Wednesday, March 26, 2008

Exclusive: Gannett Foundation documents reveal platinum benefit for company's elite executives

Updated: Company spokeswoman Tara Connell's response.

It's no secret that Gannett has given millions of dollars in bonuses and benefits to CEO Craig Dubow and other top officers, as they cut thousands of jobs and burdened thousands of other employees with additional work.

Now, I'm going to tell you about an executive benefit you probably don't know: a program available only to Corporate's elite. It comes via the Gannett Foundation -- the company's charitable arm, best known for helping homeless shelters and other worthy causes in communities where Gannett owns newspapers and TV stations.

Public documents show the foundation has given hundreds of thousands of dollars to charities favored by top company officers under the little-known executive benefit program. Federal tax returns for 2004-2006 show that Dubow and 15 other current and former executives used the benefit to steer nearly $424,000 to their alma maters and to other favorite causes. The charities were often far from any Gannett paper or TV station, a requirement for members of the public seeking community grants. And the foundation gifts required no matching money from the executives -- unlike a provision under a similar program for average employees, called GannettMatch.

I don't think there's anything illegal here. I bet this goes on all the time at corporate foundations. But it's still monumentally tacky. The company has quietly walled off a part of the Gannett Foundation -- a vehicle created for public good works -- and turned it into a private reserve for already well-paid senior executives to earmark money for pet charities. In other words, even as it preaches fiscal austerity, top brass's demands to be pampered now extend even to turning the company's charitable vehicle into just another platinum perq.

For example, at Dubow's direction, the foundation gave $40,000 to the University of Texas at Austin, where he graduated. The money went mostly for endowed scholarships. The community grants guidelines for everyone else, on the foundation's website, do not list Texas as an eligible state. Those guidelines also say: "The only scholarship program currently funded by the Foundation is the Madelyn P. Jennings Scholarship Program for children of Gannett employees."

At the request of Chief Financial Officer Gracia Martore (left), the foundation gave $45,000 to private Wellesley College near Boston, where she graduated. Gannett owns no papers or stations in Massachusetts. The school's website doesn't show a journalism department, or any journalism classes. Also at Martore's direction, the foundation gave $5,000 for "general support" to the exclusive Potomac School in McLean, Va., near Gannett's headquarters. The foundation's guidelines for the general public say it will not support elementary or secondary schools, except for special programs.

The money flowed through a charity benefit available to just a handful of executives. It is not mentioned on the foundation's website, where rank-and-file employees and the public are directed for information. The foundation's tax returns only hint at its existence; there are no related-party transaction footnotes. And there's nothing about it in the annual proxy report to shareholders, which details benefits for top officers.

Look: Buchanan Hall in tony Upperville, Va., is no doubt a delightful place to hold a garden club luncheon in Virginia's bucolic horse country. I'm sure it's lovely after its extensive renovation. But if former CEO Doug McCorkindale (left) thinks Buchanan Hall deserved $13,000, as the documents show, couldn't he have just written his own check -- instead of getting the foundation to pay? Then he could have told the foundation to give the $13,000 to a needy Boys and Girls Club in a poor neighborhood in Des Moines, Iowa. Amid Dubow's cutbacks, the 107 U.S. cities with a community newspaper or a TV station can use all the foundation's financial support they can get.

After all, the foundation describes its mission prominently on its homepage this way: "We give grants to organizations in the communities in which Gannett owns a daily newspaper or television station. The Gannett Foundation’s mission: to invest in the future of the communities in which Gannett does business, and in the future of our industry."

The company's response
I discovered the executive-driven money in the past week after sifting through hundreds of grants listed in the foundation's most recent tax returns. (The 2007 return will be available after May 15.) Gannett's chief spokeswoman, Tara Connell, who also is the foundation's executive director, told me about the program's existence after I raised questions about some of the grants.

Connell says the program helps Gannett retain senior executives. Plus, she says, "it's a great way to give money to charity."

She compared the executive program to GannettMatch, where the foundation matches employee gifts to qualified charities, including charities in communities where Gannett doesn't own papers or TV stations. But, Connell acknowledged, top executives are not required to contribute any of their own money under their program to get foundation support.

