant date. The assumptions used in an option valuation model to value the options were a 2.8% risk-free rate, a 8.0% dividend yield, 28.1% volatility, and an expected life of 10 years.

In 2018, the Company issued 13,008 shares of its common stock to its Non-Officer Directors to settle a liability of $0.2 million for 2017 services.

Share repurchase program

On May 17, 2017, the Board of Directors authorized the repurchase of up to $100.0 million of the Company's common stock ("Share Repurchase Program") over the next twelve months. The Board of Directors has authorized extensions of the Share Repurchase Program through May 19, 2020. Under the Share Repurchase Program, the Company may purchase its shares from time to time in the open market or in privately negotiated transactions, subject to restrictions in our credit facility. No shares were repurchased under the program during 2019.

Manager stock options and warrants

Pursuant to the anti-dilution provisions of the Incentive Plan, the exercise price on the 862,500 options granted to the Manager in 2016 were equitably adjusted in 2018 from $16.00 to $13.24 as a result of return of capital distributions.

Pursuant to the anti-dilution provisions of the Incentive Plan, the exercise price on the 700,000 options granted to the Manager in 2015 were equitably adjusted in 2018 from $20.36 to $18.94 as a result of return of capital distributions.

Pursuant to the anti-dilution provisions of the Incentive Plan, the exercise price on the 652,311 remaining options granted to the Manager in 2014 were equitably adjusted in 2018 from $14.37 to $12.95 as a result of return of capital distributions.

In addition to the above stock options, the Company has issued warrants collectively representing the right to acquire common stock at a future date. At origination, these warrants, which have a strike price of $46.35, collectively represented approximately 5% of common stock outstanding. As of December 31, 2019, the warrants are equal to approximately 1% of common stock outstanding.

In connection with the acquisition of Legacy Gannett, the Company issued shares of its common stock as consideration for the acquisition. For the purpose of compensating the Manager for its successful efforts in facilitating the acquisition, the Company granted options to the Manager to purchase 3,163,264 shares of the Company’s common stock at a price of 15.50, which had an aggregate fair value of approximately $0.3 million as of the grant date. The assumptions used in the Black-Scholes model to value the options were: a 1.7% risk-free rate, a 15.6% dividend yield, 37.8% volatility and an expected life of 10 years. The fair value of the options issued as compensation to the Manager was recorded as an increase in equity with an offsetting reduction in capital.

The following table includes additional information regarding the Manager stock options:



in thousands, except share data	Number of Options	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2017	2,214,811	$	4.08	$	16.90	7.7	$	2,245
Granted	690,000	$	2.04	$	16.45
Outstanding at December 30, 2018	2,904,811	$	3.59	$	15.31	7.3	$	—
Granted	3,163,264	$	0.11	$	15.50
Outstanding at December 31, 2019	6,068,075	$	1.78	$	14.70	8.2	$	—

Exercisable at December 31, 2019	2,780,253	$	—	$	13.79	6.3	$	—

Stock compensation

The Company recognized compensation cost for share-based payments of $11.3 million for the year ended December 31, 2019, $3.2 million for the year ended December 30, 2018, and $3.1 million for the year ended December 31, 2017. The total compensation cost not yet recognized related to non-vested awards as of December 31, 2019 was $4.2 million, which is expected to be recognized over a weighted average period of 1.8 years through October 2022.

Restricted stock grants (“RSGs”)

On February 3, 2014, the Board of Directors of legacy New Media (the "Board" or "Board of Directors") adopted the New Media Investment Group Inc. Nonqualified Stock Option and Incentive Award Plan (the “Incentive Plan”) that authorized up to 15.0 million shares that may be granted under the Incentive Plan. On the same date, the Board adopted a form of the New Media Investment Group Inc. Non-Officer Director Restricted Stock Grant Agreement (the “Form Grant Agreement”) to govern the terms of awards of restricted stock (“New Media Restricted Stock”) granted under the Incentive Plan to directors who are not officers or employees of New Media (the “Non-Officer Directors”). On February 24, 2015, the Board adopted a form of the New Media Investment Group Inc. Employee Restricted Stock Grant Agreement (the “Form Employee Grant Agreement”) to govern the terms of awards of New Media Restricted Stock granted under the Incentive Plan to employees of New Media and its subsidiaries (the “Employees”). Both the Form Grant Agreement and the Form Employee Grant Agreement provide for the grant of New Media Restricted Stock that vests in equal annual installments on each of the first, second, and third anniversaries of the grant date, subject to continued service, and immediate vesting in full upon death or disability. If service terminates for any other reason, all unvested shares of New Media Restricted Stock are forfeited. During the period prior to the lapse and removal of the vesting restrictions, a grantee of a RSG will have all the rights of a stockholder, including without limitation, the right to vote and the right to receive all dividends or other distributions. Any dividends or other distributions that are declared with respect to the shares of New Media Restricted Stock will be paid at the time such shares vest. The value of the RSGs on the date of issuance is recognized in selling, general, and administrative expense over the vesting period with a corresponding increase to additional paid-in-capital.

