We like to illustrate business stories with "real people" to help explain complicated issues. As employees absorb the shock of Gannett's just-announced retirement plan changes, I'm offering myself as a featured example.Gannett paid me $105,000 a year when I took a buyout as a USA Today editor and reporter in January. By then, my pension benefit was growing by about $9,000 a year. That was on top of the $3,000 in stock Gannett contributed to my 401(k) account as its maximum match to my own contributions. So, I was collecting a total of about $12,000 a year.
Under the pension freeze announced yesterday, I would have lost that $9,000 in annual growth beginning Aug. 1. Meanwhile, Gannett's annual 401(k) match would have climbed to about $5,000. So, the freeze would have cost me a net $7,000 a year, as I understand the changes.
I cashed out of the pension plan not long after leaving USA Today. My 20 years' work there and at three other Gannett newspapers earned me a $105,000 lump-sum payout, which I've since re-invested in a rollover IRA.
Related: As Gannett's stock plunges, review your 401(k), and Do top execs pay for their own health insurance?
Your thoughts, in the comments section, below. To e-mail confidentially, use this link from a non-work computer; see Tipsters Anonymous Policy in the green sidebar, upper right.
[Image: yesterday's USA Today, Newseum]
Jim,
ReplyDeleteThat is unfortunate, but your problem is that you, as well as a lot of other people, have been here for 20 years. Pension plans are so 1970's. Who actually joins a company today because the company has a "great pension plan"? I think the issue is that there are too many people here worried about a pension plan and not worried about the health of the company.
Sure this is another benefit going away and it is unfair. As you will see with your own situation, after you lost your job and your buyout ends, each month you don't get your salary, you will be in the hole another $10k. So, would you have preferred to keep your job with a reduced benfit plan or take the buyout with without any future salary guaranteed?
The company is doing this to save a bunch of jobs. So, if anyone is complaining now, it gets worse when you lose your job in a economy like this. Even worse, if you spent the last 20 years working at a newspaper I am not sure your experience is not easily transferable. Finally, does anyone know of any newspaper company hiring???
I think everyone should just be happy they are working and for people like Jim, I hope he finds a new career, because his experience is not applicable anymore.
Interesting post, Anon @ 7:37.
ReplyDelete"The company is doing this to save a bunch of jobs." Yeah. 120 to be exact. Two in particular: Gracia and Craig.
"Finally, does anyone know of any newspaper company hiring???" Yeah. Gannett. 45 in Digital alone in addition to the following posted in a recent Daily News Summary:
-- The Marshfield (Wis.) News-Herald is seeking a managing editor
-- The New Jersey Group is seeking a regional circulation sales director
-- The Tennessean at Nashville is seeking an ad manager
-- The Indianapolis Star is seeking a general manager for Indy.com
Gannett's profit margin is still in the mid-20% range. So it's not about the money. Gannett is making money. And you can't say it's being done to move the stock price because the stock price has done nothing but evaporate during the past 18 months while cut after cut is made. And Wall Street's response to yesterday's news: a 51 cent / share drop in GCI.
You can't cut your way to prosperity. Basic economics that somehow is lost on Craig and Gracia.
Jim’s real-life example illustrates a couple of important points.
ReplyDelete1. The existing pension plan wouldn’t have provided enough for most employees to live on in retirement, anyway. Consider that Jim’s $105,000 salary was pretty high, and he had 20 years of service. Even after 20 years of service, Jim’s payout was only $105,000. That’s no small chunk of change – I wouldn’t turn it down. But it’s certainly not enough for him to live on without working or relying on other investments. An employee making $50,000 and 30 years of service wouldn’t have fared much better than Jim. The real demise of the traditional pension plan occurred a decade ago. Since then, the lump-sum pension plan has been a nice add-on, but not a true retirement plan. Even before this freeze was announced, everybody needed to be investing in the 401(k).
2. The company is giving each employee less money, but the employee now controls the investment. Jim is right – after the freeze, the company would be spending $7,000 less each year to fund his retirement. However, when Jim says his match would have increased to about $5,000 a year, that represents a $2,000 gain in the amount of money given to Jim NOW. Depending on how Jim invests that $2,000 that he has control of today in his 401(k), it won’t be too long before the $2,000 is worth more than the $7,000 he would have received but had to wait years to get his hands on.
What kind of economics is that? Jim's $2,000 will soon be worth more than his $7,000? Please tell me where we can get that kind of return so I can dash out and invest.
ReplyDeleteIt also should be noted that this bombshell was dropped AFTER employees had to decide whether or not to accept buyouts in the Gannett NJ group. At least one employee turned down the offer because she didn't want to give up her Gannett pension contribution. Had she known that was about to be yanked, she would have taken the buyout.