The foundation is hardly independent of Gannett, which provides funding. Dubow is the foundation's president, a position he's held since becoming Gannett CEO in 2005. (McCorkindale was president in 2004.) Martore is one of the foundation's vice presidents, a position she held in the three years I examined.

The program's disclosure comes as Dubow (left) boosts cost-cutting as a cornerstone of his plan to reverse the company's flagging revenue and its plunging stock price. "We maintained our usual fiscal discipline throughout the year, aligning it with our strategic plan,'' Dubow wrote in his annual letter to shareholders, published last month.

Dubow and Martore may donate lots of their own money to charity. They can certainly afford to: They are Gannett's two highest-paid executives. Dubow got a $1.75 million bonus last year on top of his $1.2 million in base pay; Martore got a $600,000 bonus on top of her $700,000 in pay. Their compensation -- nearly identical to what they got in 2006 -- came despite the fact Gannett's stock lost 35% of its value in 2007.

What the documents show
Overall, the tax returns show, the foundation gave nearly $18 million during 2004-06. But the documents give just a glimpse of the executive giving program. Approximately $720,000 in about 120 grants was directed by current and former executives, the documents show. I focused on 63 grants totaling about $424,000 because they seemed far removed from the foundation's stated mission and its guidelines for the public. The more noteworthy ones include:
  • $60,000 to Penn State University, on the recommendation of former CEO John Curley, who now teaches there. The guidelines for the public community grants program do not list Pennsylvania as an eligible state.
  • $16,000 to scholarship funds at Columbia University in New York City, at the behest of former CEO McCorkindale. He earned undergraduate and graduate degrees at Columbia. At least $5,000 went to a fund named for McCorkindale. The foundation's guidelines say any credit for grants should go to the Gannett Foundation.
  • $30,000 to Young Life Williamson County in Franklin, Tenn., at the behest of USA Today Publisher Craig Moon, who has long ties to the state. Young Life's website says "every Young Life gathering or event is intended to give kids the chance to experience God's love and to consider the relevance of Jesus Christ for their lives." The foundation's public guidelines prohibit gifts to "programs or initiatives where the primary purpose is the promotion of religious doctrine or tenets."
  • $17,000 to Walker family funds at the University of Nebraska Foundation in Lincoln, the University of Georgia Foundation in Athens, and the University of Colorado Foundation in Boulder. The gifts were recommended by retired broadcast division chief Cecil Walker. Gannett owns no papers or TV stations in Nebraska. Plus, the foundation's guidelines ask that any credit for gifts go to the Gannett Foundation. Also at Walker's direction, the foundation gave $11,500 to the University of Colorado at Boulder, for scholarships, when scholarships aren't an option for everyone else. And there's no Gannett paper or station in Boulder. But The Coloradoan is just an hour north in Fort Collins. Even Corporate's page shows Colorado State University in Fort Collins. Why couldn't that $11,500 in scholarship money at least have gone to CSU?
  • $40,000 to Hartwick College in Oneonta, N.Y., on the recommendation of former human resources chief Richard Clapp. He graduated from Hartwick, I believe in 1962. Gannett does not own any papers or stations in Oneonta. The closest I could find is the Press & Sun-Bulletin of Binghamton, about an hour away.

Now, it's your turn
How to examine a non-profit's public tax returns.

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34 comments:

  1. Jim, thank you for exposing this atrocious mess. It's the kind of information that the public, the advertisers, the shareholders, and the employees need to know. Heads should roll over this. It's disgusting.

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  2. THIS is what I've been waiting to see on GannettBlog. I've enjoyed just about everything you've posted here, but this is the stuff that will really matter. Not only are you holding Gannett executives accountable in ways that no one else does, but you are modeling what a great blog can be -- full of good original reporting yet still fun and sometimes even snarky. Great job!

    Gage Church
    former deputy managing editor
    The Des Moines Register

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  3. I agree. You could also check to see if the Gary Watson term gave money to Rockford College.

    Nothing is a surprise anymore.

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  4. Watson directed three grants: One for $5,000 to the Northern Illinois University Foundation, and two for a combined $15,000 to the University of Florida, the documents show.

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  5. I still don't understand, as a former Gannettoid, why the Gannett Foundation matching grants ever ended. Especially given the size of some of these "current" gifts.

