Friday, March 25, 2011

Say goodbye to your $1.2 million board member; documents reveal fees to GCI's too-quiet directors

[Director fees vary by responsibility; bigger graphic view]

Gannett's longest-serving director, Karen Hastie Williams, retires from the powerful supervisory board at the May annual shareholders meeting, having collected a combined $1.2 million in fees since joining the group in 1997, according to GCI documents filed with federal regulators.

Also exiting May 3: Donna Shalala; she's been paid $868,283 since becoming a director in 2001. At 70, Shalala -- who is president of the University of Miami -- has reached mandatory retirement age. Williams, 66, a retired Washington attorney, said in a Feb. 23 statement that she's leaving to devote more time to other interests.

Combined, the board collected $1.4 million in fees last year, according to the new shareholder's proxy report, which GCI filed with the U.S. Securities and Exchange Commission yesterday. Nine of the board's 10 members get paid to oversee top management including Chairman and CEO Craig Dubow. As the lone GCI employee, Dubow does not get paid a director fee.

Who hired Dubow?
Williams, Shalala, and one other board member -- Duncan McFarland -- were among those directors who chose Dubow as chief executive in 2005. The other directors joined the board afterward. Williams held extra duties as the so-called presiding director, acting as a sort of deputy chairman alongside Dubow. McFarland, a director since 2004, assumed that position in February. He is a retired CEO of money manager Wellington Capital Management of Boston.

Retired Broadcast Music CEO John Cody, 64, has been elected to fill one of the seats being vacated by Williams and Shalala. Corporate has not said what the board plans for the other seat.

As across Corporate America, GCI's board of directors represents the interests of shareholders. Its members hire (and very, very occasionally fire) the CEO; elect their chairman; decide how much to pay top executives, and exercise general oversight of the company's strategic plan.

Also as across much of the business landscape, this board of directors has shown zero public evidence that it has been particularly challenging toward Dubow, Chief Operating Officer Gracia Martore, or of any other function of the company. To the best of my knowledge, the board has never said a word, publicly, about the massive layoffs that have roiled the company over the past three years.

Fees varied among members
I know that at least one director has in the past monitored this blog through an intermediary. I cannot speak for any of the other directors. I've been told, however, that they receive Google News alerts whenever their names appear on the Web. That is why you see me list their names at the bottom of this post.

GCI directors were paid fees that varied according to the amount of time they spent doing committee work, and the way they chose to be compensated -- whether mostly in cash or in stock. Last year, their fees ranged from a low of $109,534 (Shalala) to a high of $254,585 (John J. Louis, another financier).

Although their six-figure paychecks seem large to a typical GCI employee, they are well within a range paid to other corporate directors.

Big fees have drawbacks
Directors at the biggest 200 publicly traded companies received a median $228,000 in 2009, USA Today's Gary Strauss reported earlier this month, citing figures from pay consultant Pearl Meyer & Partners. That means half earned more, and half earned less. By contrast, the median income of U.S. households fell 1% in 2009 to $49,777, according to Census Bureau figures, Strauss said. (Pearl Meyer advises GCI's board as well.)

Harvard University governance expert Lucian Bebchuk told Strauss that paying for savvy board members to spend more time providing management oversight is worthwhile for shareholders.

But excessive pay has drawbacks, according to Charles Elson, head of the University of Delaware's Weinberg Center for Corporate Governance. Above $200,000, "the goal isn't about monitoring the company, but keeping the income," he told Strauss. "You can become beholden to management. You'll think twice about making waves."

Hello, and make some waves!
As promised, here's my Google News alert shout-out to the other directors: Howard Elias; Arthur Harper; Marjorie Magner; Scott McCune, and Neal Shapiro.


  1. I'm no math wizard, but isn't there a problem when all these millions are being doled out at the top of this company, while at the bottom revenues are dwindling? Something has got to give: either revenues have to be increased, or salaries, bonuses and benefits at the top have to be cut. One or the other. Your choice.

  2. Jim does a much better job of being a watchdog on Gannett than any of these "Yes, Ma'am" DUHrectors. and at a fraction of their pay.
    GCI could save millions of dollars and just hire Jim for $4k/quarter.

    Unfortunately, all the savings would go towards bonuses for Gracia and Craig.

  3. If you think the board of directors had anything to do with hiring Dubow, you're crazy. This was all Doug McCorkdindale's doing. The board just signed off on it and rubberstamps the employment agreement.

  4. i wonder if the board of directors will be taking a fulough as well?