"Soon" depends on how quickly you plan to retire. $2,000 invested today at 8 percent is worth more than $7,000 in a little more than 16 years. At 10 percent, it evens out in about 13 years.
ReplyDeleteLawsuits will be lengthy and costly. The tiger has alot of money and time on their side. Be prepared to spend as much as you might gain, not to mention the emotional toll involved.
ReplyDeleteThis is about survival and the future prospects for growth must be rather nil. At least Gannett got it out of the way so that "some" of you can create new careers.
Wait for the stock price when it rebounds for Craig to cash out his stock incentives.
I would be rather pissed if I were one of those New Jersey folks who didn't take the buyout...and now have to deal with this news.
ReplyDeleteThe timing of course was deliberate by Gannett. Screwed again.
All of this for a measely savings of only $30 million per year? For a company that does in excess of $2billion in sales. That's bull.
ReplyDeleteThis is just an effort to reduce staffing especially on the higher salary end. Figure that number out. It will far exceed this reference to $30 million.
Ten years with a $105,000 salary(Jim's noted salary here.) or $1 million. Or equivalent to 30 employees at this salary over a ten-year period.
Now what does Gannett save if 300 employees decide to bow out on August 1. And that sure beats the cost of more buyouts.
Portable to where? Job changes to where? Media News or McClatchy?
I don't think anyone on here is saying that we're going to live and die because of their freaking pension plan; or their pitiful 401(K) for that matter. So I'm not looking at this plan as my savior, but what I am doing is getting my fair share. If I can leave with $60,000 then I want it. Will I be able to live on that? Hell no. We're not stupid. But what I can do with that is have a good start in my next career...
ReplyDeleteLet me start this by saying "I have never worked for Gannett and never will." A friend of mine thought I might get a good laugh out of this blog. Sounds like 99% of you think you are smarter than current Gannett management. Why have you not risen up the ranks? There is a reason for that. You're not quite as smart as you think you are. That's why your still in the same place, doing the same job, complaining about the same thing. If you so smart leave Gannett and get a job that will make you happy. This should be easy since your all smarter than Craig Dubow. As for layoffs, Gannett is at bottom of the list of Fortune 500 companies that have laid off employees. Consider that a blessing. One final note,why would you want to bash the company that contributes your 401K matching funds with Gannett stock.Not too smart.You should be doing everything possible to improve the stock price. Not tearing down the company.
ReplyDeleteforgive my wife's comments - she wears the pants in our family. i take out my aggressive alpha male tendencies on the peons who are following me off the cliff - shhhh honey, i need these folks to keep showing up to work. we almost have them convinced that we care, we really really care mwuahahahaaaaa
ReplyDeleteAs a former executive, you make valid points. But the newspaper industry and Gannett were not caught off-guard. The winds of change had been upon management from the mid '90's. There have been no major structural changes to improve the marketability of daily newspapers.
ReplyDeleteThe lack of open and honest communication has always haunted the best of the biggest chains. It never was easy to dissent, and often met with pain.
Further, these people do not want to be negative and counter-productive. The culture has always favored insiders, favorites, and executive pets.
Hard not to be emotional given the distance between $10 million in compensation versus an over-worked $50,000 employee is so large. This is as much about America as it is about Gannett.
Freedom of speech is allowable in some camps. The failure comes from the top. Truth.
Wow! 30 million savings... I know where they can get another 2.x million... Fire Dubow (1.2 million pay + bonus last year ot 1.x million).
ReplyDeleteDamn, I'm just a peon and I just saved the company 10% while only affecting 1 person!
:)
You are daft or ignorant of decades of employees who have worked overtime without any compensation...and in some cases just thanks.
ReplyDeleteThat's the bad, really bad, rub for alot of employees.
It's not the whining...it's the lack of respect that Dubow and Company have failed to communicate.
Meanwhile, on top, the compensation and arrogance grows.
Bad combo.
From www.wsj.com ...
ReplyDeleteAccording to Gannett's annual report, the company recorded total pension costs of $54.3 million in 2007, down 47% from its 2006 total of $102.7 million. The plan has total assets of about $3.4 billion.
anonymous at 12:31pm said,
ReplyDelete"If you['re] so smart leave Gannett and get a job that will make you happy."
I did just that after seven years of Gannett's bull! Spent 17 years at a real newspaper, loved it, then Gannett came in and bought the place. Back to square one.
"Why have you not risen up the ranks? There is a reason for that."
ReplyDeleteWhat if I like my job? Can't I have job satisfaction AND a distaste for CGI's serially executive-centric decisions?
