Fortress CEO Wes Edens didn't go to meetings despite racking $115M tab - Business Insider

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Fortress CEO Wes Edens didn't show up to board meetings even as his private-equity firm ran a $115 million tab for managing local newspaper chain GateHouse

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Business Insider dug into SEC filings, as well as ISS reports, and spoke with people familiar with Edens management of the newspaper chain under his media investment firm New Media, which housedof Rhode Island, as well as dozens of other papers throughout the country. The influential shareholder advisory firm Institutional Shareholder Services issued reports to clients from May 2018 to November 2019, calling out Edens' "poor attendance" at meetings. Though it did not specify how many meetings Edens missed, ISS said that for New Media he showed up to "less than 75 percent of total board and committee meetings on which he served" in 2018.

Counting a $5.7 million tab in 2014 — New Media's first year as a public company which required it to disclose the fees paid to the PE firm — Fortress charged New Media more than $115 million altogether, not counting 2019, which has not yet been reported. Business Insider presented Fortress, Edens, and Reed, with a list of questions about their management of New Media.

The $115 million in fees were charged as a result of a so-called external management structure, which meant Fortress, acting as an outside service provider, employed the CEO of New Media to oversee the newspaper business, as well as its chief financial officer. ISS advises hedge funds, mutual funds, and other large shareholders in companies. It acts as an adviser during proxy votes, researching public companies and making recommendations about anything from whether to re-elect board members or whether to vote in favor of a merger.

BlackRock voted against the executive compensation proposal that allowed Reed and his CFO to keep their salaries private, while Vanguard voted with the company. The proposal only barely broke 50%. Reed explained to Bloomberg News in May 2018 that the company cut highly paid but under-productive reporters. It had also eliminated local copy editors and designers, moving those jobs to a central hub in Austin, Texas, where New Media hired more than 300 people, he told Bloomberg.

Separately, SEC filings disclosed "conflicts of interest," given that Fortress executives may have investments in other companies with which New Media may do business.ISS wrote that in January 2019, New Media invested about $400,000 in healthcare concierge service, TouchCare Holdings LLC — a company Edens co-founded and where he serves as a director.

 

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