Documents reveal Gannett strategy to protect Neuharth's lifetime pay from corporate failure

The $100,000 Gannett pays annually to lifetime consulting columnist Al Neuharth is just the tip of the iceberg better known as his 20-year-old retirement plan, newly uncovered public documents show.

The documents reveal that Neuharth and fellow board members took special steps in 1989 to shield the media mogul's retirement income in the then-unlikely event Gannett collapsed. He was board chairman at the time, having turned over the CEO's job to John Curley three years before.

In addition to the consulting fee, Gannett pays Neuharth $16,666 a month, about $200,000 a year, under a deferred compensation agreement, according to the 1989 proxy report to shareholders. The monthly payments appear to be in cash; the proxy does not mention company stock. (See document detail, below.)

Exit deals like Neuharth's are common across Corporate America. But they rarely surface so long after the fact. Moreover, details of his golden retirement package are emerging as Gannett newspaper workers brace for another round of payroll cuts. Beleagured investors, meanwhile, face more revenue losses when Gannett reports fourth-quarter earnings in perhaps two weeks.

Now 84 years old, Neuharth lives in Cocoa Beach, Fla., at his oceanfront Pumpkin Center estate. He is senior advisory chairman of the Freedom Forum, a journalism foundation he launched in 1991 with $650 million in Gannett shareholder capital. The charitable foundation in Washington, D.C., paid Neuharth $835,000 in fees and expenses in 2006-2007 alone, public IRS documents show.

The 1989 proxy says Gannett secured Neuharth's $16,666 payments by establishing an account with more than $5 million at Northern Trust Co. of Chicago. The figure might have been closer to $6 million; the proxy copy I obtained yesterday under federal open-records law is illegible in places.

The terms require Gannett's retirement plan administrators to use the assets solely to pay Neuharth. The only circumstances under which he wouldn't get paid are what ought to have been unthinkable in 1989: "General creditors of the company may reach the trust's assets if the company becomes bankrupt or insolvent,'' the document says.

Today, of course, anything is possible. Speculation is swirling that Gannett is about to reduce newspaper payroll again, after cutting nearly 2,200 jobs last month, on top of at least 1,100 positions in the third quarter. Advertising revenue is tumbling, and GCI's share price is down 76% from a year ago -- more than twice the loss in the widely watched S&P-500 stock index.

But what about $1 million a year?
At least one report says Gannett has been paying Neuharth much more: $1 million a year for the rest of his life under his retirement plan; that appeared in a Washington Post story on March 23, 1993. I can't find that figure in the 1989 proxy. But it could well be true: Neuharth's base pay was $1 million during his last year as chairman.

Moreover, executive compensation disclosure rules were much less rigorous in 1989. For example, the proxy says Neuharth's consulting contract also provides him with "benefits, facilities, services and perquisites appropriate to the services and activities he is performing for Gannett.'' But the proxy doesn't assign a dollar value to those benefits, which Gannett would almost certainly do today. Indeed, the 1989 proxy is just 22 pages long; by comparison, last year's ran 60 pages, and the compensation section alone took up 33.

Click on the following image for a much bigger view of the crucial 1989 proxy language on Neuharth's monthly income:


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