The elimination of pension contributions by the company in favor of an increase in stock-based benefits smacks of a company preparing itself for a sale. By doing it now, Gannett makes itself all the more attractive to a potential buyer, most likely a breakup artist. Legacy costs like pensions, retiree health care and even high-paid workers have made companies less desirable from a buyout standpoint. Sellers can get a better price by doing cuts now, and management can consequently earn more in bonuses and severance pay.
ReplyDeleteThis just moved on E&P.com ...
ReplyDeleteGannett Pension Freeze Draws Angry or Concerned Employee React
Tiny:
http://tinyurl.com/5jrj86
Long:
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003816002
I just love Tara Connell's statements:
ReplyDelete"We have not sold it as a positive, we have sold it as a reality," Gannett spokeswoman Tara Connell told E&P a day after the announcement came out. "It allows us to save money and improve the 401(k), which is what employees have told us they want."
And later ...
"The process of transforming the company has been ongoing and in that process we are looking at virtually everything we do and how we do things," Connell said about the decision behind the change. "We look at growing the top line, but also containing expenses."
such bullshit from Corporate. You might think that sales are down by 50%. Sales have been off in the 10% range. All this panic when the real issue is the stock price because the executives can't face Wall Street, and because they can't cash in on their stock incentives.
ReplyDeleteAll of these families, potentially in peril, and angst all because highly comped people can't get more cash.
Sell the cottage house and do your own laundry.
3:43 So you like your profession, but not the management you work for. Then find a company thats fits your style. Duh!
ReplyDeleteI don't believe for a second this is being done to "save jobs." The writing has been on the wall for some time. Our Wall Street puppeteers say reporters are too expensive, we change our Web sites to deemphasize news and push readers to do their own writing and photo-posting. Now Wall Street says Gannett should do away with a healthy, relatively inexpensive pension program, Gannett dutifully heeds its masters. My paper's newsroom has replaced only about 10 percent of those who have left in the last three years or so. You're either going to be downsized, or the current trend continues, and you're one of the ones scrambling to do the work of several after they are downsized. Neither sounds like much of a future.
ReplyDeleteThe bad part about all this is the companies that are "owned by Gannett" but do turn a profit. We are royally screwed because they want more money to absorb into the companies that are not making money. All the while our "peon" $35,000 year jobs that we depend on to raise our families are being outsourced to India... where is all the money you are saving there Dubow?? What about us skilled employees who actually paid for an education and our work is being farmed out to the lowest bidder.... in another damn country. Good bless big business and lets not forget those million dollar bonuses by cutting hard working American jobs. Well done Gannett with your hand in destroying our economy.
ReplyDeleteGannett is actually late to the party in terms of ending pensions. And with workers so mobile these days, how many actually stay with a company long enough to earn a sizable pension?
ReplyDeleteI spent 20 years in the newspaper business. Ironically, the only place I stayed long enough to earn a pension was Gannett: six years, three Gannett newspapers (Little Rock, Westchester and Rochester). Somewhere in my files I have the letter they sent me after I left, informing me that my pension upon retirement would be $284 a month, or about $3,500 a year. I'm 50; in 15 or 20 more years, that will maybe pay my monthly electric bill, but I'd rather have it than not.
Yet the larger story here isn't about Gannett; it's about an entire nation in which relatively few Americans save regularly, for retirement or otherwise. It's about a nation in which real wages, adjusted for inflation, haven't increased in 30 years, at the same time we are creating a plutocracy/oligarchy that's even more grotesque than the robber baron era of 100 years ago.
The conventional wisdom on retirement used to refer to the three-legged stool: pension, savings and Social Security. Now an ever-dwindling number of Americans have pensions; the vast majority either do not or cannot save meaningful sums for retirement; and Social Security is constantly under attack by people who want to turn over America's retirement kitty to the same Wall Street geniuses who brought us the subprime mortgage crisis.
I'm sorry if Gannett employees are suffering because of the pension freeze; but you're merely joining a very large club that includes a vast number of your fellow citizens.
The pension freeze is actually a small problem compared to the big picture. Gannett is doomed, there will be more layoffs soon as well as centralization and outsourcing. They will keep on taking away from the employees because they want you to leave on your own, especially if you are over 50 years of age. It is only June, can you imagine where this company will be by December and what other nonsense the will come up with in the mean time. Thank god they can lie and blame the sluggish economy.
ReplyDeleteNot everyone on Wall Street is buying GCI's spin on the sluggish economy. (There is an ad at the beginning of the video.)
ReplyDeletehttp://tinyurl.com/6ctjms
So how does a gannett employee dump their stock from the benefit web site?
ReplyDeleteOur Business Manager didn't want to tell me much about how to do it. I didn't even know we could until a month ago.
Go to www.ybr.com/gannett. Sign into your account.
