David D. Smith

About David D. Smith

David D. Smith (age 74) is Executive Chairman (since Jan 2017) and Chairman of the Board (since Sept 1990); he previously served as President & CEO from 1988 to 2017. He was instrumental in forming Sinclair in 1986, founded Comark Communications (UHF transmitter manufacturer), and served as GM of WPMY from 1984–1986 . Under Smith’s tenure, Sinclair’s pay-versus-performance shows mixed operating outcomes and volatile equity performance: Adjusted EBITDA rose to $876mm in 2024 from $557mm in 2023, while the five-year TSR proxy series implies a decline in $100 investment value to $62 by 2024 (company TSR) versus peer group at $106 .

Past Roles

External Roles

Fixed Compensation

Multi-year compensation for David D. Smith:

Notes:

• Base salary was reduced in 2024 from $1,314,164 to $1,000,000 beginning April 2024 .
• 2025 base salary set at $1,000,000; maximum annual bonus potential $3,000,000 (multiple components) .

Performance Compensation

2024 cash bonus mechanics were tied to Adjusted EBITDA with quarterly payouts, an annual recapture feature, and a separate discretionary bonus. Equity grants included restricted stock (time-based vesting) and SARs (value-based). Details:

Equity grants and vesting:

• 3/8/2024 grants: SARs 654,275 (base $13.31) vest immediately; Restricted Stock 131,480 shares vest 50% at 1-year and 50% at 2-year anniversary .
• 2025 grants: Restricted Stock 288,392 shares (time-based) .
• “Annual Incentive Plan” (AIP) adopted 2/25/2025; allows cash awards with goals including unlevered FCF, stock price, and relative TSR; no AIP awards granted for 2024 .

Equity Ownership & Alignment

Snapshot as of March 17, 2025:

Ownership structure notes:

• Class B shares carry 10 votes per share; convertible to Class A at any time .
• Smith brothers collectively control 81.0% of total voting power via agreement to vote for each other as directors through 12/31/2025 .
• David’s Class A holdings include 338,400 shares in irrevocable trusts, 803,178 shares held in the David D. Smith Family Foundation, 162,553 via LLC, 901,360 direct, 18,882 in 401(k), 598,698 restricted, and 94,249 via SARs .
• No pledges disclosed for David’s shares; company insider trading policy permits pledging and margin loans but prohibits hedging instruments .

Outstanding awards and potential value:

• SARs outstanding at 12/31/2024: 654,275 (2024), 413,337 (2023), 330,396 (2022); fully vested on grant .
• Change-in-control accelerates unvested SARs and RS; David’s disclosed SAR in-the-money value at 12/31/2024 upon change-in-control: $1,921,866 .

Employment Terms

• No employment agreement with David D. Smith .
• RS vesting accelerators: death/disability, termination without cause, good reason resignation, change-in-control, or retirement (age ≥65 or age ≥55 with ≥10 years of service) .
• SARs: 10-year term; vest immediately or over 2–4 years depending grant; acceleration on termination without cause/good reason, retirement (as above), or change-in-control/dissolution/merger per plan .
• Incentive-Based Compensation Clawback Policy covers erroneous incentive-based pay upon accounting restatements .
• Insider trading policy allows pledging/margin loans; anti-hedging prohibitions in place .

Board Governance

• Board service: Director since 1990; Chairman of the Board and Executive Chairman through 2024; Board held 8 meetings in 2024; all directors attended ≥75% of Board and committee meetings .
• Committees: Audit (Chair: Beyer), Compensation (Chair: Legg), Nominating & Governance (Chair: Friedman), Regulatory (Chair: Frederick G. Smith), Cybersecurity (members include J. Duncan Smith); David is not listed as a committee chair/member .
• Controlled company: Smith brothers hold >50% voting power; not required to have a majority independent board; Compensation decisions via independent committee despite exemption .
• Leadership structure: Combined Chairman/Executive Chairman role; no Lead Independent Director; Board reviews Executive Chairman performance annually .
• Proposal 4 (2025): Charter amendment to expand “Permitted Transferees” of Class B to certain 501(c)(3)/(c)(4) organizations where permitted transferees have significant governance or funding influence (estate-planning flexibility for controlling stockholders) .

Director Compensation

• Non-employee director compensation detailed separately; David’s compensation appears in the executive Summary Compensation Table, not in director comp .

Compensation Peer Group and Say-on-Pay

• 2024 peer group: AMC Networks, Cumulus Media, E.W. Scripps, Entravision, Fox, Gray Television, iHeartMedia, Nexstar, Tegna, The New York Times; market data considered without targeting a specific percentile .
• 2024 say-on-pay approval: ~93% support; Board interpreted as endorsement of current practices .