    Looks like something that Bush and Cheney would do. Must be the Washington DC atmosphere.

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  6. It would be interesting to know how some of these larger grants compare to the total amount allocated to some of Gannett's smaller, or for that matter, larger markets. I don't think any of the newspapers are given much to put into their communities, but Gracia's and Dubow's alma maters, where Gannett has nothing, gets the big bucks. Given their bonuses this year you would think they could have written personal checks. Then again, that's asking an awful lot!

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  7. Since we are on the subject of new "breaking" news thanks to this blog. I wonder what has happened over the years relative to the Labor Dept. Hours & Wages complaints as it pertains to Gannett's properties. It seems that the Cherry Hill issue has vanished...but not forgotten. I don't expect to see or hear anything from the McClean folk.

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  8. Yes, 10% tithing would be the "possible" rule. I wonder how Dubow is doing...but then the cost of milk and eggs is way up.

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  9. You've clearly exposed a great story! If the WSJ hasn't called you, they should.

    I wonder how many others have benefited from the company's donations. Curley's "recommendation" to give $60k to Penn State seems to have paid him back too.

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  10. Yet another example of dubious, two-faced business practices by Gannett. I understand the executive perk, but it is unsavory given the state of the newspaper industry and Gannett's penchant for underpaying non-exec employees and slave-driving their publishers to reduce every possible operation cost. Nice reporting job.

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  11. Don't forget Jim, this is not the ORIGINAL Gannett Foundation, that Frank Gannett, set up. That foundation, was stolen, by Al, and used to set up the Freedom Forum.

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  12. Great reporting Jim. We truly have a despicable bunch of arrogant, elite, narcissists running this company.

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  13. Changing topics. What is the new or current advertising strategy?
    There always was something on the table from Corporate to propel new initiatives. What has Leslie been up to? And when can we expect to hear from Dickey?

    What's the plan other than digital and shooting video's? Further, have they given up on Gen X, etc?

    After the Babyboomers die who replaces them??? The NAA appears to be as useless as the NAB???

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  14. Ah ha, I now remember. Good old Al with the raised platform desk so that he could look down over the lerking Curley. If only Curley was less tall.

    Did the Al busts get sold on ebay?

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  15. Good for you for bird-dogging this serially dishonest company, Jim. I've just learned of this excellent blog via a link from Romenesko, and like many others, I'm sure, will now be returning regularly to read your updates. Keep up the great work.

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  16. Bravo! The labors of the many support the whims, and reinforce the power, of the top execs and big shareholders. Let them read about CEO cars and spankings! Shameful.

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  17. Good story. This arrogant and tacky policy stems from the top-down culture that is hurting the company and, most importantly, its many papers. This culture condones all kinds of bad behavior by top executives (think Mark Silverman and the "leadership" of the Cherry Hill paper) because they, after all, ARE Gannett. The mindless buzzwords spewed by the cabal under Phil Currie's control are more important than any ideas coming from the staffs of the papers.
    And never mind the thousands who toil under these idiots who produce whatever is good in that company. In such a culture, it's totally proper that charitable donations go to top executives' pet causes as opposed to communities that really need the money. The University of Texas and Wellesley College are very rich institutions. They don't need cash. But they get cash while community groups in hard-hit places served by Gannett get the shaft.

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  18. Yes, I also sent a note to our alternative weekly here in Tucson, Arizona, Tucson Weekly. I noticed that Nashville had a blog site for Jim's post here and encouraged the editor in Tucson to consider putting the link on their website.

    Justice will be served.

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  19. Jim: Just chiming in on the chorus -- Bravo for your excellent sleuthing and persistence. Keep it up.

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  20. Thank you, all. Stay tuned for more, coming up shortly.

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  21. A pointed note. There was at one time in the not too distant past when newspapers had an ombudsman to protect the newsreader and offer clarity on positions.

    It appears to me that most HR people have no obligation to the employee on fair terms to hear the vettings of their concerns. It may be the time for a return to such...for employees as well as for readers. Wilmington, Delaware had such a person after Gannett purchased the paper from DuPont.

    There appears not to be anyone in charge of the Roosters or the Hen's in the big chicken coop.

