Michael Ferro stepped down from the board of Tronc on Monday, hours before Fortune published a story online accusing him of inappropriate sexual behavior toward two women while in his previous role as head of a Chicago investment firm.
Ferro had been chairman of Tronc’s board since February 2016, when he took a major stake in the Chicago-based newspaper chain that includes the Chicago Tribune, Los Angeles Times and other publications.
The Fortune story alleges that in 2013, Ferro engaged in inappropriate sexual behavior toward Kathryn Minshew, CEO and co-founder of The Muse, a career and job-search website. Ferro had invested in her startup a year earlier and had promised to invest more, Fortune said. Minshew said Ferro forcefully kissed her after signing a $750,000 capital infusion term sheet for The Muse at his corporate apartment in Chicago, according to Fortune.
In a separate incident, Hagan Kappler, an executive at manufacturing giant Ingersoll Rand, told Fortune that Ferro groped her in his Las Vegas hotel suite at what she thought was supposed to be a meeting to discuss thermostats during the 2016 Consumer Electronics Show.
Fortune also talked to nine former staffers working for Sun-Times publications during Ferro’s control of the paper who described an “uncomfortable workplace” for women, where Ferro would regularly make “sexual comments about women’s clothing and appearance.” Ferro headed Wrapports, the investment firm that owned the Sun-Times.
After the article’s publication Monday, Tronc spokeswoman Marisa Kollias said there have been no claims of sexual harassment filed against Ferro since he became chairman and the largest shareholder of the Chicago-based newspaper chain in February 2016.
“Michael Ferro has had no claims filed against him while leading Tronc as chairman,” Kollias said in an email. “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.”
While Ferro is stepping down from the Tronc board, he will continue in his role as a paid management consultant to the company, a result of a three-year, $15 million deal struck in December. Ferro has 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.
In the statement Monday morning, Tronc said Ferro, 51, was retiring immediately from the board ahead of the newspaper chain’s $500 million sale of the Los Angeles Times and other California assets. Justin Dearborn, chief executive officer of Tronc, was named to succeed Ferro as chairman.
“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 said in the news release. “I am confident that under the leadership of Justin and the rest of the board and management team Tronc will continue to deliver value for investors while executing the plan for digital transformation.”
Dennis Culloton, a spokesman for Ferro, told The New York Times earlier Monday that Ferro was “burned out” and wanted to “go out on a win.”
The two accounts of Ferro’s alleged sexual misconduct described in Fortune’s story occurred about three years apart.
Minshew, then 26, met Ferro in 2012, when he agreed to invest $100,000 in seed money for The Muse. In September 2013, after months of discussion, Ferro agreed to invest an additional $750,000 in the company. After signing the term sheet, New York-based Minshew flew to Chicago to work out the final details, and met Ferro in a corporate apartment to talk about financing, according to Fortune.
Instead, Ferro approached Minshew with glasses of bourbon and “forcefully placed his hand on the back of her head and tried to kiss her,” according to Fortune. After pulling away, according to Minshew’s account to Fortune, Ferro said, “I’m glad I didn’t take you to a restaurant, because people would think we’re sleeping together and we’re not. I’d much rather actually be having sex with you and have no one know it.” Minshew told Fortune that Ferro didn’t try to touch her again.
She told her co-founder and more than a dozen other people about the incident, naming Ferro to at least two people. The Muse found alternative funding.
Kappler, then a 37-year-old executive at Ingersoll Rand, met Ferro in September 2015, one month after the announced $1 billion sale of his startup, Merge Healthcare, to IBM. He initially discussed everything from brokering a partnership between her company and IBM to hiring her himself, according to Fortune.
In January 2016, Ferro met Kappler at the Consumer Electronics Show in Las Vegas, where he invited her up to his hotel suite, poured red wine and steered the conversation to personal matters. Then he allegedly came up behind Kappler and put his arms around her, and later put his hand on her breast, Fortune reported.
Kappler rejected his advances and told her manager about the incident the following day. He sent Ferro a letter telling him never to contact Kappler again. Kappler also discussed her options with a lawyer a week after the Las Vegas meeting with Ferro, Fortune said. She also told family members and others about the encounters with Ferro, Fortune said.
Ferro’s exit from the board and the Fortune story come just two months after Tronc placed then-Los Angeles Times publisher Ross Levinsohn on unpaid leave to investigate allegations of inappropriate conduct during previous tenures with other companies. The accusations came to light in a National Public Radio report that found Levinsohn was a defendant in two sexual harassment lawsuits and that he allegedly engaged in "frat-boy" behavior prior to joining Tronc in August.
Last month, Tronc said an independent investigation found "no wrongdoing" on Levinsohn's part, and he was named to a new role as the head of Tribune Interactive, the company's digital division. Details of the investigation were not made public by Tronc.
Ferro became the largest shareholder and chairman of Tribune Publishing in February 2016, and the corporate name was changed to Tronc shortly thereafter. Los Angeles biotech billionaire Patrick Soon-Shiong’s Nant Capital, a California-based 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.
Last month, Tronc agreed to sell the Los Angeles Times, San Diego Union-Tribune and other California-based assets to Soon-Shiong for $500 million in cash. Soon-Shiong will 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.