Performance & Track Record

Company performance metrics (pay-versus-performance table):

Compensation Structure Analysis

• Cash vs equity mix: 2024 included significant discretionary cash bonus ($1.2mm) alongside time-based RS and immediate-vest SARs; non-equity incentive declined YoY (2023: $1.97mm vs 2024: $1.02mm), while SAR grant value increased YoY .
• Shift toward RS/SARs: Company has not granted stock options since 2016; equity now delivered via RS and SARs with service-based vesting, reducing performance-contingent equity exposure .
• Performance metric design: Quarterly Adjusted EBITDA gates and annual “recapture” allow bonuses even with missed quarterly targets if annual target achieved, weakening quarter-by-quarter discipline while preserving annual performance alignment .
• 2025 AIP adds broader metrics (e.g., FCF, stock price, relative TSR), potentially strengthening pay-for-performance alignment if implemented rigorously .
• Target changes: Quarterly target thresholds scale from 92% (start of payout) to 100%; annual bonus starts at 100% to 108% of target Adjusted EBITDA, indicating defined but relatively narrow payout bands .

Equity Ownership & Alignment (Additional Detail)

• Skin-in-the-game: Significant beneficial ownership and voting control indicate strong alignment but also entrenchment risk; 25.4% total voting power for David, with multi-class voting and family agreement through 2025 .
• Pledging risk: Policy permits pledging and margin loans; no pledges disclosed for David, but allowance is a governance red flag if practiced .
• Vested vs unvested: At 12/31/2024, David’s RS holdings are treated as vested for disclosure given retirement eligibility, and his SARs are fully vested on grant; no unvested RS shown in outstanding awards table .
• In-the-money value at CIC: SAR value $1.92mm at 12/31/2024 upon change-in-control .

Related Party Transactions

• Family employment: Smith family members and related persons (e.g., Ethan White, son-in-law of J. Duncan Smith) received compensation consistent with roles; Jason Smith (David’s nephew) is Executive Vice Chairman with disclosed compensation .
• Audit Committee oversight: Related person transactions are reviewed/approved under formal policy; Audit Committee approves or ratifies and reviews annually .
• Charter amendment for foundations: Expands Permitted Transferees to certain 501(c)(3)/(c)(4) organizations where controlling stockholders have substantial influence—potentially preserving voting control through philanthropic entities .

Risk Indicators & Red Flags

• Controlled company structure (81% voting power by Smith brothers) reduces independence requirements; no Lead Independent Director; combined Chair/Executive Chairman role concentrates power .
• Anti-hedging policy permits pledging and margin loans—could amplify insider selling pressure or margin-call risk in volatility; hedging prohibited .
• Regulatory oversight: Prior FCC Consent Decree enforcement concluded May 29, 2024; ongoing oversight via Regulatory Committee, DOJ Final Judgment references; signals heightened compliance focus .
• Board committee workload: Compensation Committee met 31 times in 2024, suggesting active involvement; however, discretion-heavy bonuses (e.g., $1.2mm discretionary in 2024) warrant monitoring for alignment .

Employment & Contracts

• No employment agreement for David; severance not disclosed beyond equity acceleration provisions tied to plan agreements .
• Clawback: Company clawback policy applies to incentive-based compensation in event of restatement .
• Non-compete/Non-solicit: Not disclosed for David (present for other executives like CEO/CFO) .

Investment Implications

• Alignment and control: Extensive beneficial/voting ownership by David and family strongly aligns economic interests but entrenches governance, with no Lead Independent Director and controlled company exemptions; monitor governance changes post 2025 as stockholders’ agreement expires .
• Pay-for-performance calibration: 2025 AIP adds broader metrics (including relative TSR/FCF) that could improve alignment; 2024 structure relied heavily on Adjusted EBITDA and discretionary bonuses, with “recapture” creating potential smoothing; watch execution and disclosures for 2025 awards .
• Insider selling pressure: Policy permits pledging; while David has no disclosed pledges, the allowance is a risk factor in drawdowns; large RS/SAR grants and retirement-eligible vesting reduce lock-up friction—monitor Form 4 activity and SAR exercises around catalysts .
• Performance trajectory: Adjusted EBITDA rebounded in 2024, but TSR underperformed peers over the 5-year window; capital allocation and NEXTGEN TV execution under David’s purview remain key levers for value creation .
• Charter amendment and voting control: Expansion of Permitted Transferees to foundations may perpetuate control via philanthropic structures; governance overhang could limit activism outcomes while stabilizing strategic continuity .