The following table outlines RSG activity specific to Legacy Gannett for the year ended December 31, 2019:



	Year Ended
	December 31, 2019
in thousands, except per share data	Number of RSGs		Weighted- Average Grant Date Fair Value
Unvested at beginning of year	—		$	—
Granted	10,465,778		6.28
Vested	(3,080,766	)	6.28
Forfeited	(16,580	)	6.28
Unvested at end of year	7,368,432		$	6.28

Legacy New Media RSG activity was as follows:



	Year Ended
	December 31, 2019				December 30, 2018				December 31, 2017
in thousands, except per share data	Number of RSGs		Weighted- Average Grant Date Fair Value		Number of RSGs		Weighted- Average Grant Date Fair Value		Number of RSGs		Weighted- Average Grant Date Fair Value
Unvested at beginning of year	384,471		$	16.11	342,264		$	16.86	335,593		$	18.18
Granted	300,952		13.62		227,388		16.43		186,153		15.85
Vested	(273,845	)	15.45		(170,422	)	18.01		(128,952	)	18.87
Forfeited	(94,489	)	15.12		(14,759	)	16.55		(50,530	)	16.80
Unvested at end of year	317,089		$	14.61	384,471		$	16.11	342,264		$	16.86

As of December 31, 2019, the aggregate intrinsic value of unvested RSGs was $49.0 million.

In connection with our acquisition of Legacy Gannett, we assumed management of the Gannett Co. Inc. 2015 Omnibus Incentive Compensation Plan. Pursuant to a Form S-8 filed with the Securities and Exchange Commission on November 20, 2019, we registered 16.4 million shares of common stock under this plan and two other plans assumed pursuant to the acquisition. Of this total, approximately 10.5 million shares of Legacy Gannett common stock under the Gannett Co. Inc. 2015 Omnibus Incentive Compensation Plan which were outstanding immediately prior to the acquisition were registered for issuance. When these outstanding shares vest, the payment of shares will occur under the Legacy Gannett Omnibus Plan and not the New Media Incentive Plan.

Accumulated other comprehensive loss

The changes in accumulated other comprehensive income (loss) by component for the years ended December 31, 2019 and December 30, 2018 are outlined below.



in thousands	Retirement Plans			Foreign Currency Translation		Total
Balance at December 25, 2016	$	(3,977	)	$	—	$	(3,977	)
Other comprehensive loss before reclassifications	(1,530		)	—		(1,530		)
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾	46			—		46
Net current period other comprehensive loss, net of taxes	(1,484		)	—		(1,484		)
Balance at December 31, 2017	$	(5,461	)	$	—	$	(5,461	)
Other comprehensive loss before reclassifications	(1,509		)	—		(1,509		)
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾	89			—		89
Net current period other comprehensive loss, net of taxes	(1,420		)	—		(1,420		)
Balance at December 30, 2018	$	(6,881	)	$	—	$	(6,881	)
Other comprehensive loss before reclassifications	7,731			7,266		14,997
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾	86			—		86
Net current period other comprehensive loss, net of taxes	7,817			7,266		15,083
Balance at December 31, 2019	$	936		$	7,266	$	8,202


⁽¹⁾	This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost. See Note 8 — Retirement plans and Note 9 — Postretirement benefits other than pension.

Amounts reclassified from Accumulated other comprehensive income (loss) to net income (loss) during the years ended December 31, 2019, December 30, 2018, and December 31, 2017 were not material.

Dividends

During the year ended December 31, 2019, the Company paid dividends of $1.52 per share of Common Stock. During the year ended December 30, 2018, the Company paid dividends of $1.49 per share of Common Stock. During the year ended December 31, 2017, the Company paid dividends of $1.42 per share of Common Stock.