Two years ago, the board of directors awarded top executives a pile of stock options at a rock-bottom price: $3.75 a share. Now, regulatory documents show two of those executives have once more cashed them in for six-figure profits.
The options were part of their 2008 annual pay, and allowed recipients to buy shares from the company for a so-called "strike price" of $3.75 each, no matter how high the shares trade in the open market. (Gannett's five highest-paid executives in 2008.)
Many U.S. companies use options to tie executive pay to the interests of shareholders. But pay-for-stock performance doesn't always work that way. In the recently filed annual 10-K report to the U.S. Securities and Exchange Commission, Corporate acknowledged that for the third consecutive year, GCI's stock fared worse in 2010 than shares of the overall newspaper industry.
The 2008 options became the executives' property, or "vest," in four equal annual installments starting Feb. 25, 2010. At the time they were granted, GCI was trading for less than $3.75 a share, as the broader newspaper industry neared collapse.
Options are only valuable when a company's stock trades above the strike price. In that regard, many thousands of options granted to current GCI executives over the years are worthless.
Late last month, the two executives both "exercised" their options the same date they vested:
Dave Lougee, president of the 23-station TV broadcasting division, sold 21,250 shares at $16.25 each, according to this filing with the SEC. His profit before taxes: $265,625.
A year ago, Lougee sold 10,625 optioned shares at $16.18, for a profit of $132,069.
Paul Davidson, CEO of the U.K. Newsquest newspaper division, sold 16,250 at a slightly higher amount, $16.29 each, this SEC filing shows. His profit before taxes: $203,775.
A year ago, Davidson also sold 16,250 at $15.89, for a profit of nearly $200,000.
In 2010, Newsquest's 17 dailies and hundreds of weeklies once more laid off scores of employees, reducing division-wide employment nearly 6%, to 4,800. Overall, GCI-wide employment fell 7%, to 32,600.
GCI's stock closed yesterday at $15.59 a share, up nine cents. It's now down about 4% from a year ago, however, while the broader S&P 500 index is up nearly 15% in the same period, according to Google Finance. (Chart compares their 12-month performance.)
The options were part of their 2008 annual pay, and allowed recipients to buy shares from the company for a so-called "strike price" of $3.75 each, no matter how high the shares trade in the open market. (Gannett's five highest-paid executives in 2008.)
Many U.S. companies use options to tie executive pay to the interests of shareholders. But pay-for-stock performance doesn't always work that way. In the recently filed annual 10-K report to the U.S. Securities and Exchange Commission, Corporate acknowledged that for the third consecutive year, GCI's stock fared worse in 2010 than shares of the overall newspaper industry.
The 2008 options became the executives' property, or "vest," in four equal annual installments starting Feb. 25, 2010. At the time they were granted, GCI was trading for less than $3.75 a share, as the broader newspaper industry neared collapse.
Options are only valuable when a company's stock trades above the strike price. In that regard, many thousands of options granted to current GCI executives over the years are worthless.
Late last month, the two executives both "exercised" their options the same date they vested:
 |
| Lougee |
A year ago, Lougee sold 10,625 optioned shares at $16.18, for a profit of $132,069.
 |
| Davidson |
A year ago, Davidson also sold 16,250 at $15.89, for a profit of nearly $200,000.
In 2010, Newsquest's 17 dailies and hundreds of weeklies once more laid off scores of employees, reducing division-wide employment nearly 6%, to 4,800. Overall, GCI-wide employment fell 7%, to 32,600.
GCI's stock closed yesterday at $15.59 a share, up nine cents. It's now down about 4% from a year ago, however, while the broader S&P 500 index is up nearly 15% in the same period, according to Google Finance. (Chart compares their 12-month performance.)
Within the next two weeks, Corporate is expected to reveal details of 2010 annual pay to Lougee, Davidson, CEO Craig Dubow and other senior executives.
Earlier: Board awards second wave of 2010 stock awards. Plus: Amid layoffs, an estimated 229 jobs have been cut in the current quarter
You are reading this correctly. The company's senior brass is making big profits off Gannett's stock even as shareholders are being ill-served by their performance.
ReplyDeleteYou can thank the board of directors for this, as well as a compensation system across Corporate America that's rigged in the favor of top managers.
These fat cats should be helping out the poor people of Japan.
ReplyDeleteIm sure Gracia,Craig, Dickey and the others made much more money last year. They are laughing all the way to the bank. More of the same coming. Oh, to be in upper management and have no cares in the world about your employees!
ReplyDeleteIt seems that Gannett honchos are playing both ends against the middle.
ReplyDeleteOn one hand, they cite poor economic conditions to justify whacking expensive senior talent, continuing unpaid furloughs and rolling back salaries. Nonpayroll resources are cut to the bone.
In the next breath, they are justifying exorbitant financial bonuses for top corporate players. They probably spend more rewarding a few than they save firing 100s.
This indefensible incongruity inspires the venomous prose that fills Jim's blog day after day.
Smart people know when they've been lied to and cheated and it pisses them off. It'd be like a news center laying off much-needed workers and buying the publisher a new Cadillac in the very same week.
If Gannett truly faces such dire financial conditions, it should minimize bonuses to those who led the company into the downturn. If not, lower profit expectations and focus on maintaining the integrity of the company.
Mr. Dubow needs to lead by example on this one. He needs to impress upon top managers that merely showing up for work does not justify huge financial rewards.
Results justify financial rewards and results are sadly lacking throughout Mr. Dubow's company.
Is that a bad picture of Lougee, or is he really that sternly stone-faced?
ReplyDeleteMust be an old picture. He's gotta be grinning wide these days!