The company announced last week in a press release that PointRoll CEO Chris Saridakis (left) had been promoted to the influential new job of chief digital officer over all of Gannett. A day later, GCI disclosed how much stock it awarded Saridakis, 39, as part of the deal, in a harder-to-decipher government filing that I've now had a chance to examine with help from experts.Saridakis' compensation opens a window on how Gannett is competing for top technologists at a time when pre-IPO Silicon Valley business start-ups like fast-growing Facebook can dangle millions to lure the best candidates.
Saridakis' stock-based pay package, disclosed Tuesday in a Securities and Exchange Commission filing, consists of two parts:
- A grant of 15,000 Gannett shares over which he can take full ownership in less than four years: Dec. 7, 2011 -- but only if he's still with the company. Then, if GCI is trading at, for example, $60 a share (whoo-hoo!) by that date, these so-called restricted stock units (RSUs) would be worth $900,000. (Gannett shares closed Friday at $34.03.) The RSUs "only have worth after the four-year period,'' company spokeswoman Tara Connell told me after I asked if Saridakis wanted to comment. "If he leaves the company any time before Dec. 7, 2011, they are worthless to him," she says. "If he sells them on Dec. 8, 2011, they are worth what the stock is worth that day."
- Options to buy 150,000 shares at $33.92 each. Options are meant to tie an executive's pay to the performance of a company's stock price. If GCI stock rises to that $60-a-share example, Saridakis could "exercise" those options by paying $5.09 million (150,000 x $33.92). He could then turn around and sell the stock for $9 million (150,000 x $60), making a nearly $4 million profit. Of course, if GCI shares move in the opposite direction and stayed there, the options would be worthless.
To put 150,000 shares in perspective, retiring Newspaper Division President Sue Clark-Johnson owned 400,033 shares, as of last March. And that was after 40 years' employment. Sardarkis has been with the company only since 2005.
Saridakis will get a paycheck, too, of course. We'll learn details about that only if his compensation is high enough under SEC rules to require its public disclosure in the annual proxy report to shareholders, likely out this spring.
Note: See this disclosure on how much Gannett paid me.
Your comment re stock options is not apples to apples. Clark-Johnson owned 400,000 shares AND had 475,000 stock options at the end of 2007. The stock options are only good for 10 years and the stock must be purchased for the individual to own the stock. So, owning 400,000 shares or $14 million in stock ($35) is good after 40 years of work. It would cost Saridakis $5.3 million of his own money to purchase the 150,000 shares.
ReplyDeleteThe only advantage of options is if the stock price increases. Otherwise, it's worthless.
Where do you see that 475,000 stock-option figure for Sue Clark-Johnson? Is it the sum of the figures for her in the table on page 37 of the March 2007 proxy? The 400,033 figure I cited for shares she actually OWNED at the time is from page 60 of the same report.
ReplyDeleteThe chart on page 60 refers back to the one a page earlier. The fine print on that says 377,050 of the shares are options (the total from the chart on page 37). Those shares are worthless. Page 37 also lists 6750 RSUs which will not have vested upon her retirement. Unless Gannett made an agreement on accelerated vesting, they also would be worthless. That leaves 16,000+ shares, the most we might ASSUME she owns. Worth $550,000 at the close today.
ReplyDeleteYikes! Question: How do you/we know those 377,050 stock options are worthless? If the strike price were reset, how and when would we know about that?
ReplyDeleteThey are worthless because the exercise price of each is above $54. To my knowledge, GCI has not ever monkeyed with the exercise price of options. SEC frowns on it, and dozens of other top execs would want the same deal. For a possible look at what SCJ might get to sweeten her exit, take a look at the proxy details for Tom Chapple, who retired in '06. They did accelerate his vesting; that would impact her RSUs, if she got the same treatment. More importantly, they paid him $1.1M, which included $400,000 for a non-compete. So instead of messing with options, expect the upcoming proxy, or maybe the '09 one, to include some deal for SCJ similar to that.
ReplyDeleteYou're the king! Thanks. For more on that deal involving Chapple, and one with retired CEO Doug McCorkindale, please see this post: http://gannettblog.blogspot.com/2007/11/document-sheds-light-on-payments-to-top.html
ReplyDeleteConsidering what Chris made with his other companies, it would seem like a few million Gannett dollars is chump change. Remember he sold his company to Gannett for over $100 million and he also was part of Doubleclik BEFORE it went public. What's a few extra million for a someone who probably already has about $100 million in his bank account. Maybe he is doing it for the executive perks that the fat cats at Gannett get.
ReplyDeleteFirst, it was not "his company" that was sold. Second, this is a goldenly good example of being in the right place at the right time. Third, I (ya, anonymous) challenge anyone, including the bag of wind himself, to name one value-add that he ever made during his tenure at PR. Please, prove me wrong. Oh, that would be other than the infamous paraphrase of his take on what work/life balance means to him, something along the lines of, "I have no concept of what that means." Such is the case of tyrants who inherit undeserved priveledge and positions within companies that are run as if they are startups, without any equity whatsoever, or hope thereof, for those who e-slave at 16+hrs/day, day-in, day-out, at sub-market wages (sure, it's the employee's decision to accept, but I am calling it like it is, albeit with admittedly inflammatory hyperbole.) Tbe company's digital sweathshop reputation is well-known within the industry, despite management's attempts at dis-crediting and silencing current and aspiring alumni. Soon enough, the reckoning will come from within, or from without -- it is just a matter of time until the PR competitive advantage falls by the wayside due to a failure to equitably invest in their employees and competitors inevitably catch up. The people are what makes the place a force to be reckoned with, for now, but management that does not know how to manage its human captial, will inevitably lose market share and, probably, value. The company succeeds in spite of its management, not because of them. Check out the employee turnover specs, if you can find them.
ReplyDeleteThe shame is that, what could have been, shall never be now, and both Saridakis and his protege share full responsibility for that. But hey, I don't own any Gannett stock, and neither do my former colleagues, I'll bet, so please continue to lavish these rewards of image over substance and hasten your demise by promoting this "CDO" and his posse of miscreants.
Sincerely,
RMPublius