ReplyDeleteClick on "Your benefits resources"
Click on "Transfer money"
Click on "Reallocate" or "Transfer Money to Individual Funds"
Pick "Percent," fill in 100%, click on "company stock" for "transfer out of" then click on whichever fund you like for "transfer to."
Thank you so much..$123.00 just went into Bonds.
ReplyDeleteI hope I did the right thing!
does gannett begin to contribute money to an employee's pension plan the day the employee is hired , a few months later or not until he/she is vested?
ReplyDeletealso, when pension plan is frozen aug. 1, is the ability to still become vested also frozen?
anyone know?
if answer to either of the above questions is a certain way, that would spell bad news for thousands of employes hired within the last few years, is it not? bit of reassurance on these is wanted
ReplyDelete5 years was the vesting period...anything less, adios, bon chance. Put your own money into a savings or investment plan.
ReplyDeletethat's very interesting comment but it still doesn't answer the questions - when does company start contributing to pension plan, and will emploeyes with less than 5 yrs be allowed to become vested ? in other words, does this large group of employes get anything form the pension plan at all?
ReplyDeleteThey are telling loyal idots like me to screw myself despite giving the company 20+ years of service. I'm a 50 somthing who has put up with the crap the last few years because the company offered a pension program. They are telling me to get screwed so loyal folks like me will leave and they can replace us with the peppy, look good, talk good, but know nothings and do nothings that they seem to think will get them out of this mess. I bet if they cut out the company plane, company cars, country clubs, donations to pet projects, free home maintenance and other perks they could have recooped the $30mill. We are let by a bunch of gutless spineless morons. Sad but true. (thanks for reading I feel better now).
ReplyDeleteI didn't realize lots of employees stayed with gannett because of the pension plan . that is interesting, I think. I wonder if that's the much-better version of the pension plan I heard about that was gutted about 10 yrs ago?
ReplyDeleteHey, I just thought of something - what happens to the peppy, look good, talk good, but know nothings and do nothings who have, say, 4 years with the company -- not quite enough to reach the 5-year vesting mark ? Is it "I'm sorry, but we're going to have to keep that money" or is it, "Sure, you can still become vested and that money is yours as long as they stay with teh company five years"
Does anyone know how "guaranteed" the pension plan is?
ReplyDeleteGo to www.glassdoor.com, a new employer rating service, and let folks know what you think about Gannett and its management.
ReplyDeleteIIRC, the company starts contributions from when you're hired. You're vested after five years and entitled to the money.
ReplyDeleteCommon response around work yesterday after the email came in: "I didn't know we still had a pension plan." Apparently people haven't been counting too much on it. But it still sucks, since it's yet another perk employees have lost. when's the last time we were actually thrown a bone?
25 cents for mileage...a real bone.
ReplyDeleteDubow's smiling face...and such great overall leadership from the Corporate office.
So, I just got my benefits statement in the mail. There's nothing in here that tells me I will get a lump sum when I leave the company, only when I turn 65. So what's the deal? If I get out of this company, can I take the money and run? I'm 44 -- not wanting to wait 20 years.
ReplyDeleteI have 18 years in the business and - get this - four years and nine months with Gannett.
ReplyDeleteI was told I'm SOL on the pension, 97 days from vested.
Anonymous 6/14 - 10:17 AM
ReplyDeletePage 1, second set of bullet points, second bullet:
"The benefit will be paid to you when you retire or leave Gannett (as long as you are vested)"
If you've got five years in, you're vested. Happy trails.
You will be vested in 97 days. Although the pension plan is frozen, you continue to vest past the August 1 date, according to my HR bizzaro, who got the word from The Tower. You might actually already be vested, based upon hours worked in a year (which I think comes out to be about now).
ReplyDeletethe comment directly about this one virtually answers the questions the one poster had about whether employees not yet vested can still become vested.... so long as HR bizzaro is a good source!
ReplyDeleteGot my statement and yes, it appears I'll get a very small pension even short of five years of service. So that's something.
ReplyDeleteSo is the fact that my superiors told a whole room full of people that anyone whose been with the company less than 5 years gets nada.
That inspires confidence.
Is there a formula about how much the cash out of pension payment will be? For instance, I worked for Gannett 18 years in the 1980s and '90s, before the pension plan was decreased.
ReplyDeleteSo, if I'd wait and take monthly payments when I retire down the road, how much would I probably get per month?
Does anyone have any examples of what they got for a similar number of years in that era? My ending salary was maybe $40,000, although I can't recall.
If I cash out now, is there a formula - such as monthly pension payment X times 12 months in a year X times (20,25,30 years) of projected payments - less % penalty for cashout = $ how much I'd get. :-)
I know there has to be some formula they follow, but I've never read one. Thanks!