  5. Seriously, demystify the process for becoming a board member. Can I run for election? How does one get nominated and put on the ballot? Do you have to know a large shareholder? Since major holders have most of the votes, do you campaign somehow? Would they ever consider a currently employed internal or an external employee of a newspaper or news org?

  6. "Lifestyles of the Rich and Powerful" ... now that would be a theme for a TV series!

  7. Jim, could you enlighten us on about how many hours a year these peeps need to put in to earn the pay? I mean, Ms. Shalala has a university to run. How much time could she possibly devote?

  8. Folks, you'd all be amazed how many times Shalala had her staff calling to inquire as to the status of her pay for attending Board meetings. Disgraceful - she is one greedy woman.

  9. Dubow was not McCorkindale's choice. The board took matters into their own hands when McCorkindale ran Tom Curley out of the company and after realizing McCorkindale wasn't moving to identify a successor. Curley should have been CEO. Dubow got the job because the board's top pics of at least two other notable industry leaders weren't interested. He got his job by default and here we are today. Aren't we all happy!

  10. Martore desperately wants to be CEO and President.

  11. It's Martore's job to lose, unless the board becomes more activist and decides it wants someone who can stay longer than five years.

    Martore turns 60 this year, and mandatory retirement age is 65.

    Also, the tone and temper of the board could change with Williams and Shalala's exit. Doubtful, but if the rate of revenue declines picks up steam, all bets are off.

  12. "The Machete" Martore has certainly proved she's got the chops for the jobs. I mean, she can take a bonus with the best of them.

  13. Let Gannettoids eat cake!

  14. Bring back Saridakis as the CEO. All these board members suck shit!

  15. I can certainly see them pulling the rug from under Gracia. She has set herself up as the fall-guy for these cuts and the impact they are clearly having on revenues. I don't think they anticipated this much of a revenue fall-off, given the national statistics (I think they lie, but that is another matter) show we are climbing out of a recession. So if this continues into the second quarter, which I expect, then pressure on the board will mount for heads to roll over a program that has failed to keep revenues up.

  16. Good stuff Jim. This posting is what makes this board great.

  17. I have to ask, if the numbers listed in your note are coorect, it means that Williams and ShaNaNa earned about $85,000/year for their work. Okay, that's a lot, but it's not like they are getting a fortune. That's like, what, a couple times what average employee makes? That doesnt exactly sound like a letthemeatcake amount. A lot for a part-time job, but if they are running the company doesn't seem like a lot. How does that relate to other boards?

  18. McCorkindale engineered Dubow's ascention. He didn't care for Gary Watson, who was succeeded by Golfpro Dickey. Watson was not a people person, but he knew the news business.

  19. 9:48 Watson was an ass who ran things during the good times. Don't change history to fit the moment. Same thing with SCJ she never had to lede during the tough times. As soon as things tightened up she ran right back to Phoenix to run a think tank. Tom Curley built the CP, another wanna be.

  20. Well, if Martore were running the company, the only thing that would be different is all the savings from not having Dubow.

  21. Good riddance Hastie Williams. Your absence will not be felt, especially since you're likely to be replaced by another robot.

  22. I wonder if Director Neil Shapiro is planning to donate any of his G A N N E T T winnings to WNET-TV where he's the top dog.

    Every night now we're hearing how important it is to donate to public TV, especially since the GOP wants to eliminate the funding.

    Come on Neil, make a nice donation!

  23. Hi 8 p.m....You basically get on the board by being a pal of someone already on the board or of one of the top company execs.

    Sometimes political convenience plays a role. Rosalind Carter was on the Gannett Board when the execs felt they needed a woman, prominent enough and yet unlikely to rock the boat.

    I can almost guarantee you that Dubow will land a seat on the Coke board, or another seat on a board with close associations with a Coke exec or director.

    The boards are supposed to represent the shareholders, but so many board members have so few shares of stock, and so many are simply back-scratching appointments, that execs get away with a lot, especially bags of money!

    The one real check on a board is when a large investor, a Warren Buffet, or a pension fund is angered by a company's performance and threatens to dump millions of shares.

    That wakes up the board!

  24. 3:02. Its BuffeTT. At one point, he had a big stake in Gannett, but sold because he saw no future in the investment.I doubt he'd be interested in a company in much worse financial shape than when he held Gannett shares. He looks for astute managers and growth potential. Does that sound like Gannett?

    Dubow joining the Coca-Cola board will never happen. He brings nothing to the table for a big international company like that. Coca-Cola's board has investment bankers and big players. Dubow's a bit player in his own industry.


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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