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  22. You make me sick, Jim.
    Your fantastic reporting work leaves me literally sick to my stomach -- at the arrogance and greed and sense of entitlement that our corporate royalty has assumed.
    If this kind of perk "helps Gannett retain senior executives," then by all means let's cut it off. Maybe, if God is smiling upon us, they will leave and be replaced by business people who place the welfare of the company and its newspapers and employees ahead of their own enrichment and aggrandizement.
    Thanks for making me sick,Jim. Please keep reporting and make me ill again.

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  23. Jim

    Really interesting, original reporting. I don't remember seeing anything like this anywhere else.

    But, I have a big-picture question. Even if you find all of the executive-directed grants horrible and wrong, you're talking 4 percentage points. I assume, then, that you are saying the program - and those who run it - are wonderful and right 96 percent of the time?

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  24. More sickness. When will the Board reconsider doing away with these gifts of executive stock incentives at stupid price levels?
    How can you reward the top CEO with millions of incentives with a stock that is still down over 50% in value?

    Who will make the Board accountable to the shareholders of Gannett...including thousands of employees?

    Boost his base salary if you can justify. Otherwise how about some sensibility!

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  25. These gifts serve as up-front payments to secure future professorships for the Gannett execs as they leave. No one in their right mind in the private sector would hire these dregs. The ivory towers of academia are their only hope.

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  26. Okay, let's see. It's bad for executives to give to charitable causes.

    I guess it's wrong for the Foundation to match contributions from the general employee population too. I know they match gifts I made to Temple University. It was not much, but it was doubled by the Foundation.

    That's an outrage! They should be all fired for this charitable work.

    Why is it that much of it written here is sour grapes. Has anyone seen what is happening to McClatchy, Tribune, Dow Jones, Journal Register and the other newspaper companies?

    There are important things and there are bitching sessions. This is more of that latter.

    I'm glad I don't have to put up with this every day now.

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  27. The bitching my friend is intended to bring out other sources of potential news, comments, and items to follow up. Stocks are down period with all newspaper companies...it reflects dramatic movement of dollars. Newspapers have been arrogant and monopolistic...you know that. The piper is being paid...just like the financial stocks too. But the local communities get it real well...no surprise that places like Camden,NJ etc. don't get squat.

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  28. To Anonymous 3/27/2008 1:30 PM

    The problem is that this is not a case of executives giving to charitable causes. They are giving nothing. Instead, they are diverting money from the Foundation's intended uses, as spelled out in its guidelines, to their pet charities.
    If the execs had at least donated money through a matching grant, that would be understandable. Any of us can do that. But they express their generosity with other people's money.
    It shows how completely out of touch with the real world these people are that they could not see the impropriety of this greedy grab.

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  29. GANNETTS ETHICS POLICY

    IF WHAT YOU ARE SAYING IS TRUE THEN THEY ALL NEED STRUNG UP. THE COMPANY HAS A HOT LINE 1-800-234-4206 FOR VIOLATIONS OF ETHICS POLICY. THE ETHICS POLICY GO TO http://gannett.com

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  30. This makes me want to barf! What's going to show up next? I thought it wouldn't get worse then crapping on the bathroom floor now this?
    I'm ashamed I work this company.

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  31. I think the real problem is that too few people control all the money. I think the shareholders should really look at how the money at the foundation is used as an indication of how the money at corporate is used. It makes me sick that these people use the company as a personal bank account. McCorkindale has hundreds of millions dollars he cant write a $13,000 dollar check. Thats about the same as me giving a bum on the street a dime. This place makes me so sick keep up the good work Jim.

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  32. Thank you, Anon@3:42 -- and everyone who has left me such kind notes! Your words of encouragement mean the world to me -- and keep me going.

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  33. Hey, this just proves my point: There is NO ethics policy in place at Gannett, only for the working stiffs. It's amazing that the top brass wants to be looked at as the charitable guy next door. I wonder what they want to tell GOD on their way through the pearly gates: You see I was righteous - now let me in! There will be justice - if not here on earth (because nothing will change their behavior and callousness), but in the end they just reserved their seat in hell!!!

    Even Jesus said it will be harder for a rich man to enter heaven. This report just confirmed his preaching.

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Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

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